Smart Investment Tips for 33-Year-Old Single Woman Earning KSh 127k

• A Kenyan woman who earns a net salary of KSh 127,000 broke down her monthly expenses and sought advice on how to invest to earn passive income as she remains with KSh 35,200
• The youthful woman revealed she has a loan of KSh 700,000, which she used to buy a car, and saves KSh 17,500 monthly in a Sacco and a similar amount as a pension
• Personal finance expert Eric Muchoki explained that one of the best ways to protect her investment was by taking comprehensive medical insurance

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An anonymous Kenyan woman wrote:

"I’m a 33-year-old single woman earning KSh 127,000 net. I have a loan of KSh 700,000, and I am servicing KSh 25,000 monthly. My other expenses include pension (KSh 17,300), rent KSh 10,000, airtime and bundles KSh 3,000, nails and hair KSh 4,000, car fuel KSh 15,000 and sacco savings KSh 17,500. What adjustments should I make in my budget? What are the best investments that can give me passive income?"

A youthful woman sought advice on how to invest. Image for illustration. Photo: Tim Robberts. Source: Getty Images

Eric Muchoki is a personal finance expert and director at Customized Solutions Insurance Agency.

Why your savings scheme is good

Eric Muchoki, a personal finance expert and director at Customized Solutions Insurance Agency, commended the woman for saving 38% of her salary.

"Apart from loan repayment, 38% of your income goes to savings i.e. pension and Sacco. That's quite impressive.

The other expenditure items are basic, and we fail to grasp how you can operate without them since they are lean and, therefore, don't see room for adjustment," Muchoki told TUKO.co.ke.

How to invest the balance of KSh 35,200

Muchoki noted that after deducting all the expenses and loan repayment, the 33-year-old lady remained with a balance of KSh 35,200.

He expounded that one of the best ways to protect her investment was by taking comprehensive medical insurance.

"Hospital bills have been known to cripple the financial well-being of well households, especially when a life-threatening accident or illness strikes. If you don't have a medical cover in place, make it a first priority. We have customized medical insurance solutions to take care of that," he said.

The personal finance expert asked her to take out an endowment policy, which is a hybrid of protection and savings.

"By saving KSh 17,000 per month, you would get KSh 4.5 million in 15 years. Additionally, the policy provides cover for accidental death benefits and permanent total disability, each to the tune of KSh 2.3 million. Critical illness and last expense are also covered. We can customise an endowment plan based on your budget," he recommended.

Why you should have an emergency fund

Muchoki assured that a money market fund (MMF) was one of the best avenues for growing wealth. Since the money can be withdrawn anytime, it could be used as an emergency fund.

MMFs use the principle of compounding to grow wealth in a short period of time.

"Money can be accessed partially or in full when need be without being penalised. We have products now giving interest rates of more than 15% annually. However, interest rate earnings are based on prevailing market conditions at any given time. MMF is regulated by the Capital Market Authority, and therefore a safe investment vehicle," he added.

Disclaimer: Advice given in this article is general and is not intended to influence readers' decisions about solving financial challenges. They should always seek their professional advice that takes into account their circumstances before making a financial decision.

Do you have a story to tell? Want an expert's advice? Please email us at [email protected] with 'Ask an expert' in the subject line.

How to invest KSh 460k

In a related article, TUKO.co.ke reported about a 23-year-old Kenyan man who landed a windfall of KSh 460,000 as his share of inheritance from his grandmother.

He sought advice on how to use the money, which was the largest amount he had ever received.

The Form Four leaver revealed he lacks financial discipline, and the highest salary he ever received was KSh 12,000.

Financial consultant Walter Tarus advised him to reflect on his short-term and long-term goals to guide his financial decisions.