Investing is one of those things we all want to do – eventually. The reasons vary from person to person, but chances are, if you ask anyone why they haven’t invested yet, they will probably tell you that they’ll do it later in life when finances are more stable. However, the problem with this is that financial obligations will always exist. In fact, as you get older, they will probably increase. The best time to invest is now. Those who begin this journey early reap the most benefits from their investments.
If you are still on the fence about it, consider the following benefits:
1. Create an additional source of income
The main purpose of investing is to use existing assets to create wealth. The returns you could earn from putting your capital into investment vehicles like stocks, stock indices, currencies, commodities, or real estate will give you an additional, long-term source of income. This is more beneficial than, say, letting money lie idle in a savings account. In fact, with a sound investment strategy, your returns could eventually become your main source of income.
2. Protect assets against inflation
Inflation refers to the decrement of money’s purchasing value. The current inflation level in Kenya is slightly less than 5%*. If you have an uninvested asset worth Kshs 1,000,000 today, and it loses value by 5% each year, in 20 years, that asset will be worth very little. You can avoid this by investing it, thus preserving capital value.
3. Secure your future
If the Covid-19 pandemic has taught us anything, it’s that life is unpredictable. While you may be comfortable with your current income, things could change at the drop of a hat. Income streams can be interrupted, leaving you in financial distress. To avoid this, build a nest egg and grow it gradually by investing.
4. Achieve your financial goals
Everyone has goals that they want to achieve, and many of these have cost implications. You might want to buy a car or a home. Maybe you want to protect your family’s future, pay for your children’s education or cover other expenses. The big dream could be to start your own business or perhaps just retire comfortably. All this, and more, can be achieved with a sound, long-term investment strategy. To get a clear sense of what you want to achieve by investing, talk to a trusted financial advisor.
5. Enjoy tax benefits
KRA offers tax incentives, including capital allowances, insurance relief, mortgage relief, industrial building deductions, VAT exemption, and deductions for those saving for retirement or to own a home. This means that, as an investor, you benefit from a lighter tax burden.
Given the benefits, becoming an investor seems like a no brainer. If you want to get started on your investment journey but are unsure how, contact us and speak to a financial advisor today.