Owning your dream home requires a lot of cash/investment and commitment for many years. You have to take the mortgage, buy furniture and other valuables to give your home and elegant look. Home ownership is one of our biggest and most valuable investments. But how often do we think to insure our homes against unforeseen perils that are beyond our control?
Disasters occur every day in life, and your property might get destroyed thus, bring down all that you have tirelessly worked for many years. Therefore, that’s why homeowners insurance is important as it will guarantee coverage to your home investments and give you a peace of mind.
What is home insurance?
It refers to a property insurance cover that homeowners buy to protect an individual‘s home and properties in it against unforeseen disasters/damages. Homeowners insurance will, therefore, cover for damages caused to your property plus any other liability or legal responsibility such as accident that might occur in your home or property.
Categories of covered properties
In most cases, the covered assets under homeowners’ insurance cover are divided into four categories. The properties covered in each class may vary depending on the region and the insurance company. Thus, it is always advisable to understand precisely the list of covered properties in your preferred policy.
• Physical dwelling- It refers to the structure of the house which is covered by the policy.
• Close structures- They are the structures constructed near the house or they are connected to the house either by fence or any other connection. They are separate from the house and may include structures such as garage or animal food store.
• Personal property- They are your belongings which range from furniture, clothing, electronic appliances among others. It should be noted that personal properties such as money, jewelry and art have limited or no coverage for loss.
• Loss of use-The policy covers for any additional expenses in case a covered peril damages your house, and it becomes uninhabitable. The policy will cater for expenses that will ensure that you are compensation to the normal situation.
Related: 4 Benefits of Investing in Real Estate
Importance of homeowners insurance
1. It provides coverage for the Home Structure:
Homeowners’ insurance policy guarantees you the rebuild of your home’s structure in case the peril is covered under the insurance policy. The amount of money repaid to cater for the reconstruction depends on the policy agreement and the premiums. When you have homeowners insurance, the company will take care of the finances needed to rebuild the home’s structure.
2. Covers property damage
Homeowners insurance also covers for your personal properties. The policy provider will list the items covered under each category. In case of peril, the company will replace your valuables as per the policy contract.
3. Covers for liabilities
Homeowners insurance will provide compensation for any liabilities that might occur on your property. The policy covers issues to do with accident that you may experience either as the homeowner, family member or injuries that a third-party gets on your property.
4. It boosts the mortgage lender’s confidence
For you to qualify for a home mortgage, the lender must ensure that your home is protected from any unforeseen peril. Thus, taking homeowners insurance policy cover will boost lender’s confidence as their finances are protected. Home insurance is one of the requirements for you to qualify for a mortgage.
Kenya has continued to experience rapid economic growth and it has been recognized as one of the fastest growing market in Africa. Various economic sectors such as Real Estate, Manufacturing, Banking, Energy and ICT have expanded in the recent years thus creating more room for investment.
Are you looking for a platform where you can invest your money and earn passive income? Then investing in stock market is the way to go. In Kenya, buying and selling stocks of various companies is done through NSE which is the leading Securities Exchange in East Africa.
What is NSE?
It refers to an organized market where stocks and shares of listed companies are issued, bought and sold through stockbrokers. It was established to achieve the following objectives;
• To mobilize savings in investment sectors that will guarantee productivity as an alternative to banks deposit savings
• To regulate the money market and ensure the economy inflation rate is manageable
• To encourage growth of financial related services providers such as pension and insurance firm which encourage saving
• To facilitate equity financing
• To encourage of public flotation of private companies which improve growth
In order for you to buy/sell shares of any company, it must be listed at NSE. Currently, companies are listed based on the following sectors;
• Investment services
• Manufacturing and allied
• Telecommunication and technology
• Real estate investment trust
• Automobiles and accessories
• Commercial and services
• Construction and allied
• Energy and petroleum
The Nairobi Securities Exchange Market is licensed and regulated by CMA (Capital Market Authority) which is the government agency which regulates the capital markets in Kenya. The body is also charged with the responsibility of approving public offers and listings of securities that are traded at NSE.
How do I join NSE?
The initial process starts by finding a reliable authorized securities broker or firm who will trade shares on your behalf. It should be noted that NSE does not allow direct purchase and selling of shares among the shareholders. That is the reason why brokers come in to provide a link between the buyer and the seller of securities.
After you have identified your preferred stock broker, you will be required to open a Central Depository and Settlement Corporation (CDSC) account. This is an online platform that facilitates electronic securities transactions at NSE. Your authorized stockbroker will facilitate you in the process of creating the CDSC Account.
You will be required to provide personal details including your ID, colored passport and KRA certificate. For companies, certificate of registration is also required. Foreign investors are required to have a valid passport and further arrangements on how to invest including extra documents (if need be) will be facilitated by your stock broker.
After a successful opening of the CDS Account, you will be provided with the account number and a secret question that you will have to identify yourself with whenever you make a trade at NSE. You are also privileged to open multiple CDS accounts with different agents/brokers where you can buy shares of different companies and trade them separately.
Investing in stock exchange can guarantee you value for your money especially if invested for a long term. Ensure that you have done due diligence before settling on shares of a particular company by conducting market research analysis. Always go for companies that are safe to invest and which have high growth potential.
The term real estate refers to land and any other physical property that is on that land such as buildings, landscaping, mines and water resources. The real estate market has gained a lot of popularity in the recent years due to it continuous growth making it the best investment alternative to many investors due to its higher returns.
Real estate investment can be effected through REITS (Real Estate Investment Trusts) or purchase of rental properties. It has surpassed other investment sectors in the world’s economy. But what are the attributing factors? The growth of real estate market can be ascribed to the following factors.
The population growth rate has continued to rise globally due to improved quality life. With the recent technological advancement and quality medical care, the world has experienced gradual population increase.
Due to the fact that land size is constant, there has been increased land demand as more people seek shelter and properties. Thus, the higher the demand, the more attractive venture real estate investments have become.
Easy access to mortgages
Financial institutions have continuously strived to provide affordable mortgages to real estate investors. Provision of funds necessary to kick start real estate projects is easily available with some of the financial institutions lending at lower rates as 10-13%.
Other features that have recently been introduced includes; the 105% financing strategy where the lenders caters for all mortgage processing cost. Loans repayment periods have been lengthened from 12-15 years in the past to a maximum of 30 long years. This has made borrowing favorable and attractive to aspiring real estate investors.
Various technological innovations such as internet and building technologies have improved the accessibility of information on diverse properties globally. Availability of low-priced and quicker methods of building, raw materials, and other aspects that pertain to real estate sector has positively transformed the industry into a lucrative business venture.
The real estate industry has received a significant boost where government worldwide has provided subsidies and tax incentives to real estate investors. This has influenced many investors to venture into real estate sectors as compared to other investment option. Various governments have also provided low bearing interest rate mortgages to its workforce thus, making it easier for them to buy properties.
Benefits of investing in Real Estate:
• Lifetime investments: The rent collected from the properties makes this a lifetime ongoing source of income.
• Collateral: The properties acts as collateral for credit when the need arises.
• Lifetime appreciation in price: Real estate has over the years appreciated in value unlike other forms of investments such as stocks’ and bonds’ earning that keeps on fluctuating. This makes real estate investment idea.
• Taxes: Property owners pay fewer taxes on the property income as compared to other sources of income hence more money in the pocket.