Codex

So today am seated in one of those Integrity buses from Ngumba to town at my favourite seat in the matatu, the second last seat on the right next to the window. This counts as one of my best times of the day as long as I have neither forgotten my earphones somewhere nor my old Huawei phone shows a red label indicating a 5% battery charge and for the third time I am repeating the thing around your neck just for my brain’s sake. Just switching off the world alien to me and squinching into my own little world beneath thick layers, thicker layers and thickest layers of them all just for that quite reminisce about everything that could be or not be of this the mystery, we all call life. My novels and playlist help me out a great deal. The truth is I don’t think am ever in the real world 85% of the time. Ask the people around me. Nonetheless, today I decided to open Why Poor Nations Fail, a book I purchased awhile back but I have never had time to read it. Mind you, it’s 0615hrs, and I am unemployed, what can I say? the girl likes to read and sit in matatus. I decided to just wake up at dawn just to watch the sun rise today whilst travelling to town. However, a true Nairobian will tell you, it is to avoid the gargantuan jam at Thika road that burgeons in the morning specifically just before the steep hill after all-soaps and another after Ngara, only to abate after hours of forbearance. It’s torture I tell you. Maybe that explains why many people in Nairobi tend to be overly rough especially when it gets to that point in time when the matatu actually stops at the stage. You actually come to the realization of old is just a state of mind when an old chap with a walking stick actually pushes you off-balance with his humongous body with no apologies whatsoever only to trip and knock on a youngster beside who immediately utters a few cursing words with what-the-hell-is-your-problem kind of look. At this point your only mission is just to get the hell out of the matatu to remind the tout already standing outside to give you back your change before he disappears, a problem I have always had to deal with day-in, day-out. Finally, I am able to get outside though with my black, leather boots already covered in other shoe-prints after being stepped on by the other passengers earlier. At least the tout is still around. I remembered his face. Nowadays I make it my mission to recall the conductor’s face just until I get my change back. This was not that bad, it could have been worse. It’s June, the sixth day of the month, a day I get to remember Robert Kennedy, not that I am such political but cause I actually think he remains an icon of modern American liberalism. Talk of the heights of Americana in me. I have digressed so much, so let me share what I was able to get out of the book; which I could mostly relate to as a poor graduate. For all poor graduates out there this is for you. Investment. I repeat, Investment. This is the key to a future. This is what the Kenya’s Kirubis, the Nigeria’s Dangotes, South Africa’s Oppenheimers, Egypt’s Sawiris, Angola’s Dos Santos, Algeria’s Rebrabs and Rwanda’s Ayabatwas, just to name afew, don’t share with you. Investment is what we lack. i.e. substituting today’s consumption for tomorrow’s returns, in a layman’s tongue. The difference between poverty and prosperity is property. So then, most of us are poor. Not because we don’t have money, but because we have no idea of how well to use it. When it comes to money let’s be smart. Let’s borrow money to do great stuff. Do not borrow money to buy fries and chicken at Kenchic or that designer jeans from Woolmart or even that pizza you’ve been craving for. This is what I call the Nairobian syndrome. Let me share with you a story especially for those of us who are ready to take that one step in investment, In March 2009 the sky was falling on investors. After losing nearly half its value in six months, the Dow Jones industrial average was languishing at its lowest point in more than a decade. Down with it went the life savings of countless people. Many either bailed out or stood frozen, unsure what to do, like deer blinded by blazing, mortgage-backed headlights. What a difference two years make. Bold investors have been handsomely rewarded of late, with the Dow nearly doubling since its 2009 low. Attitudes have improved with it, and many investors are once again cautiously embracing risk. If there’s a lesson for first-time investors here, it’s this: With stocks returning an annual average of roughly 8% over the past century, it’s clear that patience and intestinal fortitude are often rewarded. That alone should serve as sufficient motivation to those getting started in their careers to begin building a long-term stake in the market. It’s important to note, however, that doing some up-front homework could save you thousands of shillings down the road. Before opening an account, make sure you have a cash cushion to cover unforeseen expenses, like a sudden trip to visit a sick relative, or a major car repair. A good rule of thumb is to always have six months’ salary in savings, as seconded by Charles Rotblut, vice president of the American Association of Individual Investors. For unemployed like me, we could do something like KES 5000-10000 given the limited liquidity constraints and depending on someone’s pocket. The key for us is to think what would happen if we never get those jobs nor salaries or how long we think it might take to get a new job, particularly in this Kenyan economy. Consider keeping up to a year’s worth of salary in cash or cash equivalents on hand if you think there’s a good chance you’ll need it–reasons include chronic health conditions, plans to have children, or employment in an extremely unstable industry especially with coming elections in 2 months. Once you’ve set up your emergency fund, check on what sorts of retirement accounts are offered at work (for the employed). If your employer offers to match your contributions, make sure to contribute enough to receive the maximum. Only after taking these two steps should you move on to opening a brokerage account. Before opening an investment account, it’s important to ask yourself what sort of investments you want to own. If you want to buy stocks and exchange-traded funds, you’ll need a brokerage account. Online brokerages are a good place for many new investors to begin. Most offer low costs, lots of educational tools and some degree of hand-holding. Steve Juetten, a financial planner in Bellevue, Wash, recommends Fidelity or Charles Schwab . Other solid choices include TD Ameritrade , E*Trade and Scottrade, and many of these outfits have bricks-and-mortar locations as well. If you have a fairly low balance, make sure you won’t get clipped for maintenance charges or other monthly fees. If you plan to trade frequently (not something I would recommend for a starter), look for a firm that offers low trading commissions. In some cases, as with Schwab, trades in the firm’s own ETFs may be entirely free (ETF management fees will still apply). Look for perks too; many brokerages offer free checking and bill-pay services, as well as debit cards that allow you to make purchases from a money market account. Once you’ve transferred money into your brokerage account, it’s time to start building your portfolio. Numerous studies indicate that investors who set up a desired asset allocation and focus on maintaining it at a rock-bottom cost tend to outperform those who swing for the fences and incur high expenses and taxes as a result. Academic studies have shown that passive beats active because of the costs associated. Especially for young investors like us who may not have as much to invest to start with, every shilling that can be invested and compounded by us now is even more valuable. If you’re interested only in owning mutual funds, you might not need a brokerage account at all. Instead you can buy funds directly from companies like Fidelity or Vanguard without establishing a brokerage account (many mutual fund firms offer the same planning and money management tools as brokerages at no cost to account-holders). No-load (sales charge) fund families allow you to trade in-house index funds with no up-front fees and with on-going expenses that are highly competitive. Fail to pay attention to fees, however, and you can easily end up paying 10 times as much, or well over 1% of assets annually, to own very similar funds. Just as it can be self-defeating to get too fancy with investing, you can give up a golden opportunity to put your money to work for you if you let it sit idly on the side-lines. Provided you take the necessary precautions, an online brokerage account can be a great place to start. Guys, we are still young, that means we have a long investment horizon to give a huge consideration to the risks involved in an investment. Huge timeline to fall and rise before time catches up. Blessed Week.