Having shared with you some simple strategies that
you could adopt to insulate yourself against the foreign exchange risk as a way
to navigate the vitality of the shilling, we acknowledge that it is indeed
prudent to consider how individuals can navigate the shilling vitality.
Avoid sleeping money
The
shilling volatility causes uncertainty in the money markets which has a
tendency to induce inflation. The only way to respond is to ensure that one
does not have money that can be said to be asleep. Consider money to be asleep
if it is giving you no return or if it is giving a return below the inflation
rate. It would be exciting to know that the mattress bank has no customers.
5 Simple Strategies to Manage Foreign Exchange Risk
Seek returns that beat inflation
Investments
giving a return below the inflation rate are practically generating results
that cannot preserve capital. Though it is true that the higher the return an
investment promises the higher the risk associated with the investment, may be
these are times to have an appetite for a higher risk to survive the
volatility.
Foreign Designated Accounts
Just as
we have stated for enterprises it is also possible for an individual to hedge
the volatility risk by opening a foreign exchange , say US dollar, account and
move to it money that may need to be held in liquid for periods below two years.
Off-shore investments
If the
interest is not to hold the money in cash for a while then off-shore investment
may be a choice for those who want to invest as they navigate the volatility.
There are a number of institutions locally that specialize in off-shore
investments and contacting them is not a bad idea.
Increase regular contributions amounts
For those
who insist home is best then it will be desirable to increase the amounts of
regular contributions, say to the investment club or Sacco to counter the
effect of the time value of money which is obviously impacted by inflation
originating from the volatility.
Consider having a local taste
In a country like Kenya with a growing middle class
it is not uncommon to get people who have an eye and a taste of imported
commodities. A dwindling shilling means imports will continue to be more
expensive. Unless a person has reason to want to buy more expensively it should
be agreeable that our industrial products are world class generally and that
explains why they are popular in our neighbouring countries. Having a taste for
local products be they clothing, toiletries, construction equipment, food
stuffs, beverages and anything else you can think of then it looks paramount
that we consider acquiring a local taste. The Kenya Association of
Manufacturers has a tag line ‘ Buy Kenya
Build Kenya’. What a good time to find our patriotism. Navigating the Shilling Volatility
If you need more help, ask us about the Wealth
Creation Masterclass where such concepts are taught.
Wealth Creation MasterclassSeason9 Come & See reactions
29th September 2015
“ Thought provoking, intriguing and practical content delivered in a well thought out and effective method.” Julius Mwaniki Nganga
“It was an eye opener. Very interactive. It has really helped me in terms of my finances.” Mary Muthoni Muritu-Mwaniki
“ Great class. Glad I came. Have learnt so much and am looking forward to joining the next class” Lisa Muthoni Kabua
Wahome Ngari – Principal
Consultant/ CEO, Citadel Consulting Ltd -wahomengari@citadel-africa.co.ke
Feel encouraged to follow us on Twitter @WCmasterclass, on Facebook, listen to our podcasts, or watch Wealth Creation Master Class testimonies. Sharing is a sign of caring... share our content with your relatives and friends.
No comments:
Post a Comment