Jennifer’s Coin Confession
Welcome to The Coin Confession! We are demystifying how people spend their money by asking everyday people to share their normal spending habits.
Today: Jennifer shares her journey
While Jennifer was still in University, she got her very first job. Much like most of us, she was excited to be earning more money. With few bills to pay, Jennifer quickly realized that she had a surplus amount of money coming in and eventually, she began asking herself how she should best invest it.
“ I had about KES. 10,000 (USD$100) of extra income and wanted to give myself options on how best to spend it. I began asking myself what else can I get for the money I’m left over with at the end of each month?”, she shared.
Being the youngest person at her place of work, Jennifer began discussing with her co-workers what they were doing to grow their surplus income. She found out that quite a few of them had invested in Life Insurance plans.
“After that, I decided to consult with an advisor from Old Mutual and settled on the life policy plan for 15 years where I would pay about KES. 10,000 (USD$100) a month.”
The way that Jennifer’s Life Insurance worked is that she could not take money out until the 5th year, otherwise, she risked losing the full investment. After paying KES. 10,000 (USD $100) a month for about 5 years, Jennifer took her money out of the life insurance plan and put it in a money market fund (MMF). After doing so, she quickly came to find out that the money she invested in the MMF wasn’t doing as well as she had anticipated.
“I mean, it was doing just okay, but it wasn’t earning interest at the rate I thought it would”, she shared.
Looking back, Jennifer shared that perhaps she may have been a little too hasty in choosing to invest in a Life Insurance plan. While she had a surplus of money, she shared that part of her decision may have been influenced by the way her other colleagues were choosing to invest their money. Also, as a student, Jennifer didn’t want to invest in a side hustle because she didn’t have time outside of school and work to tend to it, therefore, Life Insurance was the best way to earn passive income.
While her investment is doing ‘just okay’, Jennifer cautions young earners to always read the terms and conditions of any money-related contract.
“Don’t be so quick to invest, there are always other avenues to invest. Do your research. Take your time.”
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