tnai:

Congrats on starting early. May I suggest an alternative:

1. Start by putting funds in a savings account. For example, CFC Stanbic has a savings account paying 9% interest for savings greater than Ksh. 5,000. The same account pays 11% interest for savings greater than Ksh. 500,000. The interest is paid monthly and you can access the funds at any time (in case of an emergency, etc). See the following for more details:

http://www.cfcstanbicban...d-investments/Pure-Save

2. When the savings funds reach Ksh. 50k, you can use them to buy treasury bonds. Currently there are treasury bonds paying more than 12% interest and are long term (10+ years). Minimum to invest directly from Central Bank is Ksh. 50k and subsequent investments are in multiples of Ksh. 50k. You may also consider opening a fixed deposit account if banks will allow opening such accounts for less than 50k. Check with various banks for their fixed deposit opening requirements (but they should offer you more than 9% interest, otherwise keep the funds in the savings account).

A side benefit of the savings account, treasury bonds and fixed deposit investment is that they can be used as security for a loan should you get one for another purpose.

Please don't get confused by the insurance component of the educational policies. You will get a better return by buying pure insurance separately and investing separately rather getting an educational policy that combines insurance and investment.

-Fair Car Dealer

With interest rates regimes trending downwards, CFC STANBIC PURESAVE account is now giving 6% for balances between ksh.5000 to just below ksh.500,000 and 8% for balances above ksh.500,000. But you have a good point and your way seems better than going the insurance way.

@Fair car dealer,
Thank you for your great insights on my request. I love the idea, though am not for a saving plan where i can access the money. What do u mean by "buying pure insurance"? Is it like a life assurance policy or?
Our sacco has been paying dividends averagely at the rate of 10% annually for quite smtime and another option i thot wud be to save there and plough back the dividends for as long as possible. How is this option compared to the bank plan? What was endearing me to the insurance policy was the insurance against terminal illnesses etc, tho am told smtimes its just on paper.
I will contact CFC also, i know some guys there.
Have never done treasury bonds but will delve into it. You would kindly explain to me briefly abt the sacco thing also.

How will the idea of treasury bonds work? Coz say am saving 8k-pm, and need 6mo+2k to make 50K, from my understanding, it means I'll be buying a bond every six months, and as time progresses, the period of bonds also reduce right? How is the period of bonds structured? Sorry will have to research further on them. I asked the question abt our sacco which has consistently paid dividends at 10% of savings annually(prorated based on how long in a yr your money has bn in the sacco) for quite smtime, and i plough back the dividends; how would this compare to the CFC and treasury bonds option? The only issue with the sacco is -the feeling of putting all eggs in one basket and the lack of assurance that the 10% will last forever.