How I Made 2M while Doing Nothing / Lessons!

Well, not exactly nothing but still pretty significant. In mid-2021, I was looking at ways of parking my money and still earn some sort of interest. High Yielding Savings Accounts were an option but at the time, I was earning a meager 3.5% interest from my Marcus High Yields savings account. This was too low in my opinion although still much better than other regular savings accounts in the market. I’m told SOFI has a way better yield.

The other option was buying index funds such as VOO and VTI. It’s always the right choice if you’re in the market long-term. However, I wanted real cash flow (passive income) and so I took about $70k USD and bought two separate dividends paying margin call ETFs at a 50:50 ratio. Among those ETFs were RYLD and JEPI.

For the past 2 years, the average dividend rate for both has been 13%!!!. Basically, each month since June 2021, I’ve been passively making about $750. This would be followed by a straight wire to my Kenyan bank account.

Today, I checked my KCB balance and it’s at 2.3M KESH. The good thing is that I have no access to that money since I can’t exactly access my account from the USA (I checked the balance by calling KCB).

This got me thinking, if I wanted to build flats, that would cost me about $300,000 and the construction time would be about 1 year. Afterwards, I’d have to get a care-taker, and with other associated expenses of owning a rental flat, the returns would be much lower. Even if the apartment (at full occupancy) gave me 400,000, I’d get maybe 300k clean money in my pocket every month 1 year after starting construction so maybe about 240,000 after taxes if I lied to KRA a little.

However, if I took the $300k and put it all in an ETF like JEPI earning about 12% annually in dividends then I’d make about 400,000 every month stating from year 1 at a 15% tax rate. This evens out at 340,000 EVERY MONTH outperforming a full to capacity rental in the most populated estates of Nairobi like Githurai, Pipeline, Kitengela etc WITHOUT LIFTING A FINGER.

What am I saying? The $300k would still be almost intact (maybe even say a 10% drop in value of the ETF) and I’d still pocket the returns.
Now, I don’t know whether you can buy American or Canadian ETFs in from Kenya but if you can, it’s worth a try.

Clearly, earning about 350k monthly without the stress of KRA, tenants, incompetent care-takers etc is more peace inducing than putting up flats any day anytime.

It’s important that we consider alternative investment vehicles. Two goals for me going into mid 2023:

  1. Increase my holdings in margin call ETFs like JEPI

  2. Get into the Kenyan banks bandwagon of buying shares {NCBA, Equity, Standard Chartered etc}. Something I’ve noticed is that banks are making a killing in Kenya and earnings per share could be as high as 35 KESH!

Why doing 2 could make me a few extra millions in the next 3 years BEFORE the elections:

  • It all started with the Central Bank of Kenya. Many years back, CBK hadn’t introduced capped interest rates for individual borrowers and as such, banks LOVED lending to individuals. Around that time, the outgoing CBK governor imposed capped interest rates on banks which meant that lenders preferred giving money to the gov’t via bonds/ instant loans / checks to the exchequer etc etc because they could no longer make money off of individuals anymore. It was at that time that banks continued making crazy money. Eventually, the CBK governor removed capped interest rates but it was too late for banks had realized that doing business with the gov’t is much more lucrative than with the Wanjikus and Jua Kali folks aka peasants

  • Because of the previous point, profits soared like mandazis and as a consequence, earnings per share increased dramatically keeping shareholders happy! Ask yourself this question, why is every kikuyu with some knowledge of banking starting a SACCO? It’s simple, you can make SOME money and then eventually BECOME A BANK or get bought by a bank! Basically, in Kenya, the next billionaires are always minted from the financial services industry. Case in point, you only needed about 25M payable to the CBK to start a bank about 15 years ago. That figure now stands at about 100M+ I believe. They’ve made it HARDER to enter this business. When I found out how lucrative the banking sector is, I started toying with some ideas until I realized that I’d eventually have to start with a SACCO like every other kikuyu. For you to understand how lucrative the banking sector is, it’s important that you familiarize yourself with KCB’s acquisition of national bank, CBA’s acquisition of CBA bank, Equity’s acquisition of Spire Bank etc etc. I could go on and on.

Long story short, there’s a banking boom in Kenya and I seriously believe that it’s the next frontier. New money billionaires will come out of this sector. Don’t believe me? Well, just look at the highest paying dividends in the market today. It’s all financial services…….Kenyans love borrowing. GOK loves it even more. The other sector is insurance but I don’t have enough knowledge to make any reasonable conclusions.

Bank shares to buy:

  1. Standard Chartered

  2. I&M

  3. Stanbic Holdings

  4. Equity

  5. NCBA

  6. Diamond Trust

Let’s go!

NB: This is not financial advice. Opinions are my own.

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63 billion Ksh paid out in the last financial year in dividends

So how does one buy into these from kenya?

Good question

teach me your ways .How do I start . And also what do you think of the current crypto market climate especially with Blackrock entering the market , There has been a surge in crypto ever since the news last week.

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