The festive Christmas and new year season is now in full gear with all the razzmatazz and commercial overdrive associated with the season.
It is the season to indulge in abandon spending, the season of throwing prudence and caution to the four winds, wining and dining as if there is no tomorrow. It is time to spend and make merry, damn tomorrow as it will take care of itself.
And then as suddenly, the festive season is over and the long and dreaded month of January is here with us, with all its financial obligations and implications. There are bills and school fees to pay, car insurance renewal, rent, and a host of other financial obligations to take care of. And the cycle is repeated year in year out.
It is not my intention to rain on your festive mood and be a wet blanket; it is time to be happy. But it is also important to look into the future and plan for your financial freedom.
For many Kenyans, the beginning of the year is normally the time to reflect and come up with new resolutions. And for those who are disciplined enough and intend to start and keep their resolutions, January is normally the best time to start as it is the beginning of the year.
For those who are wishing to start their investment and financial freedom journey, this is the time for introspection and hard decisions.
To achieve your financial goals in 2022, you have to evaluate three key items in your day-to-day life. One, your daily living expenses that may include food, fuel, rent and school fees. Two, your financial goals may include paying off debts, setting up an emergency fund, and savings.
Three, your liabilities which may include car loans, mortgages, credit cards, student loans, unsecured loans, etc.
Now, the big question is, what stops you from your investment journey meant to grow and protect your income? Where do you get the impetus and discipline to start investing and earning passive income, and become financially secure?
There are myriad reasons why a majority of Kenyans have not been able to develop an investment culture despite having all the information at their fingertips. For most, it is not knowing how to start, when to start, where to invest, and how to calculate and mitigate risk. For others, it is fear of losing money, inadequate information, and even procrastination.
But the single biggest reason why Kenyans have not taken advantage of investment opportunities is lack of financial education. With the lack of financial literacy comes poor financial planning, and missing out on investment opportunities to grow your income.
There is no right time to begin your investment journey, the time to start planning is now. The good news is that financial literacy is now readily available, and is offered through various credible online platforms unlike in the past.
Technology has made it easy to access information and to expand your knowledge which is key to determining how and where you need to invest and manage your financial risks.
Risk management is important as it will involve you taking some actions which include spreading your eggs, protecting your income while asking hard questions as you start your financial literacy journey.
Financial freedom and protection come in various forms. For those in formal employment, insurance will offer you cover for your medical and education needs, and protect your income in case of job loss.
For those in informal employment, micro-insurance nowadays offers affordable health cover. Unit trust funds such as money market funds are an important instrument to start saving for future investment and for emergency funds. Saccos also provide a saving platform and financial protection in times of emergencies.
For those who have stopped working or retired, your retirement protection will be key for regular cash flow, and good post-retirement health insurance.
One can also invest in low-risk investments such as annuities, REITS (Real Estate Investment Trusts), government bonds and dividend-yielding stocks.
A simple mantra is to live within your means, save and invest. And patience pays.
And whereas online learning will offer you the basics of financial planning, it is important to engage a qualified financial advisor to advise on these opportunities to ensure you take up the best options for investment planning.
The Writer is the General Manager, Retail Investments at Acorn Investments Limited.