Investing for now and the future Co-opTrust Investment Services

Presentation by Lydia Muchiri26 June 2010

Outline

• Saving vs Investing• Key Considerations before starting• Stages of life and investing• Set goals• Diversification• Asset Classes• Choosing an Investment• A case of the NSE• Conclusion

Saving Vs Investing

• A savings to one person may be considered an investment to another.

• Saving - putting aside a sum of capital or cash that remains constant while earning a low, guaranteed rate of interest.

• Investing - putting capital where it can increase or decrease in value, but where neither interest nor dividends are guaranteed.

Key Considerations before starting

• Before you start investing, first establish an emergency kitty – 2 to 6mths of your take home

• Have Insurance – Protect what you already have

• Determine your Stage of life – Where am I?

• Set goals – why do I want to invest ?

• Where to invest?

Stages of life and investing

Age Saving Capacity Inclination Risk profile

Bachelor 21-27yrs High Low High risk

Newly married 28-32yrs High High High risk

With children 35-50yrs High Medium Moderate to Low

Pre retirement 50-57yrs Low High Low to Zero

Post retirement 60+yrs Low Low Very Low

Set goals – why do I want to invest ?• Ask yourself:• What are my top financial goals?

– Retirement, House, Holiday, Education,etc

• When do I hope to reach those goals?

• How much money do I need to invest? – Rule of 72

• How do I want to approach investing?– Disciplined/Adhoc

• Find out what kind of investor you are – How comfortable am I with the idea that I may sometimes lose money if

I want to grow my  savings faster?

Where to invest - Diversification

• What types of investments do I understand and want to buy?

• Some types of investments grow faster than others. A good mix of different investments will help you get enough growth, while keeping losses in balance.

• Am I comfortable choosing my own asset mix? If not, get some expert advice

Asset Classes• Through asset allocation, you can spread your money across different classes of

investments, including:• Cash and cash equivalents

– Low risk, low return

• Investment Clubs– Enjoyable, Educational, Slow

• Fixed income investments: T-bonds, T-bills, corporate bonds– Fixed steady income. Can be eroded by inflation

• Equity/Shares investments – Offer the potential to make far more than either a fixed income investment or cash

equivalent. – Affected by company growth, Economic growth

• Business ventures– Very high returns, Expertise, day to day management,

• Real Estate– Appreciates with time ,Illiquid, large capital outlay

Choosing an Investment

• Speculative Investments – Undeveloped land– Aggressive growth stocks

• Moderate Risk Investments – Blue chip companies– Quality growth stocks

• Low risk Investments– Government bonds– Corporate bonds

• Cash and cash equivalents

A case of the NSE

NSE 20 Share Index Trend

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1,000

2,000

3,000

4,000

5,000

6,000

7,000

Conclusion

• Keep track of your investments• Take advantage of Tax benefits and compound

growth • Keep good records of your investments so you

will know how well each one does.• If you have an adviser, check that he or she is

following your investment instructions. • Start NOW!!

Thank you

Q &A ??