Pick My Brain

A great way to know what brings you the most value so you don’t waste money is by applying the “Cost Per Use” formula.

Simply divide the total cost of the item by the frequency you’ll use it. The value of your purchase is directly related to how much you’ll use it.

E.g, if you buy a $1,500 laptop and use it every day for 1 year, the cost per use is $ 4.12 =($1,500/365 days). If you use it every day for another year, the cost per use goes down to $2.05!

If you own a pair of shoes that cost $100 and a designer bag that costs $500, & you’ve only won the shoes once since you bought them, the cost per use is $100. If you take the handbag to work every day for a month, the cost per use is ~$16. The handbag is the more valuable purchase.

Using the cost-per-use formula on your purchases has these advantages:

1. It empowers YOU to decide what is a valuable purchase.

2. You get to be more intentional with your purchases.

3. It enables you to stop impulse-buying.

4. It makes decluttering easier. 

You may have entered investing with the hope of achieving quick, guaranteed returns. However, the reality is that returns vary and are rarely immediate. E.g, while the stock market provides returns of around 7% to 10% after inflation, these returns are not consistent year to year and include periods of both growth and decline. 

By setting realistic expectations, you’ll be less likely to make impulsive decisions out of impatience or disappointment. Avoid get-rich-quick schemes, which often come with high risk and little reward, and focus instead on tested strategies that steadily build wealth over time. Keep in mind that investing is a gradual process that requires you to stay patient, committed, and prepared for the natural fluctuations of the market. 

Most Kenyans have their savings in a bank account instead of a Money Market Fund or any other investment that earns them more than the inflation rate.

💡 A Money Market Fund is a form of Unit Trust where investors like you and I pool our funds together and give it to a professional money manager who invests it on our behalf in different asset classes.
MMFs predominantly invest in 3 asset classes:
☑️ Commercial paper – issued by corporations to finance their short-term cashflow needs.
☑️ Treasury bills – when the government borrows money from the public.
☑️ Fixed deposits – deposits in commercial banks.

💡 MMFs in Kenya are regulated by the Capital Markets Authority.
💡 Instead of saving money in your bank’s savings account, use a Money Market Fund. Why?

It’s a LOW-RISK investment which makes it a safe investment for a beginner who doesn’t want to have sleepless nights thinking about losing their investment.

1. Accumulate Savings for Bigger Investments (Security Portfolio)
   Set aside money for future expenses on your dream purchases, such as:

   • Your first car/apartment

   • A piece of land

   • Treasury bonds or bills

2. Savings for Regular Monthly Expenses (Lifestyle Portfolio)
   Use an MMF to save for recurring costs, including:

   • Medical insurance

   • School fees

   • Annual medical check-ups

3.     1-Year Emergency Fund

o   Ask yourself: If you lost your job tomorrow, how long could you maintain your current lifestyle?

o   You should aim to have 1 year’s worth of living expenses saved in an MMF!

4.     Investment Option for Your Chama/Self-Help Group

o   Earn daily interest (compounded annually)-- on your chama’s savings.

Start Small: You can begin investing with as little as KES 2,500 today!
Comment "MMF" in my (Socials/LinkedIn) if you'd like help setting up an MMF account for savings growth.

Before you start investing, it’s essential to have an emergency fund in place to cover unexpected expenses without dipping into your investments. This fund acts as a financial safety net, ensuring you won’t be forced to sell investments at an inconvenient time, which could result in losses.

Ideally, this fund should hold three to six months’ worth of living expenses and be kept in a liquid, easily accessible account, such as a high-yield savings account. Having an emergency fund provides peace of mind and allows your investments to remain untouched and continue growing, even in the face of unforeseen financial challenges.

Many new investors attempt to time the market, hoping to buy at low prices and sell high. However, market prices fluctuate due to unpredictable factors, including economic reports, global events, and shifts in investor sentiment, all of which contribute to short-term volatility and reacting to them can lead to missed opportunities. Instead of trying to time the market, it’s often more effective to adopt a consistent, long-term approach.

E.g, dollar-cost averaging—investing a fixed amount at regular intervals regardless of price—allows you to steadily build wealth without being concerned with short-term ups and downs. This reduces emotional-investing and provides a way to buy shares at various prices, ultimately balancing out over time. Committing to a long-term strategy can yield more stable returns and a clearer path to building wealth.

Investing can be complex, and seeking professional advice when you need it can make a big difference. A qualified financial advisor can assist with setting realistic goals, developing a tailored investment plan, and navigating complex topics like taxes and retirement planning.

Find an advisor who aligns with your needs. These experts can provide clarity and confidence as you build your financial strategy. Even a single consultation can be valuable in helping you make informed decisions and avoid common pitfalls as you start your investing journey:

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