What sets average and successful chamas is their way of thinking. The trouble is many new chamas make the same similar mistake and are quick to jump into the first investment that comes along. Here are some ideas to help you make brilliant investment decisions.

Admit Your Mistakes Early

Successful chamas know that no matter how great their investment strategy is, it is never hundred percent accurate. They know that no matter how smart or experienced they are, they too make mistakes. The difference between successful investors and average investors is that the former admit their mistakes early. Once a successful chama knows they have made a wrong investment decision, they will pull out and minimize their losses immediately. On the other hand, most average chama investors hate to admit that they made a bad decision. They will start giving excuses and hold on to their bad investments. As a result, they make huge losses that wipe out any gains they may have made in the past. However, if they minimize their losses by admitting their mistakes early, they will still make huge profits from the gains they make from their good investments. For example if you have invested in a matatu business and it is making nothing but losses and draining the chama’s resources, sell it as soon as possible. Don’t hold on to it as it may wipe out all your savings in the long run. Sell it and use the money to do something else.

Get organised

There’s a wise saying that goes ‘Don’t put all your eggs in one basket.’ This is one of the pillars of good investment. Thus it is essential for sound investment decisions for the chama to get organized. Separate your investment capital into two portfolios. “The first is your core portfolio. Your top priority here is to preserve your money and make sure that the risk of losing it is minimal. Invest in conservative, low risk investments such as treasury bonds, fixed deposits, real estate, etc . This portfolio will act as a cushion for the chama at all times. Good investors do not risk all their money in one investment. The second portfolio you can afford to be more adventurous with it. Here you can invest in high earning yet risky investments such as shares.

Learn to invest little money

To be successful in investing, it’s good to learn to invest little money. Keep in mind that you don’t have to wait for investments that require a lot of money. Start investing early, with the little you have saved and start growing your money. Did you know that you can invest as little as Kshs.5,000 shillings? So if your chama has saved a little money. Don’t let it lie around without making anything out of it. Invest it.

For instance you can put it in a savings account. Today, banks are falling over themselves coming up with high-interest savings accounts. For instance National Bank Kenya has just launched a high-earning savings account known as Ahadi account that gives upto 7 percent interest. Other banks that offer high interest on savings accounts include Faulu Kenya at 12 percent. And the good news is many savings accounts do not have any minimum balance requirements, so you can get started with as little money as possible. If you opt for the various high earning savings accounts, other banks that offer this include Postbank Kenya, Barclays Kenya. Savings accounts are good if your chama is young and just starting out.

Also, if you have little savings, think about the mutual fund. Look for mutual funds with a low minimum-purchase requirement. Some mutual fund companies such as CIC Insurance and Old Mutual Kenya will allow investors to start investing with small deposits, but you’ll have to agree to an automatic investment plan whereby you let them deduct a fixed amount from your bank account every month for the purpose of buying additional stock. Such investments can be as little as Kshs.1,000 per month. You may also be asked to start off with a small one-time investment, sometimes as low as Kshs.5,000. If you agree to set up a recurring monthly deposit, you can start your mutual fund investments with a little money. And the good news is, this money can be available to you should you want to withdraw within 48 hours.

Categorised in: Barclays Bank, CIC Insurance, Investment options for chamas, Post Bank

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