High-income Kenyans plan to spend the bulk of bonus earnings on buying property or reinvesting in their businesses, underlining the propensity of the rich to save rather than splashing extra cash on luxuries.
A study by Standard Chartered Bank Kenya’s wealth management unit on how wealthy Kenyans intend to spend their bonuses in 2024 shows investing in tangible personal assets holds more appeal for the affluent and emerging affluent.
The study shows that emerging affluent individuals banking with StanChart expect a bonus averaging Sh230,000 while the affluent expect an average of Sh640,000. While 30 percent of the emerging affluent expect between Sh100,001 and Sh200,000, 34 percent of the affluent expect above Sh900,000.
According to the study, the affluent and emerging affluent intend to use 30 percent of their bonus on investments and 27 percent on savings. They intend to spend a quarter of it and use 18 percent on settling debts.
“Despite external pressure concerns, clients still intend to allocate more money to investments. When asked about their preference for allocating bonuses for investments, more intend to assign a greater proportion,” said the survey.
About 73 percent of women intend to allocate more of their bonus money to investments this year than the previous year compared with 55 percent of men who will be increasing their allocation to investments.
The study shows 45 percent of the surveyed high-net-worth customers intend to use their bonus to buy properties while 43 percent plan to reinvest in their businesses. About 39 percent said they would invest in the land while 36 percent and 35 percent said they would buy cryptocurrencies and stocks, respectively.
“On average, clients intend to allocate the largest part of their bonus to investments. Clients like to invest in personal tangible assets such as property, land, and their own business,” said the study.
“Affluent clients are more eager to invest in a variety of assets than emerging affluent clients. This is because they expect higher bonuses and have more capital to distribute.”
The study shows family obligations will take up about half of the 25 percent of the total bonus allocated for spending. About 42 percent of the spending allocation will go to self-improvement activities such as study while a similar percentage intends to spend on electronics like phones and gaming consoles.
StanChart’s inaugural survey on bonuses was a collaborative research project between the bank and Human8 —a global consultancy.
The majority (81 percent) of those surveyed were aged between 30 and 39. About 78 percent of the surveyed were in full-time employment.
“More than half of clients expect a larger bonus this year compared to last year and the past three years. Additionally, around eight in 10 clients expect two or more different types of bonuses this year,” says the study.
Most (61 percent) expect to receive a profit-sharing bonus, suggesting that they have invested in the business. The survey shows 75 percent of affluent customers expect the profit-sharing dividend, compared with 49 percent of the emerging affluent that expect the same.
About 59 percent expect a bonus from the companies they work for while 56 percent expect a commission-based bonus.
