Date Posted: 3/24/2013 10:07:14 AM
Posted By: Ombaba Membership Level: Gold Total Points: 1110
When i got out of college life was a big challenge for me. First was the realization that the albeit irregular pocket money i received was no more. Secondly life outside of campus was much more expensive. Third the prospects of getting a job to at least sustain me was not as high as i expected. Friends and relatives were not as generous with their money as before.Luckily for me i survived this period in large part thanks to a few savings and investments i had made while in college.Before i start discussing areas in which a student can invest let me talk about one aspect that predates investing and that is saving. Investments are always made through money put aside. Students do not have much earning power. Most students are given pocket money and a few gifts here and there and that is it. However with good planning a little saving here and there could amount to a lot. For me for example had one rule, that was and still is to save at least thirty percent of pocket money, gifts or any unexpected funds i received. Saving requires discipline and without it we cannot even begin to talk about investing.For a student, a majority of their time should be spent on books and not thinking up ways of making money. It makes sense however, to learn something about money before you enter the world. The basic definition of investing is to use money to earn more money. So what areas can students invest their saved funds without neglecting their studies.1. Join a sacco. A sacco is an establishment of a group of people who come together to achieve a common goal. In Kenya today there are several saccos whose membership is open to any adult. Saccos offer various services and pay dividends to members at the end of a financial year. Saccos also provide a cheaper alternative to accessing credit facilities to members. You can get a loan of between three to five times your savings from a sacco. A point to note is that to get a loan you need to have someone who knows you and is also a member of the sacco to act as a guarantor. Therefore before joining a sacco ensure there are people who know you or join the sacco with your friends.2. Start your own business. If you are the entrepreneurial kind you could use your savings to start your own business. Look for a need in your college or outside if possible that you could satisfy and get into action. You could for example provide printing services which are cheaper than the ones already existing. Alternatively if you don't want to be involved in the day to day running of the business you could invest in a running business and have an agreement to get a percentage of the profit from the business.3. Open a fixed deposit account. Though a bit expensive for an ordinary student, a fixed deposit account offers a better rate of return than a savings account. Most banks in Kenya offer a rate of between 3 to 5 percent for fixed deposit accounts compared to between 0 and 2 percent for ordinary saving accounts. For most banks you will need at least kshs 50,000 to open a fixed deposit account. For this account you have to be patient for the maturity date to elapse before you can withdraw. If you withdraw before the maturity date then you forfeit the interest and may be required to pay a penalty. The term for a fixed account is usually three, six or twelve months. 4. Join an investment club. An investment club is a group of people who come together to pull resources for a common investment goal. While in college you can either join an existing club or create your own and invite your friends to join you. As members of an investment club you have to be disciplined especially on contributions because without it you will never achieve your goals. When you pull the resources together you can be able to start a business which as individuals you could not be able to. Some businesses you can start with raised funds are; car wash and carpet cleaning, a restaurant among others. 5. Invest in the stock market or mutual fund. If you have a healthy appetite for risk then you could consider the stock market. The good thing with the stock market is that you can begin with very little money and build up your portfolio. To get the best out of the stock market you will have to research widely to get as much information as possible to make the best choices. Alternatively if you do not want to trade directly at the stock market due to limited information or are not well versed in the workings of the stock exchange you can put your money in a mutual fund which will manage your investments professionary.6. Invest in a merry go round. A merry go round is similar to an investment club, except that in the merry go round contributions made at a particular time are given to one member who then decides what to do with the money. A point to note is that when its your time to receive funds, you better have a good project planned.
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