7 Simple Guides to Start Investing for Beginners.

Wealth creation is not about what you earn it’s what you save and invest. That is why we need to know how to start investing for beginners. We know we should save for a rainy day but, we don’t grow our savings through investing. 

What is investing 

According to Forbes Advisor  Investing is the process of buying assets that increase in value over time and provide returns in the form of income payments or profit. 

I like to think investing putting your money to work for you. It is the way your money can grow. 

Why don’t people invest?

Only 20% of people don’t invest any of their annual income at all and even those who do save aren’t putting away a lot.

The reasons differ depending on the person’s circumstances. it could be because 

  • You don’t earn enough. Lack of funds is one of the major reasons people don’t invest. Investing does not require you to have a ton of money. you can start with as little as Kshs 1,000 
  • You don’t know enough about investing, “it’s too complicated” learning about investing is not hard, there is a lot of information available, and you can also get a financial advisor to assist in explaining what you don’t understand. 
  • Fear of losing your money. : You don’t want to lose your hard-earned money or savings. Once you understand your risk profile then you can choose the type of investments that suits you.
  • Imposter syndrome. “Investing is for the rich”…..investing is how the rich got rich.

Why start investing.

We all have dreams and we all want to have a better future for ourselves and the people who depend on us. That is why we come up with financial goals like your kid’s education, securing a comfortable retirement, or attaining life-changing financial independence, what you invest in plays a huge role in your success.

We work to earn money so that we have resources to spend on our needs and wants. Investing makes your money work for you and ensures that you reach your goals. 

The differences between saving and investing are:

Investment Saving
Investing grows your money Saving reserve your money
Investment takes advantage of compound interest in the long run you. There is no compound interest in saving.
Investing grows your money at interest rates that beat inflation and fees. Saving loss value due to inflation and bank levies
Creates an additional income stream. Dividend income is an example of passive income. No income from savings.
Investing is better suited for long-term goals like retirement. Saving is usually reserved for short- and intermediate-term goals.

How to start investing

  1. Getting knowledge,

“An investment in knowledge pays the best interest.” — Benjamin Franklin

For first-timers, investing can be a learning curve, but the crucial thing to understand is that there has to be a pay-off at the end of it. 

You have to do your research before you invest. There is a lot of information about investing available, however, it’s how you understand and analyze the information that makes it useful. 

It is advisable to start small and grow as you acquire more knowledge, to reduce the risk of making mistakes. The other way is by appointing a financial advisor to guide you in understanding the financial products and information. 

2. Set SMART Financial Goals. 

Start with the big picture. Visualize how you want to retire, what is your dream, and write it down in detail.

Having specific goals will enable you to determine how much it will cost you to realize your dreams. When you set smart goals that are realistic, attainable and time-bound, you will likely succeed through targeted investment. 

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3. Know your risk profile, 

Risk is the level of unpredictability you can tolerate, and what is the chance of losing your investment  

I like to think of it as the ability-to-sleep-at-night after investing your money. Will you be at ease after investing or will you stay up worrying if you made a big mistake?  

Your risk profile determines your risk requirement, what kind of risk you can tolerate, and your risk capacity based on your age and money personality. when you know your risk profile you can make better decisions on your investment decisions. 

For example, If you are young and have time to invest slowly in secure products that will grow consistently over the long term? However, if you have to catch up and grow aggressively and increase your income then you can choose your investment assets.

You can calculate your risk capacity by taking the risk profile test 

“The biggest risk of all is not taking one.” — Mellody Hobson

4. Set your Investment Goal, 

Your goals can be determined by your age, your risk profile, or your reason for investing.

Once you know your risk profile, then you can know your investment goal i.e. if you want to invest conservatively, invest for income, moderate growth, or aggressive growth. 

 For example, If you are young and have time to invest slowly in secure products that will grow consistently over the long term? However, if you have to catch up and grow aggressively and increase your income then you can choose your investment assets.

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source: https://www.ioa.com.au/understanding-risk-return/

5. How much do you need to start? 

If you have little money to start, you can start with secure platforms like money markets and treasury bills. These products do not require large amounts to start and these assets guarantee the safety of your investment, you are not likely to lose your money. 

You can start a mutual fund with as low as Kes. 1,000, most minimum amounts in the market are Kes. 5,000

6. How do you choose the investments?

If you’d prefer hands-on investments, you might prefer to open a CDSC account, do your research, and with the help of your stock brokers you can hand-pick your shares to invest in. 

If you would like to start investing in shares but you have no or little knowledge or you don’t want the burden of picking and choosing investments, you might start investing with a robo advisor like the SIB robo advisor   https://www.sib.co.ke/fourfrontmanagement/ These are automated investing platforms that help you invest your money in pre-made, diversified portfolios, customized for your risk tolerance and financial goals.

You can also opt to appoint a financial advisor who understands your goals and can help you both choose and manage your investments over time. 

7. How to balance my investment portfolio?

Your investment portfolio can have a variety of assets like stocks/shares, real estate, unit trusts, mutual funds and index funds, commodities like gold, cash, annuities, life insurance, and even cryptocurrency.  

To spread the risk in your portfolio, you have to diversification your investment to avoid putting all your eggs in one basket. 

“Invest for the long haul. Don’t get too greedy and don’t get too scared.”   Shelby M.C. Davis

Invest in different industries, know what season is good for your investment, for example, invest in telecommunication during covid and avoid tourism during that season. 

Balance the percentage you invest in various options depending on your goal. If your goal is to grow aggressively then your portfolio may have more high-risk assets like shares, then low risks like bonds, and vis-versa. 


Investing wisely means you have to do your research. Only invest in what you know. Stay on top of what is going on in the market so that you can take advantage of your business acumen.

If you can’t explain it simply you don’t understand it. Warren buffet

investing is a long-term endeavor and you’ll reap the greatest benefits by consistently investing over time. 

Sticking with an investment strategy for some time to let it grow and gain rewards. 

Take advantage of compound interest. Do not put your money where it is earning no or little interest. 

Are you ready to make the leap into investing? It’s easy to start today by contacting us for financial advice.