An investment can be described as the purchasing or creation of an asset with the hope of gaining capital appreciation, profits, or even rents at a future date. Investment is rather long term and should not be confused with much shorter term trading or speculation. The optimum investment horizon should be between five to ten years or longer for higher returns.
The local market offers various investment options and your choice will be driven by your goals as well as the specific limitations of that option. The government securities provide the safest investments with yields as high as 18% for the longer term coupons e.g. 10 years. However the limitation is the lack of personalized investment advice pertaining your particular circumstances. This would require you to get an intermediary and that often costs money.
Listed equities are another great option especially since the Uganda Stock Exchange went digital however the buy and selling by traders on the exchange is low. While there are no guarantees, high activity is often preferred over the actual profitability of a particular stock. Private equity and Joint ventures are another way to raise capital and invest, project viability, management strength as well as economic environments can crush this investment in an instant. Fixed deposits from commercial banks also offer shorter term secure investments with the only risks being tax efficiency and ease of access to money hence breaking your investment.
The one solid investment I do recommend is a guaranteed return endowment from a life insurance company. Apart from the flexibility of incremental investments, it provides a tax free, worry free guaranteed solution for your investment since all your risks as a saver are considered.
For more information please contact, lifeadvisor@uap.co.ug,
The writer is the Corporate Sales Manager for UAPLife Insurance.
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