Wealth tips from the pros - Daily Nation

Wealth tips from the pros

Friday October 30 2015

The best way to grow your riches is to listen

The best way to grow your riches is to listen to people who have walked the path you are treading. PHOTO| FILE 

By Wavinya Nguli

As we wake up daily to pursue our dream of financial freedom, the many voices competing for our money and attention can be confusing. However, the choices you make about how you grow your money should ultimately be your own.

You shouldn’t do it on your own, though: crafting a workable financial strategy is often the result of research and consultation with finance and investment professionals. You can also learn lessons from people who have grown their own wealth and follow their path. This week, five people who’ve walked the path you’re on dispense the best financial tips they have to offer.

AVOID GET RICH QUICK SCHEMES

We have all, at one point or another, been tempted by schemes that promise almost instant returns on investment – because who wouldn’t? Isaac Njuguna, head of investment at Zimele Asset Management, believes a lot of individuals will improve their investment fortunes the minute they “grow suspicious of dubious schemes posing as legitimate investments.”

Also, most individuals tend to think they can beat the market consistently over time. Such people tend to forgo tried and tested wealth-building tools like long-term investing, investment diversification (not putting all your eggs in one basket) and re-investment of profits.

Taking a wild gamble on “investment schemes” offering returns that are way above what would be considered normal is a recipe for disappointment and failure. He believes in conducting due diligence by thoroughly researching a company`s financial history before committing to any investment.

In addition, consult lawyers when in doubt about the implications of financial contracts, especially when it comes to long-term commitments.

LIKE BEGETS LIKE

Teresa Nanjala Lubano, CEO and founder of Shop Nanjala, says that in her experience as a business person, one invests in enterprises that mirror their own goals and aspirations. “For example, if I stand for business ethics I expect to partner with someone

who shares the same principles of business ethics. Similarly, if I stand for excellence, then I expect to see it in my future partners.”

What this means is that if you are looking to make a quick buck, the sort of company you invest in will reflect that… and might end up losing you your money. If the base investments of a fund are erratic offshore or foreign exchange deals you have a hazy understanding of, expect your earnings to be erratic and prone to losses as well.

Ensure you understand any scheme you invest in. Educate yourself on whether the fund you save in has high risk and high returns, and invest in it if you can afford the gamble.

Ensure you have realistic expectations of potential profits. Finally, make sure the companies you invest in are legally regulated as well, if you do not want to risk losing your money with no hope of ever getting it back.

Peace of mind

PEACE OF MIND

Wamuyu Gachina, an advocate of the high court, say her favourite personal finance tip was given to her by her father, who told her: “Never mortgage the home you live in!”

While one may mortgage houses meant for rental income, having the assurance that the home you live in is not prone to auctioning should your financial fortunes change, gives you peace of mind.

The assurance that you have a home enables you to bounce back from bad financial seasons much faster. Her father`s advice has forced her to look for alternative ways of getting into the property market. “I joined up with nine other individuals. We pool our resources and develop rental property.

We are currently undertaking a project which I would never have dreamt of nor been able to afford by myself. The project financing is phased so that members have sufficient time to raise funds.”

Keep it simple

“At the end of the day, the simpler your investment plan, the easier it is to stick to,” says Pepela Mecca, a practicing architect and director of TMS Consulting.

Without implementation, great ideas are just that: ideas. The plans which change the world are those that are applied in real life. You are better off trying and failing than not investing at all.

In this digital age, you can research trustworthy investment funds online via the Capital Markets Authority (CMA), the Retirement Benefits Authority (RBA) and the Sacco Societies Regulatory Authority (SASRA) websites.

Some unit trust funds and commercial banks even allow clients to open and manage their investment and savings accounts online.

 

Waceke Nduati-Omanga returns next week.