I’m 50 and have lots of land. How do I reinvest for my retirement and new family?

My name is Aaron. I’m 50, and I am in the informal employment sector. I don’t have academic qualifications, but I was able to acquire several properties in my younger years. Currently, my salary is Sh60,000, while my wife earns Sh35,000. This is my second marriage, after a divorce from my first wife. Thankfully, my first family is financially independent of me. In my current marriage, my wife and I have been blessed with a two-year-old son and are planning for another one soon.

Here is my financial status: I currently have no loans. My Money Market Fund account holds Sh7 million. I have two prime plots in Kiambu, valued at Sh7 million and Sh5 million, respectively. I also have five plots in Kamulu, all valued at Sh5 million. Additionally, I own a half-acre in Juja Farm and another half-acre in Kiambu, valued at Sh2.5 million.

My wife and I have an emergency fund of Sh2 million. We don’t pay rent, as we own our permanent home. All this land I own is a result of sacrifices I made in my youth. Now, my concern is how to organise myself to raise my children at my age, prepare for retirement, and live comfortably as I approach my later years. What should I invest in? How do I plan for my children’s education? How can I ensure that my retirement will be comfortable? Please advise me.

Benjamin Cheruiyot, the Engagement Lead at Abojani Investments, a personal finance and investments advisory firm, provides advice.

Aaron, it is commendable that you have invested in such an enviable portfolio of real estate. With a land portfolio conservatively valued at Sh19.5 million, your main task now is to convert this into a cash-flowing asset. This way, you can avoid being "land-rich" but "cash-poor." With a combined monthly income of Sh95,000 (your Sh60,000 salary and your wife’s Sh35,000 salary), and cash savings of Sh9 million, you can leverage this liquidity to generate even more and build a solid cash-flow portfolio.

Assuming your emergency funds are in a money market fund, your estimated monthly interest would be around Sh90,000. If you spend Sh60,000 per month for both needs and wants, you would likely have a surplus of Sh35,000, which you could add to your money market fund savings. If invested monthly into the fund holding Sh7 million, and assuming the fund offers net returns of 10 percent per annum, this would accumulate to Sh26 million within ten years, by the time you turn 60 and are ready for retirement.

This implies that, between your current age and retirement, you have around 10 years to plan and set your finances in motion for a comfortable post-retirement life. With Sh26 million in your fund, you will comfortably fund your children’s education using generated interest of Sh260,000 monthly. This is quite impressive, especially considering the liquid nature of money market funds and the low risk of loss to invested capital.

You may also consider diversifying your investment risks by spreading your wealth across different asset classes. For instance, out of the Sh7 million currently invested in a single money market fund, you could transfer Sh4 million into a higher-yield multi-asset fund with potential net returns of about 17 percent per annum. This would earn you Sh680,000 annually, which would be distributed quarterly. In ten years, this fund could hold at least Sh21 million. However, it is important to conduct due diligence on how higher-risk investments work, to avoid losing the money you’ve spent years accumulating. If you are unsure about the risks of high-yield investments, I recommend consulting a certified financial advisor with a good reputation. There have been previous cases of investors losing money in pyramid schemes disguised as high-yield investments.

With your current money market fund savings of Sh3 million, and monthly contributions of Sh35,000, you could have around Sh15 million in 10 years. This would provide you with monthly interest of approximately Sh150,000. Your emergency fund of Sh2 million would grow to Sh5.5 million by the end of 10 years, assuming no withdrawals are made.

Real estate development opportunities:

If you plan to develop your real estate portfolio, selling the Sh5 million Kamulu plots could be a good starting point. If you wish to build a commercial property on one of the Kiambu plots, you could sell the other at Sh3.5 million to raise Sh8.5 million. Assuming the plot you develop is in a busy area, you could earn around Sh100,000 monthly if fully occupied. The strategy here is to liquidate parcels that appreciate more slowly, while maximising the value of strategic plots through commercial development, which tends to offer higher returns.

The half-acre plots in Juja and Kiambu could either be leased or sold for further investment in the Kiambu plot. Adding another floor to your development could further boost your monthly rental income. With a solid real estate and cash portfolio, you can look forward to a happy retirement and a comfortable lifestyle for your family.

Additional recommendations

Alongside these investments, I would recommend ensuring you have stable and reliable health insurance coverage to avoid potentially costly medical bills in old age. You may also want to consider starting an interest-earning fund dedicated specifically to your children’s education. This will ensure that you won’t need to dip into your other investment assets when education costs arise, and it will guarantee that your children’s education is secured all the way to university.

Although you may not have formal academic qualifications, you could explore opportunities within the informal sector—particularly those you’re skilled in. This would allow you to continue generating income in your retirement without too much effort. Many retirees find that staying active with side hustles or work keeps them engaged and prevents boredom.

If you have any money problems, send us an email at [email protected] and include your contact number. Your money questions will be answered in this column.