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When is the best time to invest?

**Investments require discipline and commitment in making regular payments.** [iStockphoto]

For many, when retirement comes or those in the civil service are sent packing as part of the government’s agreement with external lenders like Bretton Woods institutions to cut the wage bill, they are not able to adjust to the new reality.

A good number of them end up depressed, not knowing how to cope.

The sad reality of life is that many people do not see it coming.

For those who are lucky to have a pension and savings, they have something to fall back on, at least while it lasts.

Not everyone is cut for business, and those who were not smart enough to make long-term investments while they were still employed find the going tough.

Sample the case of two civil servants, who, for the sake of argument, we shall call them A and B.

Civil servant A had side businesses while still in employment. Among his areas of interest was real estate, where he’d take loans to get pieces of land and develop both residential and commercial units.

He was also in the stock market with shares in different blue-chip companies and would reinvest dividends in different stocks or other areas of interest.

Civil servant B, on the other hand, lived paycheque to paycheque, saving in Saccos and banks with plans of investing when they retired.

Civil servant A would have opted to quit employment early to concentrate on his businesses, but held on given his position and the benefits that came with it.

The fat pension post-retirement was also too enticing.

When they retired, A transitioned effortlessly into his new life given by now he was business savvy, with his managerial skills an added advantage.

B, on the other hand, began one startup after another and failed. Unable to get traction in the business world, he opted to offer consulting services to different organisations, drawing from his work experience.

From this analogy, A made the right choice of investing while he was still actively employed.

Michael Kamau, a teacher in Nakuru County, attests that he had seen colleagues in the teaching profession leave before hitting retirement age to concentrate on business.

“I know of one who began academic writing. When good money began flowing in, he invested in different businesses, including horticulture and poultry business. Academic writing was paying well beyond the salary that came with deductions. After getting that financial breakthrough, he quit and is currently thriving,” he says.

John Gitau, the proprietor of Rift Valley Institute of Business Studies, is one example of someone who invested while in employment.

“I worked for several organisations like Unilever Kenya, Unilever Tanzania and Kenya Breweries in different capacities. I’d invest on the side, but what killed my first few businesses was employing family members to manage them,” he says.

His first business was a shop in Nairobi followed by a salon, both of which did not last six months.

It was while working with Unilever Kenya in Kericho that he began a salon and cyber cafe business.

The salon soon picked up and consequently transformed into a school of hairdressing.

It was at this point that he quit employment to concentrate on his businesses. That was before the 2007-08 post-election skirmishes, which saw his business reduced to ashes.

He relocated to Nakuru where he began his current business, which started with 15 students.

Today it is a Technical and Vocational Education and Training-accredited college.

“The need to invest while you’re working will pay dividends as no one envisions a life of penury when they retire or are retrenched,” says Mr Gitau.

But Moses Kahiga, a personal finance expert, says many can’t invest on the side while they’re in employment.

“From that payslip, how much goes into statutory deductions, loan settlements, and other financial obligations?” he poses.

Mr Kahiga observes the take-home for many employees leaves very little after deductions, meaning many live from payslip to payslip and even have to take loans to bridge the shortfall in their income.

“However, all is not lost as such employees can still invest in chamas (investment groups), where members can pool resources and buy land for subdivision,” he says.

“A chama with noble initiatives is a good bet in empowering such individuals to property ownership. It is better than being burdened with long-term loan repayments to get the plot. Also, know that property can act as collateral if you are in serious business if you approach a lender for financing.”

Mr Kahiga says it is, therefore, best to invest while you are still employed.