Economy

Savings cost Kenya’s rich high returns

save

A customer at a banking hall. File photo | nmg

Kenya’s rich are losing out on higher returns by opting to put their money in savings accounts, shunning better performing investment plans like fixed deposit account, pension schemes and property.

The survey by Standard Chartered Bank #ticker:SCBK revealed that 74 per cent of the respondents preferred to keep their money in savings accounts compared to fixed deposits (35 per cent), stock market (six per cent), bonds (two per cent) and pension fund (five per cent).

Average returns from savings accounts at 6.08 per cent is lower than fixed deposits at 7.82 per cent, according to the Central Bank of Kenya.
Pension returns averaged eight per cent while returns from bonds ranged between 10 and 15 per cent.

“The emerging affluent are relying on a basic approach to saving money, which could add years to the amount of time it takes them to achieve their savings goals,” said the survey. 

“The investment markets in Kenya (is) less mature, but even here emerging affluent savers could reach their goals sooner, just by moving one step up from their preference of basic savings accounts to time deposits.”

StanChart interviewed 8,000 people in eight markets including India, China and Korea. The survey revealed that Kenyans preferred to put money in savings accounts compared to respondents in the other seven markets.

In China, 28 per cent preferred savings accounts and 41 per cent fixed deposits. About 26 per cent of those survey in Korea were for savings accounts and 51 per cent for fixed deposits.

In Pakistan, half of the respondents preferred to keep their money at home compared with two per cent of those interviewed in Kenya.

“The emerging affluent in the markets (from Asia and Africa) surveyed are avid savers, setting aside, on average, 27 per cent of their income every month,” explained the report.