Group investing among millenials is an easier way to become homeowners

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“It was not raining when Noah built the Ark”, this is a popular saying coined by Howard Ruff. It is a call to prepare yourself for a future occurrence by ensuring that you are well equipped to handle it better and get through it more easily.

Majority of Kenyans begin looking for housing and investment opportunities when they are over 30 years. This is the time they begin to look for properties near their businesses and places of work.

In summary; • 74.4% of persons employed in the formal sector in Kenya earn US $496  and below per month. • Chama investments is an easier way for young people to pool resources. • Youth groups can target agricultural rich areas such as Nakuru, purchase land and venture into agriculture to create a constant food supply and ultimately gather enough profits to build their own homes. • Group contributions should not lie idle in a bank account rather they should be invested in an asset such as land that appreciates by the day.

Need of massive housing

This pressure results to the need of massive housing especially to the young population aged between 25-35 years; they begin looking for affordable land they can turn into homes. However, at this age the available properties in the market are expensive and un-affordable to them.

This crisis has been experienced in Kenya and it resulted to the launch of the Affordable Housing agenda late last year. To solve this crisis 500,000 housing units are set to be built by the government. It is time we encourage young people to embrace Group/Chama investments early in life because it is an easier way to pool resources for land investment before the age of 30 years.

Investment groups

Investment groups are formed by individuals who pool their funds to invest together on a consistent basis. They come up with strategies of ensuring that each member benefits from the investment they agree to undertake. This is an excellent way for young people to begin investing, they may agree on the amount of money to contribute to achieving a common goal.

In Kenya, for example, young people may agree to purchase a piece of land in an area such as Nakuru and venture into agriculture for a beginning and later engage in the construction of their own homes and settle their families. 74.4% of persons employed in the formal sector in Kenya earn US $496  and below according to The Kenya Bureau of Statistics. Some of those who earn this amount are able to invest as an individual. However, it is easier to invest as a group because of lower investment risk.

A group provides multiple shoulders to lean on and help carry the burden of investment. For example, a group of 10 young people may agree to share different roles when implementing a project such as agriculture where some can work on the farm while the rest go out to market their products.

Shared responsibility

This creates a shared responsibility rather than having a single investor managing the whole investment. A group also provides an opportunity to brainstorm the different ideas that may be implemented as compared to individuals where you have no one to challenge the viability of your idea. Investment groups also cultivate a culture of saving among the millennial.

The small contributions made by individuals in a group will gradually create a culture of saving among them and if they decide to invest in land they can easily be turned into homes or for commercial purposes that will generate income for the group members. This will prevent the last minute rush to acquire properties when old age has already knocked in.

Financial planning is also well cultivated in groups due to existence of rules that ensure the members adhere to their contributions either on a weekly or monthly basis. This inculcates a culture of financial discipline that ensures the continuity of financial planning even in old age. In real estate, for example, the returns are assured in short and long term.

Real estate companies

Real estate companies have identified the strengths that lie in groups and you find some giving an attractive offer for groups who purchase a certain number of plots, for example, buy 10 plots and get 1 free.

This is a clear indication that the contributions made by these group members are millions but they have not been put to productive use. It is therefore important to join a group that you share a common vision such as a group that aims at purchasing land or construction. This will ensure that your contributions are not in a bank account, rather, the money is invested in an asset such as land that appreciates by the day.

In conclusion if young people target an area such as Nakuru and invest in land as a group, it is easier for them to venture into agriculture and create self-employment. This could be in poultry keeping, potatoes, vegetables, peas etc. and create supply to Nakuru Town which is massively growing due to infrastructure and population growth.

Gradually they will have pooled enough resources to widen their investments and venture into the construction of their individual houses. This will ensure that they are well able to settle in their own homes without having to rent for longer periods of time. The author Reuben Kimani is the CEO, Username Investment Limited.

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