7 Investment Ideas You Can Start With Ksh 5,000

One of the reasons why people don’t invest is because we feel like after budgeting for all our mandatory bills and expenses, we feel like we don’t have enough money left to save or invest.

Well, what if I told you that you could start your investment journey with as little as 5000 shillings?

Here are seven investment ideas you can start with:

1. Money Market Funds (MMF)

A Money Market Fund is a type of mutual fund that invests in cash and low risks, short-term debt securities.

This fund is peculiar in the sense that you can save because they give you capital preservation (little to no risk of losing your money), and at the same time also invest because you can get interest on your money.

The inflation rate in Kenya at the moment is slightly above 5 percent, an indication that the prices for commodities are also increasing by 5 percent. When choosing an investment, you want to choose one that is giving you a bare minimum of 5 percent.

Most Money Market Funds in Kenya now give an interest rate ranging between 6 – 9 percent due to the effects of Covid-19 on the economy. Even so, the interest rates provided can compensate you for inflation.

2. Bond Funds (Fixed income Fund)

A bond fund also referred to as a debt fund, is a pooled investment vehicle that invests primarily in bonds (government, municipal, corporate, convertible) and other debt instruments, such as mortgage-backed securities (MBS). The primary goal of a bond fund is often that of generating monthly income for investors.

Found under the umbrella of unity funds, the fixed income fund ideally invests your money in Treasury and corporate bonds.

The unit trust that you choose to invest in will pool money from different investors, select and invest in bonds performing well. You will then get your return after the bond generates a return.

You don’t need a huge sum of money so long as you go through the Unit Trust and invest through the bond fund. Your money will still be exposed to the bond market (both treasury and corporate), at a low entry-level.

3. Balanced Funds

Still, under the unit trust fund, the balanced fund is an equal portfolio. Ideally, it does not expose your money only to one asset but to a diversified portfolio.

The risks involved in this investment option are moderate since they have a mix of low-risk investment and high-risk investment, (stock market).

This type of fund is the best especially if you are not sure that you want all your money to be exposed in low-risk investment only. Your money can be divided into low and moderate while also avoiding highly risky investments.

4. Equity Funds

Equity funds facilitate investment by gathering capital from investors into a single fund and investing the capital into various businesses.

The returns from businesses in the form of earnings and dividends are collected by the equity funds and passed through back to the investors.

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This fund is appropriate, especially if you’re not sure of the stock investment you want to buy to begin your investment journey.

It is worthy to note that this type is the riskiest class of mutual funds, and hence, they have the potential to provide higher returns than debt and hybrid funds. The performance of the company plays a significant role in deciding the investors’ returns.

5. Stock Market Investing

Investing in stocks just means buying tiny shares of ownership in a public company. Those small shares are known as the company’s stock, and by investing in them, you’re hoping the company grows and performs well over time.

If that happens, your shares may become more valuable, and other investors may be willing to buy them from you for more than you paid for them. That means you could earn a profit if you decide to sell them.

You need to be strategic in your choice of company. Understand the business model, evaluate the financial health of the company and understand the level of risks the company is taking with its debt. this might help in avoiding the many risks that could come along the way.

One of the best ways for beginners to get started investing in the stock market is to put money in an online investment account, which can then be used to invest in shares of stock or stock mutual funds. With many brokerage accounts, you can start investing for the price of a single share.

6. Personal pension funds

This is a long-term plan that aims to help you build up a pot of money that you can use for your retirement.

Your road to financial freedom begins with your retirement savings plan. If you’re thinking NSSF will be enough or arguing that retirement is still miles away then you need to rethink.

Anyone can get started because most of them require a minimum of sh. 1000. The excuses end here and the journey to financial freedom begins

The best thing about this plan is that it guarantees you capital preservation, meaning that you’ll still be able to retain your contribution in harsh economic conditions.

7. Start a Side Hustle

Are you passionate about doing business but you have a capital limitation? Don’t worry you don’t need millions of money to start your business.

There are many things you can start doing with as little as 5000 shillings so long as you have a valid business idea.

Some of the common small-scale businesses include selling second-hand clothes (mitumba), selling new undergarments and socks, and offering delivery services to small traders. You can also sell cosmetics like nail polish and lipstick, or create and sell Africa themed wall hangings.

Designing and selling sofa pillow cushions and selling African beadwork (earrings, necklaces, and pendants) is also a brilliant idea.

The bottom line is, you don’t have to think too hard about starting a business. Fear will set in, and you will anticipate failures before you begin. All entrepreneurs who’ve made it took risks, why can’t you?