Why youths are shying away from long-term investments

In a chat on financial planning with Elton Ndung'u, a 25-year-old youth and a resident of Nairobi, a notable trend from my previous engagements with other youths materialises.

Elton expresses concern over the ability to partake in a long-term investment, terming it a thing of the past and cannot work in the current century where 'fast moving things with immediate returns' is the order of the day.

"I cannot imagine going for a long-term investment such as property and land purchase currently. I do not have that patience to wait for years just to get a return on my investment," Elton noted.

Arguably, this could be a reflection of the broader economic and social challenges impacting younger generations today.

Economic analyst Mihr Thakar reckons that most young people today are dealing with significant student debt, high living costs and lower entry-level wages.

"This makes it difficult for them to set aside money for long-term investments, as they're often focused on managing immediate financial pressures," Thakar notes.

Elton's story mirrors that of Annah Khabaya, a middle-aged teacher just starting off her teaching career, barely three years into the practice.

She says long-term investment is never among her thoughts currently, as she only prioritises short-term goals and needs such as travel, experiences or immediate consumption.

Titus Ohando, another 25-year-old youth from Kakamega County, is of similar thoughts. He says venturing into long-term investment in his mid-20s is a bit unrealistic.

"I'm barely half a decade old in the workspace, could I have made enough starting capital for a long-term investment?" he questioned.

"The little I have goes to basic spending and at times it's never enough, forcing me to borrow loans. Whenever I manage to save, I end up spending it on short-term emergencies like medical expenses."

Real estate developer and private equity firm Fusion Capital, which ventures in long-term investments specifically property and land selling, concurs with the youths, saying that most youths today want instant rewards on ventures they put their money in.

It, however, notes that investments such as land buying could be seen as an 'old school' thing, but it is a venture that could guarantee youths double-digit returns in less than six years.

"A land bought for development for instance could start seeing value addition between three to four months from the date of purchase," said Daniel Kamau, the CEO of Fusion Estates.

The firm highlights other key untapped investment ideas in the country that the youths are skeptical of.

These are the stock exchange: The NSE, agriculture and agribusiness, branding and public relations industry, investing in government bonds and starting own business.

A study by global survey firm GeoPoll, also established that among the many reasons why youths in Africa save, investment purposes make up the least reasons.

A majority of the youths surveyed in the country and other African states: Nigeria, Ghana, Tanzania, Uganda and Ivory Coast, highlighted emergencies and medical care as the top driving forces for saving.

Savings are future goals, education, and to accumulate wealth and buy property followed in that order.

Among the youths who do invest, the study notes that they venture mostly into business (42%) and farming (34%).

"This is compared to the long-term investments such as buying land, building real estate and stock exchange, which, overall, come third, fourth and fifth, respectively," the report reads.