I’m 45, earn Sh110,000. How do I raise Sh6 million to buy a home or buy land?

My name is Louis, and I am 45 years old. I am divorced, live alone, and have children. I feel like I’m inconsistent in my financial journey. I want to own a house in three to four years and have a passive income of Sh120,000 per month. The target for the house is Sh6 million. It can be either a Sh6 million apartment or a Sh3 million plot of land and a Sh3 million building.

My net income is Sh110,000. My budget is as follows: Rent: Sh17,000, Electricity: Sh2,000, Water: Sh1,000, Wifi Sh3,000 (this I need because I use it for side hustles), School fees Sh20,000, Kids food/maintenance Sh10,000 and Parents Sh5,000. My shopping and grocery costs are Sh5,000 (mostly taken care of through side hustles). Transportation is provided by the company. Variety and entertainment I cover from side parties.

I honestly save and invest 50,000 per month. I have an emergency fund of about Sh1 million in MMF. I have savings in Sacco of about Sh300,000 but I do not save regularly because I have no guarantors there. I’m there for the dividend and maybe I’ll use Saco to buy me that land or house. I have invested Sh2 million in government bonds, which generate an average passive income of Sh60,000 for four months, with the other eight months not covered.

I have plots of land that could fetch Sh3 million if liquidated and I don’t plan to build on either of them because they are not in ideal locations. So how do I achieve these goals that will also align with my retirement?

Alex Kibibi, Founder of Rubiani Wealth Management Ltd, Investment Advisor and Business Development Coach

Your current budget is very wise and your disciplined approach of consistently saving Sh50,000 per month – about 45 percent of your net income – is a solid step towards achieving your financial goals.

To reach your goals of owning a house within four years and generating a monthly passive income of Sh120,000, I suggest a strategy that focuses on growing your passive income by purchasing more treasury bonds and then selling your plots of land to finance either the purchase of a plot of land to build your home or a down payment First for your home purchase – depending on your choice to buy or build a home. You can then take out a Sacco loan to finance the construction of your home or pay the remaining balance to purchase your home.

To implement this strategy effectively, consider setting up a separate money market fund (MMF) account specifically to accumulate funds to purchase additional Treasury securities. By directing your monthly savings of Sh50,000 into this account, you could accumulate nearly Sh600,000 by the end of 2025.

Add the expected interest of Sh240,000 from your current investment in government bonds, the approximate interest of Sh100,000 from your emergency MMF account and about Sh60,000 interest earned from your new MMF account in the year. This will bring the total funds in your new MMF to about Sh1 million to invest in treasury bonds.

I recommend investing in infrastructure bonds as they have a zero percent tax rating (so far) thus maximizing your returns. Currently, infrastructure bonds issued in 2023 and 2024 are trading at a net yield of about 15 percent in the secondary market (Nairobi Securities Exchange). Investing Sh1 million at this rate would yield approximately Sh75,000 every six months.

If you continue to reinvest your monthly savings and all interest earned from treasury bonds and MMF accounts in 2026 and 2027, your treasury bond portfolio could grow to about Sh5,450,000. This would generate an annual revenue of approximately Sh810,000. To ensure consistent monthly cash flow, you can structure your bond investments so that interest payments are spread across different months.

In the meantime, you can sell your plots at the estimated market value of Sh3 million and use that money to either purchase land in your preferred home ownership location or make a down payment for a house, depending on whether you decide to buy or build.

You can then take out a Sacco loan of Sh3,000,000 to finance the construction of your house or to pay the balance to buy a house. Many Saccos now offer competitive home development loans without the need for guarantors, so it would be worth checking if your Sacco offers such options. If you take out a Sh3 million loan at 12 percent interest for five years, your monthly repayment will be about Sh67,000, which can be covered by income generated from your investments in treasury bonds.

Once you pay off your home loan, you can continue to build your passive income by reinvesting in Treasury bonds. Additionally, consider diversifying your investment portfolio into other passive income options such as an Individual Pension Plan (IPP), an insurance annuity or even rental properties. This diversification will strengthen your retirement finances.

If you have any financial problems, send us an email to (email protected) and leave your contact number. Financial questions will be answered in this column.

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