Weekly Update

Week ended 1st July, 2011 Issue 27/11

EXAMINING THE ROOTS OF OVERSPENDING.

Quote of the Week: "Wealth consists not in having great possessions, but in having few wants."-Epicurus Not having a written budget We all need to spend money to pay for things in life, but for many, spending goes beyond buying necessities. Overspending can certainly impair ones finances, especially in the absence of a budget. In order to overcome overspending habits, there is need to look at why spending money is so easy to do. When we know what factors drive our spending, we can fight the urge to spend and save more money. To help identify the overspending trap, here are some key reasons why it happens and what can be done to avoid it in the future. Easy Access to money For most people, this is the biggest reason for overspending. Technology has made accessing you bank savings a 24-hour activity with the provision of the ATM card. . Whereas this is good in case of emergencies, it can easily lead to the urge to overspendgoodbye to good money. Use of ATM cards as well as debit cards can serve as a very powerful tool for financial planning. However, if misused, they can lead to serious spending habits that can only be likened to an addiction. Having easy access to money can present the illusion that funds are inexhaustible, resulting in spending all the money without noticing until its too late. . To remedy this, it would be wise to only use the ATM card on necessary purchases. It is also important that such purchases should have been planned for in the first place. Misuse of Credit Cards Credit cards can also be a great tool when used properly. How credit cards and other debts are handled has a big impact on our financial position. While there is nothing wrong in having a credit card or many credit cards, the biggest factor is the ability to pay the arrears on time. In fact, with most credit cards, you actually have a free interest loan for between 30-45 days if you pay your bills within this period. When used as intended, this can be a powerful personal financial management tool. Prudent credit card users do three things first, they have a comfortable credit limit which is in tandem with their income; second, they charge their credit cards only on budgeted expenditure and avoid using it in social places where expenditure can get out of control; third, they pay a sizable amount of what they owe each month and on time. The problem arises when monthly payments are delayed. Most credit card companies make the minimum payment due to be very manageable, which means that you can afford to make the payment as long you plan your finances well. However, only paying the minimum amount may extend the outstanding balance for a long time resulting in higher interest payments and other fees and charges. That is certainly not the best way to build wealth. Shopping without a list is like taking an exam without studying for it. People who go into a supermarket without a list are more prone to buy anything that catches their eye. They are more likely to end up buying things they do not actually need. Buying items on sale Buying things that are on sale can be very alluring. Having that in mind, it is important to note that just because something is on sale does not mean that it is a bargain, or that you need it. Also, seeing things on sale may give you the urge to buy them even when you do not really need them, the justification being that they are at a reduced price. It is better to buy something because you need it and not because it is on sale. Remember if you look around, you will discover that almost every other day there is something on sale. Conclusion: The road to financial recovery, and ultimately financial freedom, begins when we take time to identify the cause of overspending. The reasons listed above are just some of the reasons that cause some people to overspend. We all have our reasons for overspending from time to time. However, we cannot wish ourselves to be debt-free, financially successful, or free from the shackles of overspending; we have to actively find the underlying problems, and work hard towards cultivating planned spending habits. A written budget helps you keep track of spending. If you can see how much money is going in, then you will know how much you can spend without going broke. Likewise, if you see how much money you are spending, you will know what to do to change your spending habits. This is the surest way to keep your spending under control. Shopping without a list

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The information on which this report is based upon has been obtained from sources that Zimele Asset Management Company Limited (Zimele) believes to be reliable but has not been independently verified. No representation, warranty or undertaking (express or implied) is given and no responsibility whatsoever or liability is accepted by Zimele as to the accuracy and completeness of the information contained herein. All expressions of opinion are subject to change after release of the report at any time without notice. This publication may not be distributed to the public, media or quoted or used by the public media without prior and express written consent of Zimele.

MARKET SUMMARY
NSE Top Five Stocks
Kenol Kobil Kakuzi Olympia Capital Holdings Carbacid Investments Unga Group 1-Jul 11.85 70.00 4.50 129.00 10.40 1-Jul 80.00 23.00 8.60 41.25 14.80 27-Jun 11.10 66.00 4.25 124.00 10.00 27-Jun 87.00 25.00 9.15 43.00 15.35 Change 6.76% 6.06% 5.88% 4.03% 4.00% Change -8.05% -8.00% -6.01% -4.07% -3.58%

NSE Weekly Statistics

Kshs. B
Market Cap. Equity Turnover Bonds Turnover 1-Jul 1,115.343 0.195 1.851 Key Highlights
Kenya's economy expanded by 4.9% in the first quarter of this year compared to growth of 4.3% over the same period last year helped by improved productivity in the construction, financial services, and transport and communication sectors. However, it is not clear whether the growth momentum will be sustained from the second quarter due to the effects of rising inflation and subsequent weak consumer demand. The overall rate of inflation rose to a 19-month high of 14.49% driven by a weak shilling and high food and energy prices. Food prices rose by 22.52% from a year earlier providing the greatest force to the rise in the consumer price index (CPI), following closely was transportation costs which rose by 22.71% due to rising fuel prices. Kenyans should prepare themselves for a further rise in the cost of living in the months ahead unless international oil prices decline and the short rains are sufficient enough to lead to a significant reduction in food prices. Remittances from the diaspora hit an eight-year high of Sh.22.87 billion ($ 334.67 million ) in the first five months of this year as incomes of Kenyans living in the diaspora improved causing them to send more money back home to help their families cope with the harsh economic times. Remittances are Kenyas fourth largest source of foreign exchange next to tea, horticulture and tourism.

27-Jun 1,112.450 0.160 3.354

Change 0.3% 22.0% -44.8%

NSE Bottom Five Stocks

E.A. Portland Total Kenya Reinsurance Eaagads CFC-Insurance Holdings

Local & Regional Stock Indices

1-Jul NSE 20 Index NASI Index AIG Index USE ALSI (Ug) DSEI (Tz) JSEI (SA) 3,942.94 90.86 523.55 1,127.00 1,264.49 31,712.26 27-Jun 3,953.25 90.62 521.28 1,049.00 1,263.12 30,897.05 Change -0.3% 0.3% 0.4% 7.4% 0.1% 2.6%

International Stock Indices

Market
Fin. Times 100 Dow Jones Nikkei Average RTS Index BSE SENSEX SSE Composite Bovespa Index London, UK New York, USA Tokyo, Japan Moscow, Russia Mumbai, India Shanghai, China Sao Paulo, Brazil 30-Jun 5,945.70 12,414.34 9,816.09 1,906.71 18,845.87 2,762.08 62,404.00

Economic Data
Change
3.9% 3.1% 2.5% 3.5% 2.4% 0.1% 1.9%

Indicator
Economic Growth Overall Inflation Rate Average Bank Deposit Rate Average Bank Lending Rate Average Bank Savings Rate 91-Day Treasury Bill 182-Day Treasury Bill

Rate
4.9% 14.49% 3.57% 13.88% 1.38% 8.988% 9.854%

Period
1Q 2011 June 2011 May-11 May-11 May-11 4-Jul-11 4-Jul-11

Zimele Highlights
Zimele Funds
1-Jul Balanced Fund Pension Plan 3.97 11.23 27-Jun 3.95 11.60 Change 0.4% -3.1%

M-PESA Service
You can now send money to your account in the Zimele Money Market Fund (also known as the Zimele Savings Plan) and Zimele Pension Plan using M-PESA. Please send an email to info@zimele.net for more information.

Weekly Market Update

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