Have you ever thought of investments plans to grow wealth?
Shares are regarded as a growth investment as they assist you to grow the value of your original investment over the medium to long term.
If you own shares, you may earn income from dividends, which are effectively a portion of a company’s profit paid out to its shareholders.
Also referred to as equities, shares have historically proved higher returns than other assets.
Property investment involves the price of houses and other properties that can rise substantially over a medium to long term period.
While a defensive investment focuses on consistently generating income, rather than, the investments lean on the buying of high-quality stocks, short-term maturity bonds and blue-chip stocks.
According to the Nairobi Securities Exchange and a leading stock exchange in East Africa, Kenya boasts of some of the best-performing companies that continue attracting investors.
Despite the available vast array of stock investments opportunities, it’s upsetting to note that a big percentage of Kenyans are remotely investing in stocks.
Why would Kenyans get scared? Some would complain about the lack of enough finances to venture into this kind of investment.
Others will say they are not ready to plunge their finances into this kind of risky investment.
Another lot would allude that they are not quite sure of the return of their investment holding a belief that the plunge might end up as their financial death nail.
The fear that the returns are not guaranteed will depend on how the investment is appreciated and how much is worth when you won't sell them.
At one point you may be slowed down and get back less than they originally invested.
There are also chances of earning positive returns, although this possibility is often overlooked.
The reason Kenyans have become loss averse.
In other words, we tend to prefer to avoid losing something we possess, rather than taking a risk hoping to reap a bigger yield in the long term.
Kenyans are loosely concerned with losing more than winning and prefer to play it safe particularly when it comes to financial matters just like brits who prefer saving to share investments.
Fear has kept Kenyans outside the investments world and away from reaching their long-term financial goals.
Instead of investing it has been evidenced that Kenyans prefer to tuck away their money in savings accounts.
It is therefore important to think of investing since your investment is not tired of fixed interest rates, chances to get inflation-beating returns are highly available.
In the long run, stocks tend to perform better than cash. Seemingly stock kept for over 10 years can have a 90 per cent chance to outperform cash.
If you are buying stocks on your own, you must research each company to determine how profitable you think it will be before you buy its stock.
You must learn how to read financial statements and annual reports and follow your company's developments in the news. You also have to monitor the stock market itself, as even the best company's price will fall in, a market crash, or bear market.
However, stock investment offers plenty of benefits such as taking advantage of a growing economy. As the economy grows, so do corporate earnings.
That's because economic growth creates jobs, which creates income, which creates sales.
The stock market makes it easy to buy shares of companies. You can purchase them through a broker or a financial planner, or online.
Once you've set up an account, you can buy stocks in minutes.
The stock market allows you to sell your stock at any time. Economists use the term liquid to mean that you can turn your shares into cash quickly and with low transaction costs.
Embarking on an investing adventure involves some risk, but it doesn’t have to be a reckless journey.
There are ways to help you manage your investment risk spreading your money across many different investment types and regions could help you mitigate risk.
Seeing the value of your investments drop is heartbreaking, but it’s important to stay calm and think long-term.
If you remain invested, your potential loss is simply a negative number on a screen and this alarming figure could go the opposite direction.
So, keep your nerve and commit long-term. Not only can it help you ride out market bumps, but it’ll also give your money more time to blossom.
Edited by Kiilu Damaris
