Dragging money

How Employed People Remain Poor Despite Working Full-Time, Saving & Investing

It was back in 2007 when a young man whose career was blossoming got wind of a potentially life-changing business idea – investing in shares. Like most people, he had grown up watching TV and reading newspaper articles about the profitability of this kind of business.

So when Safaricom (the largest telco in Kenya) floated its IPO, he figured out this was his chance to stand to be counted. He took a Ksh1 Million loan from a local bank at an interest rate of 15% per annum. By that time Safaricom shares were trading at Ksh5 and so he managed to purchase 190,000 shares.

Looking into the future, he was almost assured of being a multimillionaire in a span of 5 years because as most of his fellow investors had expected, the share price would shoot to Ksh25 a piece. Shock on him, a few months down the line the 2008 global financial crisis kicked in, followed by the 2008 Post Election Violence (PEV). The share prices came down tumbling trading to less than Ksh2.50 – a situation that sent the young man into panic mode.

Things were not looking good and waiting a little bit more into the future certainly did not look like a good idea given that a loan had to be repaid. He hurriedly sold off his shares at Ksh2.10, exited the circa and used the proceeds to settle part of the outstanding loan. In addition to that, he had to part with a portion of his salary for 60 months in order to fully clear the entire amount.

To make matters worse, as he was still trying to figure out his way out of the murky waters of debt, things started to look up for Safaricom on the bourse with the share price shooting all the way up to Ksh21.00. If only he had waited for a few more years!

Stories such as this one are not uncommon, it’s only that majority choose to suffer in silence rather than parade their failures for all to see. Certainly, more and more salaried people with seemingly good life and from an educated background are slowly wallowing in poverty. This despite working hard, saving diligently and even investing.

But why does this happen? We take a look at why educated and salaried people often remain poor despite having all it takes to excel in life.

(1)Wanting to hit two birds with one stone

With a job to keep, a boss to impress and bills to pay, salaried people cannot afford to completely ditch their comfortable 8am to 5pm lifestyle. So they hire and entrust their relatives or village-mates to run the affairs of the so-called side business. And therein lies the problem.

The first person they hire proves too lazy and unambitious, so they fire him. The second person they hire is a family member who clearly lacks the zeal and expertise to run the business, so once again they fire him when they notice the business is on its deathbed. The third and final person (or the mortician if you may) is usually a former village-mate or an old friend who despite being passionate excels in dishonesty. Before you know it, the once emaciated chap milks the business dry and escapes (not back to the village but to start his own venture using money and experience stolen from the unsuspecting boss.)

At the end of it all, one is left with no other option than to simply close the business, count losses and repay a loan without getting any value in return.

(2)Investing out of superfluous research

Tell a salaried guy to follow his passion – he will confidently answer you that his only passion is drinking and partying hard all weekend long at one of those shady clubs along Thika Road. Tell them to research about the latest business trends – they will tell you they have no time because they are busy for most of the day working for their bosses.

End result: they live a superfluous life, devoid of self-awareness and facts. And because they spend most of their time typing “Amen” on Facebook, the only way they know to invest is through half-baked methods.

Others start hardwares because word on the street has it that there is a “construction boom” in the country only to be shocked about the reality on the ground. Some buy thousands of broiler chicken and keep them without learning the best practices of such business only to lose the entire brood due to an unfamiliar disease.


Author: Alex

Alex is a Kenyan blogger writing on technology, fraud, social media and politics at Nairobi Today.

email:: admin[at]nairobitoday.co.ke

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