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What to Invest in: Using Your Money to Make Money

April 21, 2024
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Hisa App
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Hisa App

How do you pick what to invest in?

A lot of people struggle with this question: what can I invest in? With the many investment options available, it is difficult to know what makes the cut in the world of investments. The task of choosing what to invest in is particularly harder for beginners as you might not know what assets to pick. 

Sure you might have heard of stocks and real estate and been told that thought they are very exciting ways to make money. But how exactly do you decide if that investment is right for you?

The most important thing to do before deciding what to invest in is to do a lot of research on each type of investments. The next thing to do is to determine and understand your financial needs. If you can tell what you desire from an investment, it is going to be easy to find out what to invest in.

Every investment carries risk, some with more returns than others. There are a lot of investment opportunities , all you have to do is find the right one to invest in. For starters, it is wise to know the pros and cons for each particular investment option. It will help you choose what to invest in. In this article, we select the eight investments that you can invest in.

In this article

8 Investments to Make In 2022

So, what can I invest in?

If you dont know what to invest in, here are the top investment options that you should start thinking about today.

1. High yield savings account 

A high yield savings account is a type of savings account that gives you very high yields on the amount of money you have saved in your account, after a specific period. A high-yield savings account is like a traditional savings account but instead has interest rates for savings. With a traditional savings account, interest rates range from 4% to 7% but with a high-interest savings account, the interest rate could go as high as 10% to 13% of interest on savings.

This could be a great investment opportunity for anyone who wants to get returns from their money just sitting at the bank. You just have to be consistent with your savings and not withdraw your funds until the maturity date. If you worry about inflation and long-term effects, then this investment may not be for you.

How do you Invest in a High Yield Savings Account?

To start investing in a high-interest savings account, you need to follow these brief simple steps:

  • Check the ratings at your preferred financial institution
  • Go for the best high-yield savings
  • Open a high-interest savings account with the bank
  • Start putting money into your account

It is important to note that high-interest savings accounts are mostly offered by online banks. For example Citibank. You can also get high yields savings accounts from your bank for instance KCB Bank. However, its important to check the interest you earn on your savings. This is important since you have to make sure your savings interest rate is at least greater than inflation which is at 7.9% as at June 2022. Otherwise, your savings will be losing value.

You could also save with fintech companies like Koa which offer up to 10% in returns.

2. Index funds

An index fund is a mutual fund or an exchange-traded fund that is designed to follow certain preset rules so that the funds can track a specified basket of underlying investments. Index funds are an excellent investment opportunity because they have simple diversification and have high returns. Index funds are good for beginners because they are easy to learn, unlike stocks. Some of the best index funds to invest in today include S & P index funds, Russell-2000 and Nasdaq-100 index funds. 

How do you Invest in Index Funds?

If you want to start investing in index funds that track various indices like the S&P 500 you can download the Hisa App today and begin your investment journey. All you have to do is:

  • Find an index fund that you want to track, starting with some of the most popular index funds like Nasdaq-100, S&P 500 etc.
  • Choose a fund that tracks the particular index like $SPY, $VOO, $IVV
  • Buy the shares of that particular index

 

Read also: 5 Reasons Why You Should Invest in Index Funds

3. Real estate 

Real estate is a type of investment that involves the buying and selling of property. Investing in real estate is usually for the long term. Whether you are a broker or an agent, you have to look for a real estate property, speak to owners and find people who are willing to buy the property at a set price. Real estate is a good investment because you can sell the property for up to 3 times its original value. Rental housing is a great segue into real estate. There are also other real investments that you can look into like raw land, and commercial and industrial real estate.

How do you Invest in Real Estate?

To start investing in real estate, you have to have a good eye for some of the best real estate properties. You need to:

  • Do your research and find out the best real estate properties for your clients.
  • Create an outstanding portfolio to share with clients 
  • Look for clients and sell them your properties

Remember to do a lot of research before you get started on real estate as an investment. You can work with a broker or a real estate agent if you want a smooth transition in the real estate business. 

Alternatively, you can invest in Real Estate Investment Trusts (REITs) which are companies that own or finance income-producing real estate across a range of property sectors. In Kenya, we have a number of REITs including Vuka by Acorn Group. Vuka allows you to invest into Acorns profitable student accommodation portfolio (Qwetuand Qejani) where you stand to make dividends and capital appreciation of the underlying income generating portfolio.

4. Cryptocurrency 

Cryptocurrency or digital currency is the latest type of investment that has taken the world by storm. It has facilitated faster payments and transactions at significantly low fees in place of traditional banks. When you are investing in cryptocurrency, you can start with bitcoin but you always have to do your due diligence to avoid any fraud, security and regulatory risks.

How do you invest in Cryptocurrency?

To invest in bitcoin, you need to join a bitcoin exchange like Coinbase and Binance, get a bitcoin wallet and have a bank account. You can then start placing orders for bitcoin on the exchanges and pay for them, after which you can then sell them at a higher price. 

  • Join a bitcoin exchange where you will make purchases of bitcoins. Examples of cryptocurrency exchanges include Kraken, Coinbase and Binance.
  • Get a bitcoin wallet you can get either a cold wallet or a hot wallet to store your bitcoins 
  • Have a bank account to transfer funds easily
  • Place your bitcoin order
  • Keep track of your bitcoin investment 

Bitcoin is one of the alternative investments in the world right now. As the world keeps on evolving, investing in bitcoin could be a wise decision you can make despite the recent drop in prices.

Read also: A Brief History of Cryptocurrencies and the Main Crypto Trends in 2022

5. Stocks 

The stock market allows you to buy and sell shares of publicly listed companies. You can get to invest in different stock markets like Kenyan stocks through the Nairobi Securities Exchange or global stocks listed on the New York Stock Exchange and the NASDAQ. You can invest in stocks through a broker if you have no experience and dont understand the market. It is a great investment for beginners and can get you very high returns if market predictions are done well. The stock market goes through a lot of movements and these market fluctuations are not ideal for someone who wants a stable type of investment.

How do you invest in the stock market?

To get started in the stock market in simple steps, 

  • Open a trading account with the Central Deposit System either with a broker or a bank
  • Choose your stocks
  • Get a broker if you are investing in local stocks in Kenya we recommend using Faida Investment Bank. If you are going for global stocks, you can use Hisa App as a broker and start investing.
  • Start trading 

With Hisa App, you can trade in US stocks. You will have access to hundreds of US companies, get predictions and also get paid dividends. If you are looking to invest in global stocks, you can download Hisa Apptoday to start your investment journey. Investment is made easier in the US stocks.

 

6. Mutual funds

Mutual funds are funds that trade in securities with money contributed by many shareholders. A mutual fund pools together money from investors and invests it in bonds, stocks or other securities. Mutual funds are a great investment option for anyone who wants to diversify their investment portfolio and spread risk. However, you have to look out for tax inefficiencies and be aware of management abuses in investing in mutual funds.

How do you invest in mutual funds?

To invest in mutual funds, you first have to: 

  • Look for institutions that have mutual funds. 
  • What type of mutual fund does this institution offer? Is it a money market fund, a dividend fund or a balanced fund?
  • Register to start investing in the mutual funds.

In Kenya, we recommend CIC Asset Management if you are looking to invest in money market funds, balanced funds or equity funds. They are the largest asset manager by assets under management in Kenya.

Rea Also: CIC Unit Trust Widens Market Share to 41% with assets worth KSh 42.9 Billion

7. Bonds 

Bonds are a type of investment security where you lend money to the government or a corporation for a specified period, after which you will get your principal payment as well as the interest earned regularly for that given time, until maturity. We can say bonds are debt securities. In Kenya, we have government securities like Treasury bills (T-bills) and Treasury bonds (T-bonds) that you can invest in. You will later get high returns on investment in the long term.

How do you invest in bonds in Kenya?

To start investing in bonds you can either invest directly through the Central Bank of Kenya or as a nominee through an investment bank like Faida Investment Bank. For this article, we will cover investing directly through CBK.

  • Open a CDS account with the Central Bank. This is important for the Central Bank to establish who holds government securities. 
  • Decide how you want to invest in the government securities 
  • Fill in and submit an application form
  • Get the auction results 
  • Make payments 
  • Wait for maturity to get proceeds 

Here is a useful thread with a step to step explanation.

 

8. Cash and commodities 

These are physical commodities that are sold in exchange for payment (cash). Examples of cash commodities include gold, silver, oil, corn, wheat, etc. Cash commodities are a low-risk type of investment and are a great investment option for starters. However, you have to know that with low risk comes low returns, especially in the short term. If you are risk-averse, this investment option is best for you.

Read also: How To Invest in Gold from Kenya

Final Thoughts

Investing is something every person with financial goals should think about doing. Reports show that a lot of people struggle with what to invest in and not the investment process in itself. You need to have a good criterion for choosing the best investment options for you. It is recommended to invest in something that is within your budget and one which you understand. Do not go into any investment because you are following the masses.

Do your research and find out what you can invest in. If you still cant find what to invest in, use this article to help you make the right decision. We have given you simple and basic steps on how you can invest in each of them. Keep doing more research as you go along. Once you have settled on what to invest in, everything else gets more exciting and thrilling as you go. 

So what are you going to invest in today?


 

 

 


 


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