Whenever I write some of these, I like to prefix that apart from a little math I do now and then, I can’t give financial advice and this is just me rumbling. I find the ‘Invest with as little as 5 shillings’ phrase that up and coming fintechs are using pretty guff.
This is going to be a short rant, perhaps, but please stop telling people to invest such small amounts, there is no way anyone gets rich of off investing Sh5. I personally have never sat down and wanted to invest such an amount.
I find that as much as there is the common myth about needing a big fat bank account to start the process of building a solid portfolio, the promise of making millions from absolutely nothing is also wild to me.
One such platform is Chumz, so CEO Moneto Samuel Njuguna says that Kenyans have a “self-imposed” limitation that they can only save Sh1,000 and above. His platform “will allow users to invest as low as Kshs 5 to enable individuals to build a savings culture.” Also isn’t investing different from saving?
Saving 5 Shillings every day is about what, Sh1,825 a year? say at 12pc interest that is Sh2000 a year, factor in inflation and everything, what could you possibly do with this amount? What goals are you going to accomplish with this? in 10 years saving 5 shillings a day will get you what? Sh20,000? Good luck retiring with that. (pls don’t quote my math)
“Through Chumz, we will enable Kenyans to achieve any aspiration including education, travel, home-ownership and so on. Our partnership is grounded on one desire: to democratise investment by giving people access to opportunities with competitive returns.” Hahah. lol.
The Sh5 marketing phrase is plain stupid. There has to be a reasonable amount to start investing with. Anyways Atlanta is back and these Fintechs remind me of that scene where Earn explains, “Poor people don’t have time for investments because poor people are too busy trying not to be poor. I need to eat today, not in September.”
Poor people are not investing because they have a bad savings habit or they don’t know how to, it’s because they actually can’t. Targeting them with this Sh5 nonsense is not in the least in their good interest, pun intended.
There has to be a good healthy mimimum amount you can invest. for instance, Standard Chartered Bank Kenya recently partnered with Sanlam Investments East Africa Ltd (Sanlam) and Mangosteen BCC Pte Ltd (Bambu) to launch SC Shilingi funds, a low-ticket money markets fund proposition for Kenyans.
According to Kenyanwallstreet,in order to invest, there is a minimum investment limit of Sh1,000 and a maximum of Sh1 Million. I find this more reasonable. Starting to build your investment with Sh1,000 makes sense to me.
I am not saying you should shy away from investing, by all means start slow, even with a small amount of cash, establish the habit of investing regularly, which will hopefully lead to a large nest egg in the future, but don’t let these platforms lie to you.
Anyways what do you think? are these startups encouraging poor people to invest or are they just looking for a quick buck? Leave a comment down below or come engage me over on our Telegram channel or on Twitter.