Investing for now and the future Co-op Trust

Investing for now and the future Co-op. Trust Investment Services Presentation by Lydia Muchiri 26 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 6 mths 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 -27 yrs High Low High risk Newly married 28 -32 yrs High risk With children 35 -50 yrs High Medium Moderate to Low Pre retirement 50 -57 yrs Low High Low to Zero Post retirement 60+yrs 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 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

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 ? ?