Alternatives to Investing in Property
- 05-04-2021
- By Yasfinder
Many Real Estate investors are busy people, with little or no time to run other full-time businesses for that extra cash they need to secure their future better. Whereas Real Estate is one of the best passive income opportunities that exist today, there are other passive income opportunities for those who do not have the passion for real estate, or those who want to diversify, and are looking elsewhere.
Here are some passive income alternatives to Real Estate.
1. Unit Trust
Unit Trust is like a chama (pooled investments). It collects money from different investors into a single fund and invests that money in different securities such as bonds and shares depending on the objectives of the fund.
CIC unit trust scheme has the largest portfolio (27.5 billion) followed by Britam unit trust scheme (8.72billion), ICEA unit trust (8.01 billion), CBA unit trust (6.95 billion) Old mutual unit trust (6.28 billion), and Africa Alliance (2.01billion).
Others include Sanlam with assets worth (2 billion), Madison asset unit trust (1.59 billion) Dry associates(1.62billion), and Zimele (1.06 billion)
Others with assets below 1million include Cynton equity investments, Apollo and Co-op trust.
The funds are managed by a fund manager who is expected to report to the Capital Markets Authority where they intend to invest the money and how they arrived at that decision. This is to protect the investors from losing their money. Some fund managers collude with third parties to swindle investors or make poor investment decisions.
There’s also a custodian who holds and safeguards the assets. It’s usually a bank or a financial institution given the mandate by the Capital Markets Authority to carry out this role. They receive instructions from the fund manager on where to invest the money.
The Trustee has the best interest of the investors. They act on behalf of the investor and makes sure the fund manager sticks to the objectives and goals of the fund. If they are not comfortable with how the fund manager is running the fund, they report to the CMA.
There is a management fee that usually ranges 1-3% of the fund balance annually.
There are four types of unit trusts you can invest in:
Money market fund – this is a short-term investment usually for periods less than a year. Its primary objective is to earn interest for the shareholder.
Balanced fund – It combines a stock component, bond component and sometimes money market component in one portfolio.
Equity fund – Only invests in stocks and can be actively or passively managed.
Bond fund – Primarily invest in bonds and other debt instruments. The kind of debt a fund invests in depends on it’s objective.
There are regulations that have been put in place to protect the investors, but it’s important that the investors do their due diligence and evaluate the viability of an investment.
According to the classic book “The Richest Man In Babylon, by George S. Clason” 10% of all you earn should be invested in a well evaluated, researched low-risk investment vehicle. Invest and reinvest the proceeds and only eat the great-grandchildren of the initial investment. Unit Trusts are usually sure (safe) investment options, particularly the Money Market fund.
Try bismart.co.ke, where you will get advice on which fund to invest in, and answers to every question you may have on investment in Unit Trusts.
If you start early, you will reap the benefits of capital gains. Start now and reap tomorrow.
Here are some passive income alternatives to Real Estate.
1. Unit Trust
Unit Trust is like a chama (pooled investments). It collects money from different investors into a single fund and invests that money in different securities such as bonds and shares depending on the objectives of the fund.
CIC unit trust scheme has the largest portfolio (27.5 billion) followed by Britam unit trust scheme (8.72billion), ICEA unit trust (8.01 billion), CBA unit trust (6.95 billion) Old mutual unit trust (6.28 billion), and Africa Alliance (2.01billion).
Others include Sanlam with assets worth (2 billion), Madison asset unit trust (1.59 billion) Dry associates(1.62billion), and Zimele (1.06 billion)
Others with assets below 1million include Cynton equity investments, Apollo and Co-op trust.
The funds are managed by a fund manager who is expected to report to the Capital Markets Authority where they intend to invest the money and how they arrived at that decision. This is to protect the investors from losing their money. Some fund managers collude with third parties to swindle investors or make poor investment decisions.
There’s also a custodian who holds and safeguards the assets. It’s usually a bank or a financial institution given the mandate by the Capital Markets Authority to carry out this role. They receive instructions from the fund manager on where to invest the money.
The Trustee has the best interest of the investors. They act on behalf of the investor and makes sure the fund manager sticks to the objectives and goals of the fund. If they are not comfortable with how the fund manager is running the fund, they report to the CMA.
There is a management fee that usually ranges 1-3% of the fund balance annually.
There are four types of unit trusts you can invest in:
Money market fund – this is a short-term investment usually for periods less than a year. Its primary objective is to earn interest for the shareholder.
Balanced fund – It combines a stock component, bond component and sometimes money market component in one portfolio.
Equity fund – Only invests in stocks and can be actively or passively managed.
Bond fund – Primarily invest in bonds and other debt instruments. The kind of debt a fund invests in depends on it’s objective.
There are regulations that have been put in place to protect the investors, but it’s important that the investors do their due diligence and evaluate the viability of an investment.
According to the classic book “The Richest Man In Babylon, by George S. Clason” 10% of all you earn should be invested in a well evaluated, researched low-risk investment vehicle. Invest and reinvest the proceeds and only eat the great-grandchildren of the initial investment. Unit Trusts are usually sure (safe) investment options, particularly the Money Market fund.
Try bismart.co.ke, where you will get advice on which fund to invest in, and answers to every question you may have on investment in Unit Trusts.
If you start early, you will reap the benefits of capital gains. Start now and reap tomorrow.
