By Mary Anne Zita

In your chama, you have worked hard and saved faithfully every month. Now, you have some good money and you are thinking of investing it. Sometimes, we get excited and opt to put all our money in one project that seems very lucrative. Perhaps you may decide to invest all the chama savings in shares that look very promising. But, you never know. Something could happen to that company and the share values drop overnight and you make a huge loss. That’s why, no matter how good an investment seems, don’t put all your eggs in one basket. This means that you have to take precaution. The basic idea is that as a chama never put all your money into one investment in case there is a problem and something happens to it. Financial advisor Patrick Wameyo of Financial Academy and Technologies gives some ideas to help you make sure you are protecting investments.

Whether you are experienced chama investors or not, always remember that there is no such thing called risk free investment. All investments carry some degree of risk, big or small. If this is your first time, you need to bear in mind that all investing has a degree of risk. Don’t fall into the trap of putting all your money in one thing as the dangers of having all your investments in one place have become very apparent in this economy where many chamas have lost a lot of money because they didn’t protect their investments like they could have. This doesn’t mean that they would have been immune from the problems that came up, but there is a possibility that they would have lost less money if they were more careful about where they were putting their money.

Diversification is very important when it comes to investment. It can help you to insulate your Chama’s savings from any financial collapses that could happen in future. Whilst there is never anything that can be done to completely remove the risk inherent in investing, but there certainly are ways to make sure that you are spreading things out. The idea of diversification means that you have more assets and the same amount of money spread out over different investments with different risks. When you balance your investments, you make sure all your eggs are protected and that you are making the most of your money.

In your chama when planning your investments, you should consider the four basic types of investments there are: cash, treasury bonds, property and shares. Money in a fixed deposit account is ranked one of the lowest risk investment and shares as the highest risk. When you are planning your investments and deciding where you are going to put your money, you should also spend time and consider what risk level you are taking on with allocating your investments that way.

You want to make sure that you are always conscious about what is going on in your portfolio so that you never really have to wonder what is going on with your money. A good move would be to elect one of your chama members to be in charge of investments. This person will be charged with keeping a hawk’s eye on the group’s investments. This is due to the fact that your investments are very important and you should be sure that they are safe.

Also, keep in mind that everyone has a different level of risk they can tolerate and you should make sure that all chama members are comfortable with the investments the group is taking and what that means for your chama investments in the long term. So when you are planning your portfolio, be sure to think about how many baskets you are carrying and how many of your precious eggs are in each of those baskets and that all chama members are well versed with this.

In your chama you will feel secure to some degree in your investments despite the many risks you will face when they are diversified. In fact you need the sense of security so that you can continue investing and building your financial future. Make sure that your investments consist of a good combination of conservative and high risk in investment to give you a profitable future.

Categorised in: chama management, Investment options for chamas

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