What is Net Investment? Everything You Need to Know About It.

Mombo Smart Investment

What is Net Investment?

Want to understand and gain knowledge about net investments? We at Mombo SACCO are here to explain it easily.

It is the measure of how much a company has invested in capital goods such as property, industries, equipment etc. Net investment will give you knowledge about the expenditure of the company on capital goods used for active work.

Try subtracting depreciation or the capital expenditure from the amount. You’ll get a more precise idea of the investment’s real value. The sustenance, maintenance, repair or installations of the goods are also included in the cost of capital goods.

At Mombo SACCO, we’re going to briefly explain everything you need to know about net investment.


Difference between Net Investment and Gross Investment

Confused about the difference between gross and net investment? Can’t figure out the difference? Well, let us give you a little more understandable difference.

The total investment which is spent on new capital goods is known as Gross investment whereas net investment is itself gross investment but it is altered for capital depreciation.

Depreciation is a method of moving the cost of a substantial good over its working lifespan. In other aspects, it is the decrease in the value of goods.

Gross and Net investment are concurrent

We have already given a difference but they are also concurrent to one another. Notice closely! If the gross investment is constantly higher than depreciation, net investment is positive. Verily, if the gross investment is constantly lower than depreciation, net investment is negative. The positive side indicates that productive capacity is rising. On the other hand, the negative side indicates the downfall of productive capacity. This is a possible problem and is true for all organizations, small or large.

Net investment in economic growth of a country

Let us provide the formula first for you to understand easily.

The formula for net investment is (capital expenditure depreciation = Net Investment).

When the net investment is greater than 0, it indicates an increase in capital goods in the country. Increasing the production capacity and shifting the PPC (Production Possibility Curve) upwards. As a result of an increase in GDP.

But to inform you, this is also the opposite if the net investment is lower than 0. Declining the PPC and GDP.

But, then again when the net investment is equal to 0, what do you think happens? The amount of capital goods remains the same. The production capacity and GDP does not change and the PPC does not shift.

Net Investment income tax

Tax is something you can never escape from. So here, we are going to talk about net investment income tax. Let us explain with an example, you have an income from investments. You are or may be subject to net investment income tax. Simple!

Generally, it includes, but not restricted to: interest, non-qualified profits, dividends, capital gains etc. No need to be worried because it does not include wages, alimony, unemployment compensation, social security benefits etc.

Net Investment Calculation

You must be very keen by now to know how to calculate it. Let’s start then!

Earlier, we have given you the formula and now we are going to apply it. A simple example will make it easy for you. Suppose you own a company which spends KES 20 million on a brand-new equipment. It has an anticipated life of 30 years and a residual value of KES 2,000,000. Let’s take the straight-line method of depreciation. Then the annual depreciation would be KES 600,000 (i.e. {KES 20,000,000- KES 2,000,000}/30). Quite simple, right?

Now, applying the net investment formula, we are going to get KES 19,400,000(KES 200,000,000- KES 600,000) as the amount of net investment at the end of the first year of that equipment.

There is no fixed amount for proper investment in any company as some need more than the others because of capital decline every time. The net investment totally depends on the amount necessary for a company in a sector to operate. All sectors are quite different from one another and the net investments cannot be compared. But it is applicable when the companies are working in the same sector.

We at Mombo SACCO have tried our best to easily explain to you about all you need to know about net investments and we can assure you, this knowledge will help you in the long term.

Big Wedding or a New House? Here Is How High interest Savings Account Helps You Have Both!

High interest Savings Account

Starting a new family in an own, new house sounds like a dream. However, many couples are far from this dream financially. The wedding theoretically comes before a new house. But it often eats up tons of money, and newly-weds start to save for a house from scratch. Such scenario makes these two important events quite separate in time. Does it mean there’s no chance for a dream to come true? Of course not! If you both dare to be so wise and calculating, you can have both a wedding and a house and fast! We’ll tell you how to save up for two events simultaneously with a high interest savings account.

Are you ready for the adventure? Great! But first, you’ll need to stop and do some heart-searching to check if you both are on the same page.

Analyse your Dreams and Means

You both have to be honest about your goals and financial means with each other. It’s one of the pillars of harmony in the family. So start practising it early. Have a sincere talk about your goals and priorities. Which event do you want first? What kind of property fits you both? Do you want to have a honeymoon and how lavish you want to be on your first trip as a family? Discussing it now prevents you from unpleasant arguments down the road.

Even if you decide to save up for both a wedding and a house, it’s important to agree on your top priorities. Sometimes life makes its amendments to your saving plans. If circumstances change and you have to pause one of two saving activities, which one would it be?

Some Ideas How You Can Save on a Wedding

Both a wedding and a house can be as expensive as you want them to be. It’s up to you to decide what your upper limit would be. There will always be a temptation to overspend. But you don’t want to get into a big debt and start a new life completely broken. Here is how to reduce the wedding cost.

  • Make a wedding list. Include things or activities you want to have on that big day. Then strike out unimportant things you added just to impress others. Isn’t it better to use this money for your new house instead of blowing the budget? Don’t look at other people, but think what will work best for you two.
  • Shortlist guests. Invite only the closest relatives and friends. Don’t be afraid to insult others as long as you honestly explain why you keep your wedding smaller.
  • Ask friends and relatives for help. Such things as a wedding cake, photography and video can be handled much cheaper by somebody you know well.
  • Postpone your honeymoon. There is no crime in having it later, after you become house owners. The vacation will be even sweeter after that.

How to Open a Savings Account for a Wedding and a House?

Start with defining your budgets for both. The time you need to save up for these 2 events can differ a lot depending on the saving account you choose. The point is in the interest rate. You need a high interest savings account to reach your goals faster. Next, if you opt for a no-fee savings account, you also avoid maintenance fees. It means everything you save up goes towards your future family pocket. With Mombo App, you can open a savings account in Kenya that will be both high interest and no-fee. You get 6% annual yield on your monthly instalments (minimum 3,000 KES). But the biggest benefit is that after 3 months you can take a loan worth 5-fold your savings. What does it mean? You can have the wedding and buy a new house 5 times faster! Then you just pay off comfortably at lowest possible 12% interest rate.

Tip 1: We recommend opening two separate accounts. One for a wedding and another for a new house. This way you can take loans separately and decide how fast you want one or another event to happen.

Tip 2: Another idea how to speed up your saving for a house. Consider creating a fund to which your relatives and friends can contribute money instead of bringing a wedding gift. Use money from this fund to grow your “house” savings account.

7 Rookie Investing Mistakes and How to avoid them

7 rookie investing mistakes

When it comes to businesses, there are no specific set of rules that will guarantee you success.

There are many different strategies or approaches that might work for you but might totally backfire when it comes to someone else.

However, when it comes to investing in the stock business, there are a few guidelines that you can follow. There are some clear Dos and Don’ts, which you might fail to see if you’re new in the stock world.

Here are seven rookie investing mistakes that rookie investors often make, and how you can stay a million miles far from them:

·      Day Trading

Day traders are the people who buy and sell multiple shares on the same day. While this might seem like a worthy risk to you if you know a very successful day trader, think twice before you decide to become one yourself.

First of all, day traders need really strong and speedy technology that help them understand the best deals, which you probably can’t afford if you are still new.

Secondly, unless you have a ton of experience in the field, you won’t be able to make the right calls even if you do manage to buy the equipment needed.

·      Overusing margin

When you use borrowed money to buy securities, it is called trading on margin. Many people use it to make extra money when they’re in short of cash.

However, a loss occurring on a stock you bought on margin is much bigger than one occurring in a normal scenario.

Not only do you have to endure the loss, but also have to pay back the loan you took from your own pocket, which is essentially an additional loss. Hence, it is recommended that you do not misuse the power of using margin.

·      Undermining yourself

Many people who are new in the stock market, get intimidated by the huge institutional investors and experienced brokers.

However, what you forget is they do not perform as well as they seem. If you invest some time in learning and researching the market, you might actually do much better than them!

A good amount of common sense and intelligence is what distinguishes a good investor from a bad one. If you think you have a good share of those, don’t underestimate yourself just because you have a different 8 to 5 job!

·      Believing everyone

When it comes to the stock business, most people think they are experts at it. That is a big rookie investing mistake. They will proudly discuss stocks in public and brag about shares they think are “about to do great”, which many people are bound to hear.

When you find yourself overhearing such conversations, or see a talk show in which some investment professional does a similar thing, don’t believe them right away.

Do your research, make sure you trust the company and understand why the share might do well. Most of the stocks that you hear about in such scenarios do not do that good in the long run.

·      Purchasing a stock because it’s price decreased

When a stock that used to have a high price, decreases all of a sudden, you might be tempted to buy it right away. Another rookie investing mistake.

But, beware! There might be very strong reasons to WHY the stock price fell, reasons which might indicate that the price will not go up anytime soon. In the worst case scenario, you might eventually end up with a totally failed investment.

·      Depending only on technicalities

Nowadays, people depend A LOT on technology to know which stock they should invest in and which they should stay away from. Hours of financial analysis and identifying patterns is usually what dictates a decision nowadays.

Even though these tools are really handy, don’t forget to do a qualitative analysis as well. Unless you take into account the current status of the company at the present time, or how it might change in the recent future, you might end up making a bad decision.

·      Not accepting your rookie investing mistakes

No matter which profession you are in, you should always have the courage to learn from it and correct yourself.

It is the same when it comes to stock business. If you make a bad investment, it is best to realize your rookie investing mistakes and move your precious money somewhere else.

Blockchain VS Supply Chain: How the Blockchain Could Impact Your Business

blockchain technology for businesses

You will probably have heard the words crypto and blockchain thrown around over the last year or so. It seems to be a craze. The latest wave of something that people are getting passionate about. Everyone chasing the dream and wanting a bite of the cryptocurrency apple.

The truth is that the crypto world is still relatively obscure to most beyond these terms. Sure, most people can tell you what Bitcoin is. But that really does sum up the average person’s knowledge. Blockchain technology for businesses is a crucial part of this largely unknown world and it is potentially going to have massive repercussions in the real world.

Here’s the lowdown on Blockchain.

  • Ledger .It serves as a ledger, recording data securely about transactions. The data is secured using cryptography. Each transaction forms a block, and each block is then added to the chain. It is the online equivalent of stringing pearls on a necklace.
  • Can’t manipulate. Like a pearl it is not possible to manipulate the contents of a block. So, with a pearl it is either a natural pearl or it isn’t, with a block you can’t alter its structure. This means the data held on each block is preserved indefinitely.
  • Orphans. As blocks increase the chain lengthens. Occasionally there will be data sets or transactions that divert off the main chain. This could be for any number of reasons but most commonly it is because they don’t fit the original criteria of the chain. These sub blocks can then form smaller chains. These are called orphans.

So hopefully, that has enlightened you about how the blockchain works. And what it would look like if it was a physical entity. It is very much like your transaction history on your bank account, all categorised into blocks and stored securely in a way that people can’t access or manipulate it.

That is the key. The power to be free from manipulation.

And, that is why businesses everywhere are likely to adopt the Blockchain or a variation of the technology to record the data they need within their supply chains. Blockchain technology for businesses will be very lucrative.

So why hasn’t it happened yet?

Well the answer is both convoluted and simple. The simplest answer though is that the Blockchain is not a very quick chain. It takes time to record the data and it takes time for each block to be added. When you take into account the sheer volume of transactions any business makes in say a day then blockchain technology for businesses becomes fraught with problems.

This is partly the reason why there have been so many questions asked of Bitcoin’s credibility. It relies on the Blockchain and the Blockchain is notoriously slow. Meaning people would rather invest in other crypto-currencies that they can exchange faster.

Blockchain technology for businesses is being refined, it is being streamlined. Currently there have been other crypto-currencies using faster variations of the Blockchain or alternate versions. It could, in theory, if fast enough, be integrated to secure the data of all financial transactions made, everywhere, all over the world. Once financial institutions put this into practice the larger businesses tend to follow and this filters down until you have small to medium enterprises all using Blockchain technology for businesses.

Will we see it happening?

As it stands, it is at the toss of a coin. Currently the technology is robust enough to function but not fast enough to function. Businesses everywhere are therefore reluctant to place this otherworldly technology at the heart of their structure.

It is more likely that the Blockchain technology will pave the way for a new type of ledger altogether. One that takes what Blockchain has done and builds on it so that businesses have a technology they can integrate with no hassle. That is where the safe money would lie.

Blockchain has done a lot of the groundwork needed to revolutionise business transactions and supply chains, it is now that the world awaits an innovative successor to take the mantle and form a new and exciting core to businesses the world over.

It will happen one day, with some form of new secure ledger, that is almost a certainty. Is it going to be blockchain for businesses? Only time will tell.


Digital Currencies- Why Investing in Bitcoin is UNSAFE?


The Bitcoin market is really a hyped-up one that is instinctively leading us to too many risks; price unpredictability is just one of them. We understand that your yearning to get an investment with high returns may take you to this market, but trust us, investing here would only put you in some uncertain risks. So, in case, you were deeply tempted to invest in Bitcoin, reading these reasons would surely compel you to amend your decision.

 People, these days, are desperate to invest in anything that can bring them instant riches. But, is that really a reason to step into the world of digital currencies? Well, don’t be fooled by what they show you, know some of the major risks of Bitcoin, which can actually put you in trouble, once you have stepped into the world of digital currencies.

  • Intense Unpredictability

Don’t be fooled by them, there is way too much risk than you think. Investing in Bitcoin is risking yourself to the extreme, as the prices are extremely volatile here. Many top experts even are skeptical about it being an investment, in real. The fundamental analysts don’t find enough of an ecosystem surrounding Bitcoin to acclaim it as an investment.

Aren’t people just making such an imperative investment decision with inadequate information? Of course, they are, which in turn, will just be taking them down in the end. One might consider it one of the best short-term investment plans, but certainly, it is not.

  • Hackers Seizes it Easily

Cryptocurrencies are easier to lose – This question matters a lot, whether do you keep the bought cryptocurrencies in the smartphone’s wallet or in the exchange? Well, the former route is the better option, comparatively. If we believe the researchers, there have been cases, where billions of dollars worth of Bitcoin were lost on exchanges. Of course, the hackers snatched it away. Isn’t that a big reason to secure your Bitcoin inside your Smartphones? Imagine how much can one loose to hackers, just with a few clicks. Ask the experts, where to invest money, and they will never suggest you investing in Bitcoin.

  • Security Concerns

The Securities and Exchange Commission and Consumer Finance Protection Bureau have become more active in the cryptocurrency oversight. Moreover, they have been warning for a very long time about the frauds that are occurring in the exchange. So, don’t you think we all should have understood by now, the jeopardy of being a part of this market? We mean, how can anyone still exist at a place, where unsuspecting investors and fraudulent activities are everyday’s matter?

  • An Unfettered Space

Don’t enter this unfettered space- Bitcoin market is not regulated by any bank or government entity. There exists no big authority, which can be reached for grievance redressal. You must know how the bank compensates when you buy something with a credit card and get ripped off, right?

Don’t expect the Bitcoin Exchange to compensate anything when you are completely ripped off. Consider it impossible to get the money back when you are in this market. Those who are already stuck in this market understand the pain of investing through unregulated schemes. So, experts are choosing not to recommend this as an investment with high returns.

  • Fees are Charged

The idea took the turn soon- So, initially, the idea was to create a back alternative, which could provide people the option of paying low fees. But, later it changed. What didn’t change was to cost a certain amount of the people. Trading cryptocurrencies will still cost you, the percent of the total transaction amount, which actually depends on the exchange. The fee charged depends on the total exchange done on the Bitcoin, worldwide. But, the more people trade in Bitcoin will lead to a higher fee, which simply means more fee will be charged. So, it is anyway an unprofitable deal for anyone.

The Verdict

Bitcoin might seem like an investment with high returns, but, after digging deep inside one knows how jam-packed this market is. How can anyone ignore all of those dicey paths, which are simply inescapable? It is therefore suggested to keep digital currencies like Bitcoin out of your list when it comes to investing in a good place.

All we would advocate is to probe into the pros and cons of this market before actually investing here. Don’t get fooled by the ‘made-up’ benefits that they flaunt to capture more investors, every now and then.


Where to Find No Fee Investment Funds in Kenya

Investment funds are potentially a great way to get more from your money, but the fees associated with investment funding can often leave you unsure about whether they’re right for you. Ideally, you want to find a way to make your money grow and be able to withdraw it when you like, without any fees.

Here’s all you need to know about no fee investment funds in Kenya, including what they are and where to find them.


What Are No Fee Investment Funds?

Investment funds are made up of groups of people. Those people are investors who have put their money together to invest in corporations, stocks and businesses. You band together to invest funds, rather than buying stocks in the stock market as individuals.

All the risks are shared (therefore minimised) between shareholders and you all receive the benefits of the investment too.

Usually there’s a third party involved. They organise everything, bringing you and other investors together to invest your money. This makes finding an investment fund and managing your money much easier, as you’re not dealing with the other investors yourself.

However, many of those third parties don’t offer no fee investment funds in Kenya, or work for free. Often you’ll find that there are multiple fees attached. Some will charge more than others, but that’s not always a guarantee that your investment will be more successful.

No fee investment funds in Kenya are pretty self-explanatory. They are investment funds that have no fees attached, meaning no fees to start investing or withdraw them. Simple enough to understand, but tricky to find.


The Traditional Methods of Investing Funds in Kenya

When it comes to investing money in Kenya, there are 2 other options besides no fee investment funds. Kenya investments can also be bonds and stocks:


A large company, or the government, offers you bonds for your money. Those bonds have a time limit, so the money you give to the government (your investment) will come back to you at the end of that term. In the meantime, you receive regular payments for your investment from the interest agreed on.

These are usually issued for businesses and projects that need funding, rather than individuals.


You can invest in stocks at the stock market. You can choose to invest in one company (direct) or multiple (indirect) to spread the risk. The main stock market in Kenya is the Nairobi Stocks Exchange. Like investment funds, you’ll most likely use a third party to navigate the share dealing platforms and handle the actual investing.

Both bonds and stocks will have risks and benefits, just like costly and no fee investment funds in Kenya. Unlike investment funds however, you’ll be investing on your own rather than in a group of investors.


Can I Invest Funds for Free?

If a broker or third party company is offering an investment fund for free, be wary. There are often fees that the third party has to pay to invest your funds, plus there are usually administration and management fees that cover the costs of the third party handling your money.

If you aren’t paying for those services, ask who is paying for them. If a broker offers no fee services in Kenya and doesn’t sound legitimate, or if you have any concerns at all, it’s best not to invest. It’s not worth losing your money.


The Best Places to Buy Investment Funds in Kenya

The best places are those that are transparent with all their fees upfront.

Usually management fees are around 1% or 2%. You should also ask about administration fees, early withdrawal fees and other fees you may need to pay when the investment fund matures.

Some of the biggest investment brokers in Kenya include: Genghis Capital, Dyer and Blair and CFC Stanbic. Their fees will vary; make sure to do your research before trusting your money with any broker, no matter how big they are.


Mombo App  is still gearing up to the launch of our investment services, including investment funds. We strive to be transparent with our fees, making it very clear what you will be charged and when.

Our only fee is a 1% withdrawal fee for those shareholders that decide to withdraw their money before the term is up. You can find out more about the launch of Mombo investments here.


How to Not Succumb To Confirmation Bias While Investing


The human brain is more similar to a programmed software than we admit it to be. There are certain habits that all of us are guilty of having, and in most cases, these habits affect all of our decisions in a similar fashion.

One such habit is the “Confirmation Bias”. If you’re unsure about what it means and hence assume that you probably don’t have it, let me assure you that you are probably wrong.

The confirmation bias is something most of us suffer from. It is the tendency to look for proof that supports our beliefs, and ignore or disbelief those which go against our ideas. This bias affects almost every decision we make, no matter if we acknowledge it or not.

Starting from choosing the best cereal to buying electronics from a brand, we tend to stick to the companies that we believe to be the best. A prime example would be my belief in buying Apple products, which leads me to continuously look for reasons to validate why it is the best brand for smartphones, while ignoring anything negative I hear.

As I said, all of us are affected by confirmation bias to some extent.

However, when confirmation bias starts to affect our decisions regarding our investments, it is something to worry about. If you invest in stock exchange business, continuing to hold on to a declining share just because you “believe” its price will increase since it did in the past, you are being controlled by your confirmation bias.

You might even go as far as discussing the matter with someone who has no idea about it and ultimately convince them to agree with you, or, talk to a person who is directly related to the falling company who will undoubtedly speak in favour of it, therefore validating your own bad decision to yourself.

If you have a financial adviser who supports such and all other decisions of yours without a second question, it’s time you find yourself a better one.

Therefore, the first step to avoid confirmation bias is to acknowledge it. The moment you realize that your decisions are being driven by solely your perception towards an investment, and not by facts, you will be able to open up your mind to actually consider the truth.

There are a few more things you could do to keep the effect of confirmation bias to a minimum (as it’s nearly impossible to get rid of it!):

Analyze ALL facts with equal strictness

A common mistake that most of us make is that we do not give equal importance to all the facts present in front of us.

For example, in many circumstances, I have made a choice to invest in a stock just because I had not invested in some time and hence I assumed I have to invest now by hook or crook.

Therefore I invested in the first share that seemed profitable to me, without judging or analyzing the statistics and real empirical values of the share at that current time or predicting how they might change. Consequently, I ended up with a loss.

Find someone to argue with you

As human beings, we tend to interact more with people whose opinions are similar to ours. While this might bring peace in the household, being around people who agree with what you say all the time can severely narrow your thought process, which ultimately leads to more confirmation bias.

From the people you trust, find someone who is logical and intuitive, and make them argue against your decision. Ask them to find out points against your choice, or facts that support a decision different from yours.

However, make sure you actually pay attention to what they have to say and consider it thoroughly instead of arguing back to prove your point.

Make sure you are honest with yourself

Before starting to research about whether you should invest in something or sell something, ask yourself, do you really want to?

If you have your answer, talk to people about what you are considering! Don’t ask them leading questions that they will just nod to, engage them in active conversation. And please, make sure you are actually listening.