10 investments you can make in 2019

5 good investments for those with a low risk appetite

1.            Unit trusts

This works through pooling of financial resources by investors with a common objective. Unit trusts (money market and equity funds) are managed by professionals called fund managers who dictate the daily decisions regarding investments, which go hand in hand with the specific objective of the fund. Income received by the fund from its investments is passed on to unit owners as dividends. However, this type of return is not guaranteed if the fund makes little or no income.

Offered locally by some banks and insurance companies.

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2.            Rentals and other income generating properties

You can purchase land or property as an individual and then lease it out commercially to the public as rentals. However, you can also invest in Real Estate Investment Trusts (REITs). REITs invest in commercial real estate and allow individual investors to buy shares from their portfolio. REITs receive income from various properties in different sectors of the economy, for example energy, healthcare, processing and manufacturing. The returns are acquired from leasing the property spaces and acquiring rent income. The returns are then distributed in form of dividends to the shareholders of that particular REIT.

* Offered locally by Stanlib, UAP Investment, Nabo Capital and CIC Asset Management Limited.

3.            Corporate bonds

Corporate institutions or government regularly issue bonds to the public at a particular price (bond price). A bond is a means of acquiring funds from the public, meaning the organisation issuing out the bond takes the funds as a loan, and then returns the money later on to the people who bought the bonds, with interest on top. The funds acquired through corporate bonds are directed to finance a particular project. Bonds are held by the bond holder for a particular period of time. Interests vary according to the prevailing interest rate in the market and reset every six months on average.

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* Sold by stockbrokers listed on CMA website and you can get additional information from NSE website. They are also listed on newspapers’ financial pages.

4.            Treasury Bills

These are short-term, debt instruments (documents that show evidence of debt with a promise of repayment) dispensed by the government. They are another means which the government uses to acquire money from the public, then repay later with interest. Treasury Bills are issued on a daily, weekly and monthly basis to raise money for a particular project. They are of three categories; 91- day bill, 182 - day bill and 364 - day bill. They are of low risk and are an assured way of earning returns on capital invested without much effort.

5.            Investing in Saccos

Saccos are a viable and stable manner of gaining returns on investments at any salary range and help you inculcate an efficient savings culture. Most saccos have a minimum contribution amount. The dividends you earn from a sacco can be used to offset a current loan you may be having. All you have to do is direct a standing order with your commercial bank and the sacco. Your share amount is automatically deducted from your monthly pay.

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Source: Karumba Kinyua, managing partner at PineHill Consulting; a risk , strategy and investment firm.

Investments2019Low riskReal Estate Investment Trusts