By Chris Mugi
Aug 2 – It is May 2020, and you’ve got lastly purchased that 50X100 plot on the outskirts of city. Five years down the street, nothing has modified, aside from the weeds, and you’ve got needed to construct the perimeter wall twice. Was that basically an funding?
For the previous a long time, investing in land has been the Kenyan dream, a ceremony of passage for the burgeoning center class. The dream has lengthy symbolised safety and demonstrated aspirations for many younger professionals and enterprise house owners. Kenyans, particularly these in main city areas, proceed to position their monetary religion on this acquainted funding selection. But in right now’s financial local weather, with inflation eroding buying energy and uncertainty clouding the longer term, we should ask, does this age-old technique nonetheless make monetary sense?
While land possession typically feels secure, tangible, and emotionally satisfying, it typically comes with excessive upfront prices. There are title processing charges, property upkeep complications, and lengthy holding durations with little to no revenue within the interim. And when it’s time to promote, liquidity turns into a critical barrier; it could possibly take months and even years to discover a purchaser, particularly in distant areas.
In distinction, unit trusts, whereas not as culturally ingrained or emotionally resonant, provide one thing many land investments don’t— liquidity, diversification, skilled administration, and most significantly, constant returns. And opposite to in style perception, they don’t seem to be only for the rich or company elites.
As a matter of reality, cash market funds (MMF), one of the vital in style kinds of unit belief, are accessible from as little as KES 500 and might return between 9% and 11% yearly, with next-day entry to your funds.
More growth-oriented choices like fairness or balanced funds provide larger potential returns over time, excellent for long-term targets reminiscent of schooling, house possession, or retirement. For a middle-income household making an attempt to plan their monetary future, the distinction these instruments could make over 5 or ten years is transformative.
However, even towards such potential, skepticism nonetheless persists, with many Kenyans assuming that investing in unit trusts means locking up their cash for years. Others consider such merchandise are reserved for company elites or high-net-worth people. These assumptions couldn’t be farther from the reality, as a result of most unit trusts provide next-day or two-day liquidity, which means traders can entry their funds virtually as simply as they’d from a checking account. Moreover, the merchandise are designed to be inclusive, with entities like Old Mutual offering options that permit minimal funding ranging from KES 500, with no ongoing deposit necessities.
Unit trusts present greater than a financial savings ledger, as they provide analysis, danger administration, asset allocation, and portfolio development. More importantly, unit trusts empower traders to tailor their danger as a result of they don’t at all times want a private monetary advisor to construct a diversified portfolio anymore.
Mobile-first platforms now permit traders to browse fund choices, monitor efficiency, and make investments or withdraw with the faucet of a display. Such instruments are democratizing financial savings and investments, however their uptake stays restricted as a result of monetary literacy round funding choices remains to be low, and many individuals equate stability with the familiarity of conventional investments, even when it means sacrificing returns and, to an extent, overlooking a few of the dangers related to the funding car they select. Others worry market volatility, not realising that with correct diversification, the core precept of most unit trusts, such dangers may be managed.
The future, nevertheless, is promising, and expertise is pushing the business towards better transparency and accessibility. Regulatory reforms are additionally underway, aiming to strengthen investor safety whereas encouraging innovation. Meanwhile, Artificial Intelligence and knowledge analytics are making it simpler to evaluate fund efficiency, evaluate charges, and even obtain personalised portfolio strategies with out the price of personal wealth advisors.
Of course, land will at all times maintain a spot in our cultural psyche, and rightly so. But if the objective is to develop wealth and construct a long-lasting monetary legacy, then we should transfer past sentiment and embrace smarter, extra versatile funding choices.
The author is a Portfolio Manager at Old Mutual Investment Group
