It is important for everyone to understand that the investment journey of every individual is very personal and different. There are 3 main reasons for this.The first one is that people are different in terms of temperament, personality and character. This means that the way they will move through their journey will, to a great degree, be determined by the kind of person they are.Secondly, people are in different places personally and financially. This will determine the options and methods of investing available to them in their current position and lastly, and I think most importantly, people have differing driving forces. Even though their goals may be similar, the core motivations that drive people in their investment efforts will play a huge role in the choices they make as investors.

That being said, in this article I would like us to go into the general guidelines that govern investment choices. As you learn them, it is important not to take them in wholesale but tailor your own situations.

To reap the best from investment you do not need to be a genius. If you have morethan 120 or 130 I.Q. points, you can afford to give the rest away. You don'tneed extraordinary intelligence to succeed as an investor. – Warren Buffet

 All you need is disciplined approach to it and it starts by looking at your individual circumstances.

Some of the key factors that determine our investment choices include:

1.     Knowledge; if you do not know about something it definitely does not exist in your world. One has to start by understanding the available options for investments. If it is starting a business, more often than not, people will start a business in line with what they have seen others do. That’s why, in your village and other rural areas, the types of businesses you will see will be no more than five and any new business shall be in competition withthe existing ones. The starting point is to gain as much information as one can get on the various available options.

An investment in knowledge pays the best interest. - Benjamin Franklin

2.    Investment Horizon: We all invest for different reasons and to achieve different goals but since the goals in our lives are time-bound, we should prioritise them well. The risks that a 30-year-old can take are very different from the ones a 50-year-old can take. There are occasional outliers like the founder of Kentucky Fried Chicken (KFC) who started a business at over60 and it ended up being very successful. However, the statistics are not in favour of those who wait too long to start their investment journey. A person saving for their school-going children’s tuition will need to consider different investment options to a person saving for a new-born. It is therefore important for one to understand where they are and what they are investing for.

3.    RiskTolerance: We are all wired differently. There are those of us who cannot stand losing any of our money while others are natural risk takers. Understanding where you stand helps you determine what choices you have.For instance, if you cannot stand seeing your investment portfolio lose say 20%,it means that maybe the stock market is not your most suitable investment option since fluctuations in stocks are inevitable and sometimes losses are great.

4.    Return: We all invest to get good returns. One of the key things that we all need to be aware of is that returns vary from one asset to another but also for one to actualize any meaningful return they need to be patient. Some investment returns are known and easily predictable than others so it is always good to know how the returns are generated and how sustainable they are.

5.    Available resources:  You cannot invest what you don’t have but, in most cases, we have resources that we are not utilising well. The starting point of calculating and understanding your available resources is listing down what resources you have access to and writing down what they can be used for. There are some you might miss because you have had them for so long you take them for granted. I suggest you ask someone close to you to help you with this list. For example, if you have an idle piece of land in a developing place, see what economic activity can be done there. If what you have is more subtle, like a skill, such as public speaking, you can invest in it and put it to work for a good return.

6.    Partnerships and Networks: when investing especially when starting a business one of the biggest assets you have is your relationships and network.Finding the people who have done what you want to do or even someone you can bounce off your idea can be a huge advantage. While looking at the right networks, find someone who shall tell you the truth no matter what but ensure they don't have lots of negative energy around.

7.    Available options: If you are looking for a passive way to invest, then one is restricted to the available options. Most of the formal investment products are regulated by the various regulatory institutions. It is good to understand the basic regulations and the market operations of the various products. Depending on the investors risk-return tolerance they should be able to make the right investment decision.

8.    Prescribed minimums:  there are some products that have minimum amount’s that an investor can invest in. Ifthe minimums are beyond your reach, then in most cases one can’t take advantage of these products. You might want to explore cheaper investment options.

9.    Taxation status: Understanding your taxation status determines what investments make more sense. For example if you have decided to invest ina government bond its is better to invest in an infrastructure bonds as it is tax exempt as opposed to the normal bonds whose interest is taxed at 15%.

Making the right investments choices is an iterative process whereby we have to go through it time and again to check if our circumstances have changed. If they have, you need to change tact and if not, you can do a status report to see what you have achieved vis-à-vis your goals. Understanding oneself is the starting point to the journey of financial freedom. Should you need more help in making the right investment choices, you can find us at liz@elizabethnkukuu.com and 0777 600577. If you are ready to start your wealth creation journey with us, follow the link here to join our masterclass.

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