SMART MONEY

Keeping Money in the Bank Won’t Make You Wealthy

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Digital lenders will be teaching their customers about financial wellness this month. www.businesstoday.co.ke
Digital lenders will be teaching their customers about financial wellness this month. [Photo/ Eve] D'Souza]
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Did you know that keeping money in the bank won’t make you wealthy?

Well, if you didn’t, this is the time to reorganise your finances and see how best to see your money make money for you. Better yet, there is nothing as good as making money while you sleep, right?

Money in the Bank Scenario

Have you ever wondered why banks tell you that your interest rates are per annum (per year)?

First, the bank is not there to make money for you but instead to make money from you. Thus, the institutions will give you a deal that favours them and seemingly favours you. In most cases, the favour for you is against your growth.

It’s not a crime, though, since the banks have to make money and remain afloat.

Take this scenario for instance. If the bank is keeping Ksh1,000 for you for a year, the returns will not be more than Ksh200. Here’s why.

If the bank gives you a rate of 14% p.a., then you will make Ksh140 from your Ksh1,000 that year.

What many people do not understand is that the percentage offered by the bank is not monthly but yearly. If one goes in with the misconception that their money will earn 14% interest every month, then they will be in for a rude shock when they check their accounts at the end of the financial year.

Bearing in mind that there are costs that come with banking, even the Ksh140 may be hard to come by.

Making Your Money Make More For You

Using the same Kshs 1,000, let us look at a scenario where you invest your money so it brings you more.

Assuming that you are in a place and time where you can afford to rear kienyeji chickens which are hardy and low on maintenance, how much can Sh1,ooo bring you in a year?

Well, if you manage to buy two chickens to start a flock, then this is how it turns out.

Assuming that you can buy good, healthy chickens at a cost of Ksh500 each, a male and a female and you have to rear them in your backyard, then you will have started on a venture that could bring good returns.

Hoping that your chickens suffer no sicknesses and they start laying as soon as you acquire them, then luck is on your side. If they are good partners giving you fertilised eggs, then you can look at growing your flock from the two.

If you eat a few eggs and then hatch let’s say 10 when the chicken becomes broody, you’re looking at growing your flock by at least five more birds in less than 6 months.

I know about the cost of their feed and all but if you decide to let them scavenge and feed them on kitchen scraps, then it is possible you will turn out fine.

If your chicken manages to bring up about 5 chicks which survive the year, then your Ksh1,000 will have given you more than 100% return on investment.

If you have managed to cut feed costs, then this could be the reality that you face. Growing your flock from 2 to not less than 10 in a year.

Do you know wealthy people don’t keep money in the bank but they have where it keeps working for them?

Read >> Questionably Wealthy Kenyans Hiding Ksh6 Trillion Abroad

Written by
Hakeenah N. Njenga -

Kenya is my home and its development and growth my motivation. I have a pen and a story to tell about why #KenyaIsMagical. Do you have a tip? We can showcase Kenya together since there is no place like home. Reach me at [email protected]

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