My name is Travis and I am 35 years old. I am employed and earn a net salary of Sh103,000 per month. I have a family. My monthly budget is as follows: Rent and water Sh28,000, school fees per term for two children Sh45,000, transport Sh8,000, family activities and emergencies Sh10,000, harambees and support groups Sh5,000, miscellaneous expenses Sh8,000 (can sometimes go up to Sh12,000) and savings Sh7,000.
I started saving in June 2024. I do not have huge loans that I am repaying except for short-term loans of Sh80,000 that I am repaying in the next four months. It has been difficult to save enough money to start a major project. I want to buy a car soon as my family grows and maybe a piece of land in the next five years. Help me to achieve these two goals.
Alex Kibebe, Founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
The first thing you need to do is to define your goals more clearly so that you can make your savings more targeted.
For your goal of owning a car, determine the price range. Let’s say you want a second-hand car worth about Sh600,000.
As for the land, you need to decide what you want to do with it. Is it for speculation, to build a house or to generate rental income? This will help you identify the right location and budget.
For planning purposes, we will assume that you intend to purchase the land to build your home. We will use an estimate of Sh900,000 for the land price.
Next, we will evaluate how you can save and invest to achieve these goals. From the information you have provided, your total monthly expenses come to Sh74,000 and you are currently saving Sh7,000, leaving you with Sh22,000.
This surplus is likely being used to pay off your loans, which will clear in four months. Now, to meet your goals within your set timelines, I suggest increasing your current savings to Sh10,000 even as you continue to pay off the loan.
You can do this by reducing Sh1,000 each from your contributions to harambees, family activities expense and the miscellaneous allowance.
Once you have increased your savings to Sh10,000, I recommend that you place these funds in a Sacco. Identify and save with one that offers development loans. This will help you build up shares so that when the time comes, you can borrow funds to build your house. To maintain consistency in your saving, I would advise you to set up an automated deduction of this contribution at source.
After paying off your current loans, invest the Sh22,000 you will have freed up in a money market fund (MMF). Research different fund managers and identify an ideal one with a track record of good returns.
To maintain discipline, consider setting up a bank standing order for the investment. If you invest in the MMF for two years at the current net annual interest rate of about 13 percent, your total investment should grow to approximately Sh600,000. This would enable you to buy the car.
To purchase the land within your target of five years, continue investing the Sh22,000 monthly in the MMF for a further three years. By then, your fund should grow to around Sh950,000, allowing you to buy the land as planned.
Assuming that you have been contributing Sh10,000 per month to your Sacco within this period and that you reinvest the dividends earned (approximating 10 percent per year), your shares could be worth around Sh780,000.
At this point, you can apply for a development loan of Sh2,000,000 from your Sacco to build your house.
If you get the loan at an interest rate of 12 percent and a repayment period of eight years, your monthly repayments would be Sh32,506.
To manage this, you can redirect the Sh22,000 you have been investing in the MMF and the Sh10,000 going into the Sacco towards this loan repayment.
Once you have built your house and moved in, you will be saving on rent and you can use this freed-up money of about Sh28,000 to invest towards fulfilling other goals such as saving for your children’s higher education and building a passive income for your retirement.
If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered on this column.
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Britam half-year net profit hits Sh2bn on higher investment income
Insurer and financial services provider Britam posted a 22.5 percent jump in net earnings for the half-year ended June 2024, to Sh2 billion, buoyed by increased investment income.
The rise in half-year net profit from Sh1.64 billion posted in a similar period last year came on the back of net investment income rising 2.5 times to Sh13.27 billion from Sh5.3 billion.
“We are confident in the growth and performance trend that Britam has achieved, supported by its subsidiaries in Kenya and the region. Our business is expanding its revenue base while effectively managing costs,” Britam Chief Executive Officer Tom Gitogo said.
“Our customer-centric approach is fueling growth in our customer base and product uptake, particularly through micro-insurance, partnerships, and digital channels.”
The investment income growth was fueled by interest and dividend income rising 34 percent to Sh9.1 billion, which the insurer attributed to growth in revenue and the gains from the realignment of the group’s investment portfolio.
Britam also booked a Sh3.79 billion gain on financial assets at a fair value, compared with a Sh1.8 billion loss posted in a similar period last year.
The increased investment income helped offset the 12.7 percent decline in net insurance service result to Sh2.13 billion in the wake of claims paid out rising at a faster pace than that of premiums received.
Britam said insurance revenue, which is money from written premiums, increased to Sh17.8 billion from Sh16.6 billion, primarily driven by growth in the Kenya insurance business and regional general insurance businesses, which contributed 30 percent of the revenue.
The group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.
Britam’s insurance service expense hit Sh13.6 billion from Sh11.3 billion, while net insurance finance expenses rose 2.6 times to Sh12.3 billion during the same period.
“Net insurance finance expenses increased mainly due to growth in interest cost for the deposit administration business driven by better investment performance. This has also been impacted by a decline in the yield curve, which has led to an increase in the insurance contract liabilities. The increase has been offset by a matching increase in fair value gain on assets,” said Britam.
Britam’s growth in profit is in line with that of other Nairobi Securities Exchange-listed insurers, which have seen a rise in profits.
Jubilee Holdings net profit in the six months increased by 22.7 percent to Sh2.5 billion on increased income from insurance, helping the insurer maintain Sh2 per share interim dividend.
CIC Insurance Group posted a 0.64 percent rise in net profit to Sh709.99 million in the same period as net earnings of Liberty Kenya nearly tripled to Sh632 million from Sh213 million, while Sanlam Kenya emerged from a loss to post a Sh282.2 million net profit.
Tanzania: Samia Hands Over NBC’s 354m/ – Crop Insurance Compensation to Farmers Affected By Hailstorms
President Samia Suluhu Hassan, has handed over a cheque of 354m/- from the National Bank of Commerce (NBC) as compensation to tobacco farmers, who were affected by hailstorms during the previous farming season in various regions across the country.
Handing over the cheque in Dodoma, the compensation is part of the crop insurance service provided by NBC in collaboration with the National Insurance Corporation (NIC).
Furthermore, President Samia has also handed over health insurance coverage to members of the Lindi Mwambao Cooperative Union based in Lindi Region, through the Farmers’ Health Insurance service provided by the bank in partnership with Assurance Insurance Company.
While visiting the bank’s pavilion at the Nanenane Agricultural Exhibition and being received and briefed by the bank’s Managing Director, Mr. Theobald Sabi, she said: “This crop insurance is one of the crucial solutions in ensuring farmers have a reliable income, without fear of challenges such as natural disasters, including hailstorms.
“I call upon all farmers in the country to make the best use of this important opportunity by accessing these kinds of insurance services. I also highly commend NBC and all the stakeholders participating in this programme.”
Elaborating further on the crop insurance service, the Minister of Agriculture, Hussein Bashe, stated that it will help to recover the loss farmers incurred, especially in various calamities beyond their control.
Citing them as floods, fires, and hailstorms, which have significantly affected the well-being of farmers and caused some to be reluctant to invest in the crucial sector, Mr Bashe added: “However, our President, this step by NBC is just the beginning, as this is the second year since they started offering this service, and the results are already visible.
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“As the government, we promise to continue supporting the wider implementation of this service, with the goal of ensuring that this crop insurance service reaches more farmers.”
ALSO READ: NBC participates in TFF 2023/24 awards, promises to enhance competition
On his part, Mr Sabi said that the farmers who benefited from the compensations are from 23 primary cooperative unions in the regions of Shinyanga, Geita, Tabora, Mbeya, Katavi, and Kigoma.
He added: “In addition to these insurance services, as a bank, through this exhibition, we have continued with our programme of providing financial education and various banking opportunities to farmers, alongside offering them various loans, including loans for agricultural equipment, particularly tractors, to eligible farmers.:
At the NBC booth, President Samia also had the opportunity to be briefed on the various services offered by the bank to the farmers namely crop insurance and health insurance services.
There, the President had the chance to speak with some of the beneficiaries of the services, including the Vice-Chairman of the Lindi Mwambao Primary Cooperative Union, Mr. Hassan Mnumbe, whose union has been provided with a health insurance card from the bank.
Source: allafrica.com
