Thanks for taking part of your time to eduacet the little knowledege you have. God bless you. Waiting for the next post

Thanks Marty for your smart pieces.....I think its very important to run your projects on the side while we are still in employment so that when we retire there is a smooth transition.Most of our folks,uncles etc waited until they retired then they started doing small businesses and farming.Since they were not used to this activities they usually failed or were not done with passion.

Mwalimu Marty sounds like that activist...anyway I like the name. Sad about this case, but I can assure you they are all over

They will give you a wheelbarrow after 30 years of Loyal Service

We all would want to live our sunset years at peace and enjoying the money hard earned during our more youthful years. Picture watching your grandsons and daughters grow and letting your sons and daughters live comfortably without having to bog them down with your needs. Sounds good but it is not always rosy for majority occasioned by very poor planning, if any planning at all. Majority of Kenyans become dependants at old age when poor health takes a toll on them and all they can do is reminisce of the good times, recount unfulfilled financial goals and blames it on their kids, after all they utilized all the money as you educated them, clothed them and provided food for them. Sounds logical to say that they are the ones who ensured you never got rich, mind you it is a God given responsibility to take care of them. The expectation of people with such a mentality is that when the kids do well, it is payback time and they must take care of you during old age. However, we all know that it is not always the case especially when your kids start to see you as a liability.

So what do we need to do to prepare well for retirement?

1. Understand that the Pension that you shall get (if any) will be of minimal value by the time you receive it and it will only help you keep afloat. I know of a guy who was a provincial prisons commandant (quite a big post) and all he got as lump sum payment for pension was a mere 2M and he receives monthly pension of 20k after working for 30 years. For such a guy, having not invested or even built a family house, his idea was to go to shags and use to 2M to build a house and survive on the 20k monthly pension for recurrent expenditure…wow.. What I know is that by the time you receive your retirement package (many years down the line), the amount will have been eaten up by inflation such that the value will be so minimal, and you won’t believe it. So quit relying on this amount…it should only complement your other cash if at all you’ll wait to retire at 55 years.

2. Big Mistake: You retire and assume that you shall start a business that will keep you busy and earn you some cash? At least we know from some earlier posts that 90% of businesses fail within their first 5 years….you need lady luck to smile at you to succeed in your first attempt on business at 55 years. Succeeding on this one is like the proverbial camel going through the eye of a needle story…unless you success is written high up in the stars (one in a million chance). So brother /sister, start doing business as early as you get a chance, in your early years you can afford to fall flat in your first attempts, dust yourself and rise up…after all business is not for the faint hearted.

3. Don’t you underestimate the power of saving and investing and especially when you are young and have all the time in this world. Picture saving consistently 5k per month (very modest) for 20 years…..simple calculations add to 1.2M …now assume you save 5k per month for the first 5 years, 10k per month for the next 5yrs, 20k per month for the next 5 years and 30k per month for the last 5yrs…..adds up to 3.9M…

Suppose then you introduce the element of investing you savings above…even if you got a modest profit of 25% per annum on you investments …compounded…I don’t want to imagine how the figures would be….20M…30M..50M perhaps.

Surely, you must do something..be it stocks, unit trusts and Treasury Bills..whatever..but so something

4. Remember how important it is to buy appreciating assets… I once bought a plot in Syokimau like 10yrs ago at 80k..back then there were wild animals. But where did the wild animals go to…Imagine if I bought like 6 plots at the same price. I hear the current price could be 1.5M…*6 = 9M ….sounds juicy.
Go to Maasai land….where you can get an acre at 30k and hold for 10 yrs. They might label you a speculator..whatever.. but it is the forces of demand and supply in our crazy world of real estate that makes you the money…fundamentals notwithstanding.

5. If you are able, you might get to this level where you have some rental units. It is not so hard. Somewhere in your working life, you can afford to take a big loan, buy a nice plot somewhere. Even if it means doing a single unit per annum..for 15 years you’ll have 15 units each getting you a rent of 15k..and that means at the age of 55 and above, you’ll not need to go round your sons and daughters places with a begging bowl. Heck, you will even afford to have something they’ll inherit, small fights notwithstanding, and a few generations will remember you for your hard work. Occasionally, you will even afford to organize some get-togethers for your big family and you eat some goats. Tell those grandkids who will care to listen about how life was when you were young and how organized you were.

But look at it this way. You might get to level 5 above when you are 40 years of age. I don’t see why you should even continue working as most educated slaves do. Therein lies a smooth transition between employment life with its own challenges and an independent life where you can dictate your schedule. How sweet it is to get off the shackles of employment at around 40yrs…It is very possible only with proper planning and taking practical steps towards early retirement.

Life does not follow a straight path and am sure some of us are in our 20s, 30s, 40s and 50s. Most importantly, we need to prepare for our later years and you surely must be able to do something well in advance before the day of reckoning when they bid you goodbye and give you a wheelbarrow and some gumboots. After all, how many are even lucky to get there especially with downsizing of companies, retrenchments thereon, contractual jobs and general job insecurities all over….prepare for that rainy day coz chances of it coming are much higher than you think.

Next, we shall look at inherited land, selling the same and crazy repercussions.

Marty,keep up the good work.

Marty, You put it well that people need to be actively saving, investing and planning for retirement.

I would fault your assertion about educated slaves never going into business however, simply because not everyone can engage in business and be good at it. Some people would be better off living below their means, saving and investing in assets that can appreciate higher than inflation. Running a business requires discipline, a sober mind, etc, and not everyone is made for it.

However, thanks for your good work in teaching us these important financial lessons that can shape our future for the better if we applied them to our lives.

I guess the bottomline is doing what you enjoy. The idea of saving, investing and acquiring assets while employed is good. I agree that business gets tricky and a very big % fail. However, the best you ought to do is secure your future whichever way. Like doing some rental units may not really need a big business mind but it gives you a very reliable source of income for yourself and maybe for your generations to come.

Seems harsh to call people educated slaves..but the slave bit actaully stands for 'working for money' and 'always at the behest of the employer and dancing to their tune' and certainly 'lacking the independence of being in charge of your schedule'. Most of us started there but it is certainly better to outgrow that stage.

Glad that people are practising what we are learning, otherwise it'll be an exercise in futility to teach.

Of inherited land and selling part 2

Alex is a smooth talker, no wonder he actually always had a way of convincing even the toughest of the fairer sex and of course his stint as a pastor gave him a chance to horn this attribute. Typical of him to first mention religious matters and keen to know how I was doing in that regard. After laying the base with the religious niceties he dropped the bombshell. Of course I knew of how he sold his inherited property, bought a cheaper plot, build the mabati house and squandered the rest. So when he narrated how he had this nice business idea that I buy a taxi, he runs it, grow the business into a fleet of taxis bla bla; it was never lost on me what he had gone through.
And so I asked him, “How comes you never thought of buying that Taxi with the cash you had after sale of the ½ acre plot?” He was quick to answer, “of course I had thought of that but opted to start the business of importing mitumbas which unfortunately never really kicked off and somehow the cash I had kept diminishing to a point where it dried up mysteriously” I knew I was in a scenario where I had to wriggle my way out coz in all fairness I never felt that buying a taxi would amount to a worthwhile venture, not with him as the main guy. Actually, the idea of entrusting my good friend with a business having known his history was the last thing I’d entertain.

However, this was a friend in dire need of help and leaving him in that status would not be good. And so, I floated an idea to him that in my opinion seemed workable and practical. I told him of a housing development we were undertaking and that I’d recommend him to the Project Manager just to assist him source materials. Just to go round looking for the best deal for sand, ballast, quarry stones, cement and any other material the guy could get just for some small commissions. Interestingly, he accepted that idea and as we speak he is a broker sort of and doing just fine. At least he can feed and clothe his family and even educate the kids.

Whenever I speak to him he wishes he’d turn back the hands of time especially due to the lost time but at least he is now much more positive about his life and earns an honest living. He claims he’d can never sell anything he inherits as he is convinced that there is a curse on ‘that land’. Of course he hopes that there is more land to inherit form his mum but it may not be the case.
Someday I asked my old man the reason why anyone who sold inherited land around our village always squandered the cash. He told me that it had an interesting history around it. The land was acquired after the infamous Mau Mau war with the whites. It claimed many lives and some people were maimed and all that. When our great grandfathers got the land, having been active fighters, they pronounced a curse on it; that it must never be sold outside the family and it must be passed on from generation to generation. Any sale had to be within the family. It is therefore the case that anyone who sells to anyone outside the family will therefore never help themselves. An interesting perspective but I opted not to engage my old man further on the matter.

Some very strange stories around my village regarding fellows who have sold inherited land. The funniest was this guy who sold the small piece he inherited. He called the villagers from all walks of life, bought them 5 goats, dug a big trench and jumped over it, leaving the villagers on the other side of the trench. The trench and the subsequent jumping was a symbol of him having the crossed the divide from poverty to riches. He waved the villagers bye and zoomed off into riches leaving them to enjoy the 5 goats to mark the big occasion. Sad part is that he left his family as well only to return back after 1 year having squandered all the cash. Of course he found the wife had already left and got married to someone else and moved on with her life. His only brother accepted him back and gave him some shelter….interestingly it was a story reminiscent of that prodigal son in the bible; I guess these things started way back. Pretty sad that they never learn from other's past experiences. Someone told me that this is tantamount to get bitten by a dog which is chained somewhere.

A friend of mine once told me that the reason these villager have failed to do anything worthwhile with the cash is the fact that they are not used to big money. Of course if you are playing in the league of maximum ten thousands and all of a sudden you have a windfall of a million, the natural reaction is to assume that you are filthy rich. Most become very generous and get to shopping sprees, get away with some nice girls and assume life will always be like that. Of course no big money remains big if all you are doing is spending; the net result is a shot back to reality and destitution which is much worse having come from the crest of a sinusoidal wave.

Let our people learn, that whatever you have worked hard for and is acquired through your own sweat, you can freely sell but what you acquired by way of inheritance, you need to pass on to the ones behind you.

Next we shall look at some business practices which are not so good that are attributable to business men who are seemingly doing well; think micromanagement (know when to let go), blowing your own horn as opposed to that of the team, leading as opposed to managing, amongst others.

Njuguna, aren’t you working too hard?

I first heard about Njuguna the very first time I landed in Kitengela in search of land. The broker I met was very jovial and excited to meet a young man (I was then) interested in investing in land. As he took me round to view the available options he could not help but tell me about Njuguna, coz he felt I could be as successful as him. They were buddies with Njuguna coz the broker is the one who would get nice pieces of land for Njuguna to purchase. I was therefore very keen to know more about this Njuguna and probably meet him.

According to the broker, Njuguna had as many as 150 acres of land in a myriad of places, in different sizes around Kitengela. In other words his fortune converted into cash would translate into like 200 Million as per the valuations of that time, quite a tidy sum several years ago. I requested the broker to take me to Njuguna just to have a chat with him coz maybe I’d get some tips from him.

I was taken to some timber yard and introduced to Njuguna who happened to be the owner of the yard. Njuguna never in any way looked like what I expected. A man of average height dressed in some blue jeans and some blue t-shirt and in sandals; quite simple and modest. When we shook hands and introductions were done, before we could speak further he was on his phone. From the conversation I figured out he was talking to a guy somewhere in Tanzania and they were discussing about timber delivery or something like that. When he finished the conversation he looked at me and told me that he is usually quite busy. Immediately another call came in and from my little knowledge I could hear he was talking to someone at Lands office in Kajiado and the little I heard it was all about a missing green card.

While still talking, some lady came over and joined us and motioned to us that she wanted to talk to Njuguna and urgently so. When the guy finished talking on his phone, the lady was all over him asking about some timber he was meant to have delivered to her site somewhere in Athi River. He cooled her down and called some guy and instructed him to measure some timber from the yard and deliver to Athi River.

Soon after Njuguna was looking at the broker who brought me to him and asked, “What is it that this Kijana wants? “ The broker was at pains to explain that I was interested in investing in land and wanted to just talk to him and probably get some advice. His reaction was quite a surprise as he looked menacingly at me, “Kijana, you know we cannot talk about some things now. Why don’t you come later at around 6 and over a cup of coffee, we can talk business?” Of course I realized how busy he was and nodded in agreement and then we disappeared into the horizon together with the broker.

Of course I really wanted to know the secrets of Njuguna and how he had made it. I was therefore quite inquisitive and the broker gave me a long story of Njuguna’s life and I realized the following:

1. He was an extremely hardworking guy and his story was that of ‘from rags to riches’. The timber yard was set up like 15 years ago with a capital of twenty thousands shillings and it had really grown to an extent that he could channel part of his profits to land consistently. He had created a good relationship with Masaais and they’d always bring offers for any land on sale to him.

2. He used to take charge of almost everything in all his businesses. He was the manager at the hardware, was in charge of sourcing for timber and could spent most of his weekend at the border of Kenya and Tanzania awaiting the lorries from the other side of the border.

3. As far as land dealings were concerned, he would also take clients to site, chase documentation at lands office, chase consents with DO, and sometimes even go to Survey of Kenya to get maps and so on.

I realized that despite doing quite well, he was too busy and working for long hours, sometimes to the detriment of his health. I therefore concluded that he was not only a workaholic but also his businesses depended entirely on him. Minus him, then the businesses would crumble like a stack of dominos.

He had a big problem trusting anyone else to even do the simplest of errands. He was also a mkono gamu and releasing any of his shillings was a painful ordeal. I actually looked for him several time so that we have the coffee but he always had something that would not allow him to show up. He seemed to have a cluttered life to say the least.
The big question I had on my mind is whether he was working too hard and was he actually working smart? Is it possible that with a different approach, he’d easily get to a higher level of success and probably work less, have time with the family and generally create a reliable system that requires his minimal input and probably at a strategic level?

Are you having problems similar to Njuguna’s and how can you get away from the mindset of working hard and start working smart?

Working too hard can have a really negative effect on your quality of life. Long hours and the pressure to keep doing more can lead to stress, burn out, depression, or just that miserable feeling of is this all there is to life?

Next post we shall explore Njuguna’s weak points and possible ways of dealing with them. Maybe the dude should even get time to play golf and take the family out, a few holidays here and there….he should enjoy life, or so I have been thinking. After all, what is the motivation of accumulating all this wealth? The religious fellows like me will even ask “Of what use is it if a man gains the whole world and loses his soul?

Many thanks @Marty for educating us! Because yoy have freely given,freely you shall receive!