Those discussions have been raising interest for many to want to learn more in depth and make investments.
And the investment that people have been very interested in learning and doing is in the stock market, and we are not bound.
When we ask to know if those people have started making any investments, the answer is that they haven't started yet.
So I have prepared this investment guide for all people, especially targeting those who are foreigners, so that they can know the right place to start on the investment journey.
Welcome to learn and share this guide with others so that they can make the right decisions.
What is investment?
Investing is making money work for you. That is, you can use your money to generate more money without you having to work directly.
WHY INVEST?
It is important to invest because, as you age, your energy to work decreases while the needs increase.
So you must be able to generate income to run your life without working directly.
What are investment objectives?
Investment goals are to achieve financial freedom. And financial freedom is when you can run your life without working directly. That is, to be able to generate enough income to run your life even if you are not working. And you will achieve that through investment.
How many types of investments are there?
Investments are divided into various groups, here we will look at the main types that we have been discussing frequently;
1. Investment through mutual funds. Here the fund collects capital for investors, goes to invest, and then returns profits to investors.
investment in the stock market. Here you contribute capital to the company, and when it makes a profit, you get dividends.
Also, the growth in the value of the company and shares gives you a profit.
3. Investment in bonds. Here you lend the government or institution money, and it pays you interest for the entire period of the agreement. In the end, you get back the amount you invested.
HOW MUCH SHOULD YOU INVEST?
The amount to invest is determined by your goals. But there are two main principles we follow;
One is SLOW; here you invest at least 10 percent of your income.
This method will take you 20 to 30 years to reach financial freedom, depending on your income and living expenses.
Two are MWANDOKASI; here you invest at least 50 percent of your income.
This method takes you 10 to 15 years to reach financial freedom, depending on income and expenses.
You can also have a combination of those ways depending on the different periods you go through in life.
Where to invest?
Many people are attracted to investments and things that are exciting, such as investing and getting big and fast profits. But the truth is that the right investment does not excite you, instead, it robs you.
Investment is bad because it takes a long time to see the big return on investment, unlike other ways of generating income such as being employed, self-employed, or doing business.
So the first criterion in choosing an investment is to avoid any investment that is very exciting, for the most part, it will bother you a lot or give you a loss at all.
ADVICE FOR THE COMPLETE BEGINNER.
For someone who is just starting an investment, the right place to start is mutual fund investment. in Tanzania there are four funds so far, which are UTT AMIS, FAIDA, TIMIZA, and SANLAM.
Reasons to start with mutual funds are;
1. It is easy to invest, you don't need to do any long process to invest. I can invest wherever you are without affecting your activities.
You can invest as little as you can afford.
2. You don't need to know anything about investments, because fund operators have investment professionals who do great work.
Your investment does not affect your other activities, because you do not need to monitor the investment trend.
3. It is easy to withdraw your investment and get money when you need it, because you don't wait until a customer is found to sell, but the fund buys your investment and gives you money.
In the bags currently on the market, it is better to start with UTT AMIS bags because;
1. It has been around for a long time, almost 20 years now, so it is an indicator that it has the ability to continue doing well.
2. It has many pockets in it, compatible with the various needs that a person has. uTT AMIS have six funds, which are UNITY, CHILDREN, INVEST LIFE, JIKIMU, UKWASI, and BOND.
3. You can open, invest, and sell your investments using your mobile phone without having to go far to complete it.
The fund is managed by the government and has guarantors outside the government, making it safer.
5. The continuous growth of the funds every year has been providing a good and reliable return to investors.
WHY SHOULD YOU AVOID STOCKS AND NOT CLOSING IF YOU ARE STARTING?
Of all the types of investments, stock investments are the most profitable of all, in the long run. And bond investments are safer than other types.
But if you are just starting an investment or the amount you are investing is still small, it is better not to get involved in a stock investment, and we will not close at first. That is for the following reasons;
1. A bond investment requires a minimum amount of Tsh one million at a time, an amount that if you are just starting out, you may not have.
2. Stock investment requires monitoring of market trends to make the right decisions. That is extra work, especially when you have other responsibilities other than investing.
3. Investing in stocks requires wide diversification to reduce the risk of loss when a particular type of stock performs poorly. If your capital is small, you cannot make a good spread.
For these and other related reasons, when you start, don't go into stocks and bonds, but start with mutual funds, which are going to invest there.
WHEN IS THE TIME TO GO INTO STOCKS AND WE ARE NOT CLOSED?
It should be understood that you will not invest completely in stocks and we will not commit, you will get there later. But first, learn investment and build capital through mutual fund investments so that you can also continue with your other income-generating activities.
You will be able to enter the investment of stocks and bonds once you have a basic understanding of investments and how they work, in addition to having built enough capital to make investments that will give you good profits and returns.
Although you also don't have to go into stocks and we don't close directly, if mutual funds give you enough profit, the great stability that you get by investing in those funds is more profitable than the additional profit that you would get by going to the market directly.
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