NMG hosts second BD Investor Education Conference

For many years, older Kenyans have known and focused on only one investment: land. People have been storing their wealth in many eighth-acre parcels of land in the city outskirts, hoping that in tough times they will sell.

“When I got my first job, my mother asked me, ‘when are you buying land,” said Kenneth Mbae, the chief executive officer at Centum Real Estate Company, at the just concluded BD Investor Education Conference that attracted many Kenyans looking to diversify their wealth creation portfolio.

Land speculation has been the route to wealth, but not everyone has been lucky.

“I know families that have acres and acres of land but cannot buy medicine. They are asset-rich but cash-poor. The land may have appreciated in price but when everyone around you has the same asset, who is buying? The person you want to sell the land to also has land,” said Mr Mbae.

With the “overinvestment” in land and its inability to be cash in three days or one hour if one requires cash for school fees or to pay medical bills, Gen Zs and millennials are now shying away from traditional investments, even if land still retains its position as the symbol of success among older investors and an asset that helps the distribution of wealth across generations.

Younger generations are now setting their sights on money market funds, government bonds, cryptocurrency and real estate, even if it is buying a Sh2.3 million studio apartment and turning it into Airbnb or rental unit for earning passive income.

“They are looking for cash-generating investments such as rental units. If you build a rental house on land, it is not dead capital,” said Mr Mbae.

When land is not the only investment, where else can one grow their wealth?

Mbithe Muema, the Nairobi Securities Exchange chief business officer, says last year gold was one of the best-performing asset classes.

“You can trade in gold, US stocks, REITs [real estate investment trust] stocks, derivatives and standard shares,” she said adding, “in the last quarter, we saw a lot of investors making a return to the derivatives market.”

However, before picking an asset to invest in, Esther Waweru, the senior portfolio manager at ICEA Lion Asset Management, said “understand what you are buying. Make sure you put your money in an investment that you can explain in layman’s terms.”

“We are moving away from lazy saving or investing. You cannot be a retiree and just heard about cryptocurrency and you rush investing in it because it’s trendy. There is a lot of volatility that comes with Bitcoin trading. Do your homework,” she said.

But not many Kenyans are optimistic that they can make money, especially in this high-tax economy.

Mary Wamae, the Group Executive Director of Equity who was also at the investor conference, said it is time that Kenyans start looking outside the country and Nairobi.

“People are still making money; we just need to spot opportunities. Let’s open our minds about investments. As the saying goes, ‘The person who has not travelled widely thinks his or her mother is the only cook.’ You’d assume that Kenya is your only market until you realise that the DRC has a big untapped market,” she said, “entertain the thought that opportunity may be wider than where you are sitting today.”

“You may not need to relocate to the DRC; partner with someone who understands that market and let your money work for you. Make calculated investments. Invest in companies that have a regional presence. When you are investing in a company like Equity or KCB, you are investing in the region with one share. Learn from credible people. If you have a fear of downside, go in when cheap and select the investment well. Think long-term. And finally enjoy investing, it’s not all that bad,” she advised. And the higher the risk, the better the returns.

Mr Mbae added, “Volatility is a friend of investment, we shouldn’t be afraid of it.”

But the biggest question is: how do you invest what you do not have? How do you save enough to invest?

Pius Muchiri, the founding CEO of Nabo Capital, said if you want to increase your savings, start by changing your mindset.

“Get your income, pay yourself first. Set aside a portion of your income in savings before you do anything else with the money. We often imagine that if we save, we won’t have enough to spend but somehow, we get enough for our expenses. Just budget,” he said.

On how to plot your wealth creation graph, Mr Mbae said, “If you project to live up to 90 years, and you reach 90, you cannot start blaming the government or your children for having not invested. Start by saving every day, every month, you’ll have money to create wealth for retirement. What is the motivation to start saving now? For me, in retirement, I want to do what I want when I want to. So, I plan now on how to achieve this,” he concluded.

By Diana Mwango