EFFECTS OF SAVING AND INVESTMENT STRATEGIES ON THE

PERFORMANCE OF MERU COUNTY GROCERY OWNERS (CASE STUDY

NCHIRU MARKET).

ASUMTAH MUTHEU KIMWELI

A RESEARCH PROPOSAL SUBMITED TO DEPARTMENT OF

BUSSINESS FOR PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR
A DEGREE OF BACHELOR OF SCIENCE IN FINANCE AT MERU
UNIVERSITY OF SCIENCE AND TECHNOLOGY.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background to the study
Most business people trust that the principle target of profiting is to spend it to meet their
quick needs and wants and that the future will deal with itself. Now is a better time to invest
than later. Saving and investing are impossibilities for these people (Obstfeld, 2016). Many
people also believe that saving and investing are good habits to have, and that people will
need to save because they don't know what will happen next.

Many people in developing countries believe that saving and investing may provide them
with financial security (Regnar Frisch, 2015). The current financial conditions in Africa have
had a negative influence on most African small companies, and small businesses in Kenya,
particularly in rural regions, have been greatly influenced, resulting in poverty for many rural
small company owners, such as grocery store owners.

According to Miller and Van Hoose (2014), saving is an unavoidable use. In a straightforward
dialet, Ahmed (2002) defines it as "putting money aside for future use." He claims that
saving is the result of careful management of income and consumption, with the goal of
having enough left over to set aside for future use.

For economists and policymakers working on economic development and regional

expansion, small businesses (such as grocers) have become a key research figure. Small
enterprises are the primary foundation for building a middle class society, thus their value
and significance. The small company sector meets the needs of customers in a flexible and
timely manner, and it is a useful tool for resolving social and economic issues.

Small businesses such as groceries has become an important research topic for economists
and policymakers working on economic development and regional growth. Its importance
and significance is due to the fact that small businesses are fundamental basis for building a
competitive environment, as well as basis performing a middle class society and also
improvement of the welfare of small businesses owners. This sector provides flexible and
fast satisfaction of consumer needs. Therefore this sector needs improved saving and
investment strategies to be effecting and useful in improving the welfare of the owners.

Investment funds have existed for a long time, especially among rural people, as people
have consistently stored away money and used it in times of need, and this is the basic
concept of saves and investment funds (Keynesian Theory). In the 1990s, as the economy
grew and unemployment fell, poverty fell dramatically, indicating a better level of welfare.
Despite having the greatest average income in the developed world, poverty remains
disproportionately high in the United States (Jesuit and Smeeding, 2019). According to
recent data, families in various states continue to face high poverty rates and sluggish
income growth.
Because groceries deal with agricultural products, and agriculture is a major contributor to
Kenya's economy, employing roughly 70% of the country's rural population, there is a need
to support the expansion and operation of these businesses, which need financial support.
The inability of rural entrepreneurs to obtain finance has limited their capacity to expand
their businesses, resulting in low living standards and poverty among rural residents.
According to the Economic Journal, volume 75, pages 493-517.

Statement of the problem

Saving and investment by grocery owners could be one of the major issues
affecting the development of small scale business owners in Kenya.

Many small-scale business owners have been unable to finance their operations
due to a lack of credit, risk and uncertainty, and insufficient savings, among
other factors, resulting in the development of alternative means of saving and
funds for investment, such as groups to mobilize saving and investment to
improve welfare. To small-scale businesses such as groceries, the minor
proclivity to consume outweighs the negligible proclivity to save financial
experts anticipate. There are options for grocery store owners. Regardless of
how hard a small business tries, their methodologies and proclivity to save
frequently do not translate to the bottom line in the managed productive manner
that financial experts anticipate. For grocery store owners, there is a massive
disparity between what is in their success strategies and what the market desires
for development. This development gap stems from the fact that grocery owners
in the Njiru market are pouring money into small groceries and consumption
rather than attempting to comprehend what funds and venture they can use to
drive development in their businesses.

Objectives of the study

1.3.1 General objective
 To analyze the saving and investment strategies on the performance of grocery owners
within meru county.

1.3.2 Specific objective

 To determine the level of saving among grocery owners.
 To determine the level of investment among grocery owners within meru county.
 To investigate the influence of saving strategies on the performance of grocers within
meru county
 To investment the influence of investment strategies on the performance of grocers.
Hypotheses
The study is to prove the following null hypothesis and whatever decision made would made on the
given hypothesis,

 There is no significant difference in the level of saving among grocery owners.

 There is no significant difference in the level of investment among grocery owners within
meru county.
 There is no significant influence of saving strategies on the performance of grocers
within meru county.
 There is no significant influence of investment strategies on the performance of grocers

Importance of the study.

Saving gives you a sense of financial freedom. This is obtained by looking
ahead, anticipating expenses, and achieving personal financial goals ( Olson and
De Frain, 2010). They also discovered that lower-income businesses are unable
to save much money because they spend a larger percentage of their income on
necessities such as food, clothing, and shelter. The scarcity of financial
intermediaries, as well as the lack of a small business saving and investing
habit, prevent savings from flowing into the most productive uses ( investment).

This study will assist grocery owners in the njiru market in improving their
financial performance, lowering their operating costs, and improving their
saving and investing habits. Financial institutions will also use this to boost
productivity, provide better services, and reduce regulatory
Justification of the study

The research focuses on the impact of saving and investment strategies on

the performance of grocery owners in Meru County. The findings of this
research study on the analysis of saving and investment strategies on the
performance of grocery owners could assist policymakers, the government,
and credit agencies in providing effective credit services delivery of loans
that could increase production, improve grocery owner performance, and
add value to grocery owners' product sales.

Scope of the study

This study is going to focus on the analysis of saving and investment strategies on the welfare of
grocery owners within meru county.

Limitation of the study.

Time constraint

The research will simultaneously engage in this study with other academic work. This

consequently will cut down the time devolved for the research.

Definition of terms and variables

Saving - Portion of income not spent on current expenditure.

Investment - Refers to keeping our money in financial assets. The action of putting something into
somewhere else

performance- The well-being in any respect (health, happiness and prosperity).

Case study area - The areas surrounding nchiru. The areas include; kunene, kianjai, nchiru, mascan
and miathene.
Chapter 2

2.0 Literature Review

Foreword
This chapter reviews the literature on savings and investment strategies for the well-being of food
owners. The literature covered areas such as savings strategy, investment strategy, and the welfare of
grocery stores in Meru county.

Saving

savings and investment assumes that there was a duration of humanity. Individuals have reliably had
what they had to use for lack of time. This is the basic thinking of savings. This is only possible until
valuable metals, such as gold and silver, are used as cash (Kaufman, 2018). Save is usually a word
used by people in your daily schedule. It means lifting for future capacity utilization, which is
considered to be given. Miller and Hoose (2011) point out that savings are refraining from use. These
indicate a waiver of use if the profits generated during a particular period are not fully used. There
are savings if some of what you earn is left to them for future use. On his side, Ahmed (2012)
describes it in a simple dialect as saving cash for future use. In short, savings and reservations are
the aftermath of cautious income

and consumption, with the goal of leaving something in case of contingency. In her study,
Maheswari (2016) show that most respondents have low employability, and even if they increase
their income, they only allocate a small portion of their income to savings. The number of
respondents invested in the form of financial assets is small. Respondents are selected only from
rural areas, are low-income, poorly educated, poorly hired, bank deposits, post offices, not lack of
mutual funds, stocks, corporate bonds, bonds, and new awareness. , Contributes to life insurance.
Financial asset schemes and opportunities lead to reduced investment in higher risk financial assets.

People's needs change as society grows, which in turn makes a big difference in people's attitudes
towards salvation. Savings are rare in low-income communities and often consist of cash or in-kind
donations. Saving cash is cheap and convenient. Differences in savings can be seen in different
communities due to differences in income levels, consumption patterns, perceptions of savings
benefits, family size, investment opportunities, and more. Human attitudes towards savings have
changed over the decades, as seen in the remarkable growth of society (Nayak, 2013).

Saving strategies include: Budget from a monthly income perspective, save gradual changes, avoid
debt as debt earns interest, and live like a minimalist. In other words, put your life into a necessities
and focus on what's most important. you.

Investment

Investment is one of the important macroeconomic variables. That volatility depends on the level of
output volatility, and income economists associate high investment rates with long-term economic
growth. Many researchers have attempted their work to investigate the theoretical and empirical
relationships between investment and savings. Historically, classical and neoclassical economists
have explained that interest rates on capital markets are determined by investment and savings.
Consistent with this, Goldsmith (2017), McKinnon (2018), and Gurley and Shaw (2019) found that
economic development creates demand for certain types of financial agreements, and the financial
system automatically responds to those demands. I'm pointing out that. According to these
researchers, the national financial system mobilizes savings and improves the attribution of savings
to investment. According to Bencivenga and Smith (2010), the financial system allows the
composition of savings to be modified in a way that favors capital accumulation. For example,
influential economists such as Robinson (2016) and Kuznets (2020), Caprio and Howard (2019), and
Rubini (2012) explain the correlation that policy responses have been observed between savings and
investment. It suggests that. In their analysis, the size of the country is an important determinant of
the correlation between savings and investment. In fact, the level of domestic savings determines
interest rates and thus investment costs, which influences the demand for new capital. In this sense,
low investment rates are associated with low savings rates. The positive relationship between
domestic savings and domestic investment is often seen as evidence of imperfect international
capital flows. Chaubey and Dimri (2008) conducted an analysis of investment perceptions and
behaviors in their research paper, Investment Patterns , to design effective investment policies. The
analysis shows the trend of change from investment planning to investment in banking, insurance
and trust planning. In economics's concept of "investment" is used to buy capital goods, that is,
goods that are not consumed but will be used for future production. In corporate finance,
"investment" means the purchase of securities or other paper monetary assets in money or capital
markets. For example, Pollacle and Heighberges (2020) describe investing as investing in
commodities that are expected to increase the value of money, such as stocks, tapes, investment
trusts, and other securities. Mohammed and Kemeir (2012) found that real interest rates are not a
key determinant of financial savings, but investment in informal financial markets is a key
determinant.

In the finance, the investment strategy is a series of rules, actions and procedures that lead to
investor selection of investors in investment portfolio. Individuals have different profit goals, and
their individual skills make different tactics and strategies. Some options include a compromise
between risk and return.

Performance

Harshvardhan N. Bhavsar (2013) tried to determine the relationship between savings and
investment patterns among small business entreprers. It shows an important relationship between
income and savings. The survey was conducted on the owners of different small businesses in
different locations. The study concluded that the main investment opportunity is primarily in the
form of bank deposits. According to a survey conducted, most small business owners are saving
money for family consumption, children's education, and other social costs. In his study, Varsha
Virani (2013) shows patterns of savings and investment in the city of Rajkot. It shows a major impact
on savings by small scale and small scale. In cost low-income, there are some business owners who
save minimal standards for future needs. The day after the day is increasing to improve people's
living standards. You use money for luxurious lifestyles to avoid what you prefer regular living
standards. This study is most of the surveyed money in the form of bank deposits for unpredictable
future safety. Welfare economics aims to use tools such as cost-benefit analysis and social welfare
functions to assess the costs and benefits of economic change and guide public policies to improve
the welfare of society as a whole. Happiness includes family happiness. The performance of the
Nchiru grocery owners depends heavily on their savings and investment strategies, as well as the
income they earn from grocery stores.

Conceptual framework

Investing in different types of assets is a challenging activity that attracts people from all disciplines.
It is the use of funds aimed at generating income and capital appreciation (Pandian2019). Investor
motivations for investing are complex and depend on many factors. Researchers in different
countries are trying to better understand why people manage their investments in different ways. A
conceptual framework has been developed to show the relationship between independent and
dependent variables, along with intervening variables that influence savings and investment
strategies for the well-being of food owners, as shown below.

Independent variable

Savings level

Investment level

Dependent variable

Welfare of grocery stores

Intermediate variables

Government guidelines for financial institutions

Natural disasters

Government policy

Interest in savings

Investment level

Income level

Savings

Investment strategy knowledge

Grocery store welfare

Natural disasters

Drought

Savings Level

Spending Level
Savings Habits

Access to Savings Facilities

Chapter 3

Research method

3.0

Introduction

This chapter describes the methods and approaches used to perform the survey, the tools used to
collect the data, the sampling techniques used, the survey population, and the data analysis.

Research design.

The function of study design is to allow the generated evidence to answer the original question as
clearly as possible (de vaus, 2020). Research design is the creation of conditions for collecting and
analyzing research objectives and providing economic benefits in the process. This study uses a
cross-section data collection method because data is collected at a specific point in time (once).

This survey uses a descriptive survey method. This is because research needs to collect information
about people's savings and investments. The main purpose of descriptive research is an accurate
description of the research. The study design used both quantitative and qualitative approaches to
analyze savings and investment strategies for the well-being of grocery stores in nchiru area.