CountPesa helps you see where your money goes. But knowing where it went is just step one.
This is about where it should go next.

A Bit of a Backstory

Earlier this year, I built a simple chrome extension that can grab the full content of any web page and paste it into an AI chatbot of choice at the click of a button. So for example, if I clicked the extension while on this page, the article would be grabbed and put into ChatGPT, along with instructions I had set telling ChatGPT how to process it.

Yesterday, while I was on Telegram browsing posts from one of Kenya's popular personal financial advisors, an idea crossed my mind. Why don't I dump all this content into ChatGPT and ask it to share with me the recurring insights?

The channel was Gichuki Kahome's. What I like about his content is it emphasizes practical, Kenya-specific advice while incorporating global best practices where appropriate.

I scrolled up to January 2024, loading all the posts from then till yesterday, and clicked "Summarize". The extension opened ChatGPT on a new tab, pasted all the posts and gave me a breakdown of the recurring insights.

The derived insights were so rich, I thought I'd share them here.

1. Portfolio Fundamentals: What Actually Matters

Here's the foundation everything else builds on:

Liquidity and Cash Flow matter more than net worth.

You can own valuable land or real estate but lack funds for emergencies or opportunities. This is the "asset rich but cash poor" trap. The two most important elements of any portfolio are:

• Liquidity - How easily you can convert assets to cash
• Cash flow - Regular income your assets generate

As Gichuki puts it: "Cash flow is more important than net worth."

This might seem obvious, but it changes how you think about every financial decision that follows.

2. Four Things to Avoid With Your Money

Let's start with what NOT to do. These are the common traps that destroy wealth in Kenya:

1. Bank Savings and Fixed Deposit Accounts

   Savings accounts earn zero or negligible interest. Fixed deposits offer poor returns that barely keep pace with inflation. There are better alternatives for both short-term and long-term goals.

2. Education Policies and Endowment Policies

   These insurance-investment hybrids typically underperform. High fees and commissions eat into returns. A better approach? Set up a dedicated education fund instead - a fixed income fund with restricted access that actually grows your money.

3. Loans for Personal Cars

   Taking debt to finance depreciating personal assets is wealth-destroying. Cars lose value immediately while you pay interest on them. The exception? Income-generating vehicles might justify financing.

4. Using Chama as Your Only Savings/Investment

   Chamas serve a purpose, but they shouldn't be your sole financial strategy. They lack diversification and professional management. You also face limited liquidity and potential governance issues.

3. Money Market Funds in Kenya: The Right Way to Use Them

MMFs are misunderstood. They're excellent tools when used correctly, but terrible for the wrong purposes.

What MMFs ARE Good For:

• Emergency fund storage - Liquid and accessible when you need it
• Short-term savings - Preserving capital for near-term needs
• Sinking funds - Saving for upcoming expenses like holidays or insurance premiums
• Temporary parking - Between investments or while awaiting opportunities

What MMFs Are NOT Good For:

Here's where people get it wrong - using MMFs for long-term investing. Four reasons why this fails:

1. Easy Access = Easy Spending

   Frequent withdrawals defeat long-term wealth building. As Gichuki warns, this "could leave you with nothing after 10 years."

2. Average Returns

   MMFs barely beat inflation. They track interest rates and T-bill rates. Think of them as "a near-cash instrument - don't expect much from it."

3. Low Risk, Low Reward

   There's no potential for outsized gains. You can't build significant wealth compared to stocks, real estate, or crypto.

4. Lack of Diversification

   Long-term investing needs multiple asset classes to hedge against inflation, currency risk, and home-country risk.

Market Context: MMF returns normalized from pandemic highs of 18% back to typical 7-10% range as interest rates declined following CBK rate cuts.

4. SACCOs: Five Critical Facts Most People Ignore

SACCOs work differently than most people think. Here's what you need to know:

The Five Realities

1. Share Capital is Non-Redeemable but Transferable

   Your initial share purchase locks capital into the SACCO. You can transfer shares to another member but cannot withdraw them.

2. BOSA Account Savings Are Non-Withdrawable

   Back Office Savings Account funds are only accessible when leaving the SACCO. This is NOT your emergency fund.

3. Accessing Money Requires Taking a Loan

   To save = deposit money. To access = take a loan against your savings. This is fundamentally different from bank accounts.

4. SACCOs Only Make Sense If You Need Loans

   The primary value proposition is cheap, accessible credit. If you don't need loans, the returns may not justify the restrictions.

5. Two Account Types with Different Rules
   • FOSA (Front Office Savings Account) - Similar to bank accounts, earns NO interest, liquid access
   • BOSA (Back Office Savings Account) - Earns interest (called "rebates"), determines loan eligibility, non-withdrawable

SACCO Safety Considerations

Given recent scandals and fraud cases, verify:

• Proper licensing and regulation compliance
• Transparent governance structures
• Regular audits and financial reporting
• Strong capital adequacy ratios
• Clear loan policies and NPL management

Critical Warning: Never save emergency funds in a SACCO due to access restrictions.

5. Offshore Investing: Why It Matters for Kenyans

There are two powerful reasons to invest offshore:

1. Currency Depreciation Protection

   Ten years ago: 1 USD = 86 KES
   Today: 1 USD = 130 KES

   That's 51% currency devaluation eroding the purchasing power of KES-denominated assets.

2. Superior Market Returns

   The S&P 500 (the top 500 biggest companies in America trading as one investment. Think Apple, Microsoft, Google, Amazon, Tesla - all bundled together) has returned an average of 10.57% annually since 1957. Kenyan markets are more volatile with less consistent long-term performance.

Recommended Approach: Start investing in offshore stocks and ETFs (Exchange Traded Funds - Think of it like this: Instead of buying individual stocks, which requires research, timing, risk, you buy a basket of stocks all at once). This diversifies away from home-country risk, gives you access to global economic growth, and hedges against local currency weakness.

6. Kenyan Real Estate: The Unglamorous Truth

That's the key warning about Kenyan real estate. There are specific downsides to land investment despite its popularity.

Why Western Advice Doesn't Work Here

The common advice in developed markets is: "Use other people's money (debt) to build wealth." Take a mortgage, repay it with rental income.

This does not work in Kenya due to:

• High interest rates on mortgages
• Rental yields insufficient to cover mortgage payments
• High property development costs
• Market inefficiencies

Don't assume strategies that work in the US or UK will work here.

7. Bonds and the Bond Ladder Strategy

Bond Investment Considerations

When evaluating bonds, look at these key factors:

• Maturity Date - When you receive principal back
• Coupon Rate - Interest payment amount (generally higher for longer-term bonds due to credit risk)
• Coupon Payment Schedule - Semi-annual payments on predetermined dates
• Yield Curves - Sometimes inverted, affecting rate strategy

The Bond Ladder Strategy

This is Gichuki's preferred approach, especially for retirees: Structure bonds with staggered maturity dates. This creates predictable, regular cash flows and mitigates interest rate risk through diversification.

As he puts it: "I would prefer this over rentals any day."

Why? Steady income without property management hassles.

8. Nairobi Securities Exchange: Active Management Required

"The NSE is not a place to 'buy and forget' your shares."

Active management is required. High volatility demands attention. This is different from Western buy-and-hold strategies. The Kenyan market doesn't reward passive investing the same way developed markets do.

9. Macroeconomic Context (Kenya, January 2025)

Understanding the broader economic picture helps you make better decisions:

• Inflation: 3.3% (up from 3.0% in December)
• Credit Rating: Moody's Corporation (a global credit rating agency - think of them as the people who give countries and companies a "financial report card.") upgraded Kenya's outlook from negative to positive
• Foreign Exchange: Continued KES weakness vs USD

After the CBK cut rates by 0.5%, there was a rush to lock in rates before further declines:

• T-bill auction bids reached KES 71B (highest in 11 weeks)

• 91-day: 9.52% → 9.11%
• 182-day: 10.02% → 9.51%
• 364-day: 11.31% → 10.75%

The Cash Reserve Ratio (CRR) cut released KES 57B in extra liquidity. The big question: Will banks lend more or continue preferring T-bills?

10. Investment Asset Classes: Strategic Allocation

Here's what you should consider for your portfolio:

• Offshore stocks
• ETFs (Exchange Traded Funds)
• Real Estate (with the caveats mentioned earlier)
• Bitcoin/Cryptocurrency
• Gold
• Local stocks

Gold recently hit an all-time high and was up +13.67% Year-to-Date during the content period. It performed well while other assets tumbled during Trump tariff uncertainty. Recession fears drove safe-haven demand.

Gichuki says, he is yet to find a reason why a retail investor should ask: What stocks should I buy? The modern question is: "Which ETFs should I buy?"

ETFs reduce single-stock risk, provide professional diversification, and lower your research burden.

11. Saving vs Investing: Know the Difference

Saving

• Short-term horizon
• Highly liquid instruments
• Near-cash or cash equivalents
• Capital preservation focus

Investing

• Long-term horizon
• Can involve illiquid assets
• Growth and income focus
• Accepts volatility for higher returns

DO NOT confuse the two!

12. Behavioral Finance: The 30-Day No-Spend Challenge

Gichuki calls this the "smartest financial strategy" - especially for January.

It's a psychological trick: being "broke on purpose." This forces spending awareness and resets consumption patterns after the holiday season.

"Works like a charm!"

The psychological principle: Creating artificial constraints that you control feels different than actual scarcity, making discipline easier.

13. Tax Optimization: Legal Strategies

He shared a video he did on "Tax Secrets of the Rich" which explores legal tax reduction strategies - not evasion.

As Gichuki notes, taxes are "the biggest expense we pay in our lifetime."

It references how the rich like Equity Group's CEO, Dr James Mwangi, Elon Musk and Warren Buffett manage tax burdens.

And gives actionable advice on legal optimizations the rest of us can use.

14. Financial Literacy Education

Money Mastery Masterclass

Gichuki offers monthly cohorts with curriculum covering:

• Personal finance management
• Financial markets investing
• Portfolio construction
• Asset allocation strategies

The format is cohort-based learning with early bird pricing.

Additional Educational Content

Regular X (Twitter) Spaces sessions and YouTube videos on:

• Real estate truth in Kenya
• SACCOs deep dive
• Land investment cons
• Bond ladder strategy
• Money Market Funds explained
• Tax optimization

15. Asset Allocation By Age

He shared an article: "How Should Your Allocation Change With Age?"

I checked it out and it's definitely worth the read. Here's a hint of what it's about:

Life stage considerations:

• 20s: Focus on career growth, building good habits, and experimenting with risk tolerance due to smaller investment amounts.
• 30s: Plan for significant life events (weddings, home, children) by setting aside cash or cash-like assets for short-term needs, or adjusting portfolio risk.
• 40s and 50s: This period often involves peak liabilities, so take precautionary measures like increasing emergency funds, ensuring adequate insurance, and potentially reducing portfolio risk.
• 60s and beyond: Allocation becomes highly individualized, depending on personal goals, wealth, health, and desired legacy.

Ultimately, your allocation should be based on your unique life circumstances, risk tolerance, income, and spending, rather than a one-size-fits-all age rule.

16. Common Investment Mistakes to Avoid

He had a post on "How Not to Invest" emphasizes that avoiding blunders is more important than finding perfect investments.

Three Critical Mistakes

1. Emergency Fund in Wrong Vehicle
   • Never in SACCO (illiquid)
   • Never in banks (no returns)
   • Use MMFs instead
2. Long-Term Investing in MMFs
   • Inflation barely covered
   • Opportunity cost of real growth
   • Easy access encourages spending
3. Wrong Account for Wrong Purpose
   • Bank fixed deposits for savings
   • SACCOs for emergency funds
   • Chamas as only investment

17. First-Job Financial Wisdom

What people wish they knew earlier:

• Start emergency fund immediately
• Understand employer benefits fully
• Begin investing early (compound interest)
• Avoid lifestyle inflation
• Learn about taxes and deductions
• Don't confuse salary with take-home pay

18. Kenyan Financial Market Ecosystem

Products Available

• Treasury Bills (91, 182, 364-day)
• Infrastructure Bonds (IFBs)
• Money Market Funds (KES and USD denominated)
• SACCOs (FOSA and BOSA accounts)
• Listed stocks (NSE)
• Offshore access (stocks and ETFs)
• Gold investments
• Bitcoin/crypto

Regulatory Environment

• Central Bank of Kenya (CBK) - Monetary policy
• SACCO Regulator - Cooperative oversight
• Capital Markets Authority - Securities regulation
• Moody's and international rating agencies - Sovereign credit assessment

Key Philosophical Themes

As you work through all this information, keep these principles in mind:

• Context Matters - Western financial advice doesn't always apply to Kenya
• Liquidity is King - Access to cash trumps paper wealth
• Know Your Why - Every financial vehicle serves specific purposes
• Active vs Passive - Kenyan markets require more active management than developed markets
• Currency Risk is Real - Offshore diversification protects against local currency erosion
• Education First - Financial literacy precedes financial success
• Behavioral Awareness - Psychology often matters more than strategy

Just to be clear, this was an AI assessment. It definitely doesn't capture everything and mistakes could have been made. But after personally going through it, I firmly believe it is worth sharing either way.

What strikes me most is how much of this directly contradicts some of the beliefs I personally had about investing - and how much sense it makes once you understand the local context. How I wish this was taught in our schools.

At the end of the day, personal finance is very personal and it is advisable to do your own research, educate oneself and avoid blindly following another's advise. What applies to you and your situation might not apply to another.

But I definitely recommend his channel. He posts almost everyday if not daily on matters Kenyan personal finance to investments. It's really been a good way for me to keep up to-date with financial news, opportunities and reality checks.

Telegram channel: https://t.me/personalfinancetoinvesting