Would You Rather Invest in a Special Fund or Buy Company Shares? [A Case of Ksh250K]

Imagine this, you have just reached your year's saving target of Ksh250,000 and you’re eager to grow it, but you’re torn between two investment options - special funds or company shares. Both choices can potentially multiply your money, but they come with very different risks, returns, and management styles.

So, if you were making this decision today, which path would make the most sense? Let’s do the maths.

Option 1: Special Fund

A Special Fund is a professionally managed investment pool that targets high returns by spreading money across various assets. Unlike traditional low-risk funds, special funds take on higher risks, investing not only in government securities but also in currencies, precious metals, and other volatile sectors.

The goal is simple - achieve better-than-average returns. In Kenya, some special funds have been offering an average net interest rate of 18% per year.

Initial Investment: Ksh250,000
Annual Growth Rate: 18%
Investment Period: 2 years

Year 1: Ksh250,000 × 1.18 = Ksh295,000
Year 2: Ksh295,000 × 1.18 = Ksh348,100

Total Growth: Ksh348,100 - Ksh250,000 = Ksh98,100 profit

Special funds attractive for investors who prefer a hands-off strategy and want professionals to do the heavy lifting.

However, there’s a catch. The very nature of special funds means your investment is medium to high risk. Markets can be unpredictable, and while you could earn above-average returns, you could also face periods of losses.

Read Also: Mansa X: All You Need to Know About the Special Fund Offering 24% Returns

Option 2: Company Shares

Buying company shares is a different game altogether. When you purchase shares, you are literally buying ownership in a company. Your returns come from two sources:

1. Dividends – periodic payouts from company profits.
2. Capital gains – an increase in the share price over time.
   

Shares can be incredibly rewarding, especially when the market performs well.

The NSE 20 Index provided the framework for this calculation:

2023 Index Value: 1,501.16
2025 Index Value: 2,700.67
Percentage Growth: (2,700.67 - 1,501.16) ÷ 1,501.16 × 100 = 79.9%

Applied to the investment: Initial Investment: Ksh250,000
Growth Multiplier: 1.799
Final Value: Ksh250,000 × 1.799 = Ksh449,750

Total Profit: Ksh449,750 - Ksh250,000 = Ksh199,750

That’s significantly higher than what the special fund would have given you.

But again, the risk is much higher. Share prices fluctuate daily, influenced by company performance, investor sentiment, economic factors, and even global markets. You could easily lose a chunk of your investment if the market dips or if the company underperforms.

Read Also: Most Profitable Stocks in the NSE - January 2025 to August 2025

So, Which is the Better Choice?

The truth is, there is no one-size-fits-all answer. Both options can grow your wealth, but your decision should depend on:

• Your Risk Appetite: If you’re more conservative but still want higher-than-fixed-deposit returns, a special fund may suit you. If you’re comfortable with market volatility and want potentially higher profits, shares are a good bet.
  
  
• Your Financial Goals: Looking for long-term growth with less involvement? Special funds might work better. Looking for control and the thrill of the market? Shares are the way to go.
  
  
• Your Knowledge Level: Shares require active monitoring and market knowledge. Special funds give you access to professional fund managers.
  

Wrapping Up

With Ksh250,000 in hand, whether you choose a Special Fund or the stock market comes down to your personality as an investor.

• If you value professional management and steady but slightly risky returns, a special fund could be your best friend.
• If you thrive on market research, risk-taking, and the potential for bigger profits, shares might suit you better.

At the end of the day, some seasoned investors even combine both options—putting part of their money in a fund for stability and part in shares for higher growth. That way, they balance risk and reward.