As the cost of living continues to influence household budgets, investors need to look beyond the headline return on their savings and ask a more important question: is my money growing fast enough to preserve and build my purchasing power over time?
Kenya’s annual inflation rate edged up to 6.5 per cent in July 2026 from 6.4 per cent in June, according to Liberty Life’s latest investment market review. While inflation remained within the Central Bank of Kenya’s target range of 2.5 to 7.5 per cent, continued pressure from food and fuel prices means that consumers cannot afford to overlook the impact of rising prices on their long-term financial plans.
For an investor, this highlights an important distinction between earning a return and growing wealth in real terms. An investment can generate a positive return, but the more meaningful question is whether that return is sufficient to preserve purchasing power after accounting for inflation and applicable investment costs.
The latest performance figures demonstrate why investors should understand the strategy behind their investments rather than focus solely on a single headline number.
Liberty Life’s Boresha Maisha Umbrella Fund recorded a 13.87 per cent gross year-to-date return in its aggressive portfolio to July, compared with 12.53 per cent for the Balanced portfolio and 9.64 per cent for the conservative portfolio. Its cash portfolio recorded a 5.24 per cent gross year-to-date return.
These differences do not necessarily indicate that one portfolio is universally better than another. They demonstrate the relationship between investment strategy, risk and potential return.
An investor with a long-term horizon and greater tolerance for market fluctuations may be better positioned to consider a growth-oriented strategy, while someone approaching a financial goal may place greater emphasis on stability and capital preservation. The appropriate approach ultimately depends on an individual’s objectives, investment horizon and risk tolerance.
Market conditions also reinforce the importance of diversification. The equities market performed strongly in July, with the NASI gaining 6.1 per cent and the NSE 20 gaining 9.0 per cent, taking their year-to-date gains to 27.5 per cent and 30.3 per cent respectively. This positive equity performance supported returns in aggressive and balanced portfolios.
At the same time, the fixed-income market remained relatively stable, although yields on government securities edged higher amid inflationary pressures and continued government borrowing. The 91-day and 364-day government securities increased to 8.8 per cent and 9.1 per cent, respectively, during the month.
For investors, the lesson is not to move money every time one asset class performs strongly. Markets move in cycles, and different asset classes can play different roles within a well-considered investment strategy.
Instead, investors should regularly ask three questions.
First, what am I investing for? A short-term financial objective requires a different approach from a retirement goal that may be decades away.
Second, how much risk can I comfortably accommodate? Higher potential returns can come with greater fluctuations, while more conservative strategies may prioritise stability.
Third, is my investment strategy still aligned to my circumstances? Changes in income, family responsibilities, financial goals or proximity to retirement may require an investor to reassess their approach.
The current market environment therefore presents an opportunity for Kenyans to shift the conversation from simply asking, “What return did I earn?” to asking, “Is my investment strategy helping me achieve my financial goals?”
Investment performance should always be considered in context, including the underlying investment strategy, prevailing market conditions, investment horizon, inflation and applicable fees. Liberty Life’s reported investment returns are gross of product-related fees, with net income credited to clients’ accounts after applicable fees.
Ultimately, successful investing is less about chasing the highest return at any particular point in time and more about having a disciplined strategy that is appropriate for one’s goals, maintaining a sufficiently long-term perspective and reviewing that strategy as circumstances change.
The goal is not simply to make money. It is to ensure that your money continues to work towards the life you want to build.
