Balancing act in juggling land with other financial assets

But here is the catch: Before you dive into any of these, a couple of financial experts say you must win what Is called the "food war." This means stabilising your cash flow so you can afford the risks that come with investing.

Livingstone Mukasa, the chief executive officer of Living Business Education Limited, says: “Once your cash flow is stable, you are in a good position. Look for land you can afford. Hold onto it until it appreciates. Alternatively, consider developing it for profit.”

But where do you get the cash for such investments? The answer is simple: start a business, even something as simple as selling oranges. Maximise sales, reinvest profits and minimise risks.
As the business grows, the cash flow will follow, giving you the funds to venture into larger investments such as real estate.

Mukasa throws in another piece of advice: Your partner is your biggest financial decision. 'Marry for economics,' he says, emphasizing that the right partner builds a strong financial foundation.
Two incomes? That is a bonus. Once you have cleared your societal obligations and navigated what he calls the “African tax” (family responsibilities), you are free to focus on building wealth.

In addition to business ventures, Mukasa also touches on other investment options, such as government bonds, which provide a stable, predictable income.

Then there is real estate, which operates on an implied 10 percent return model. If a property generates say, Shs1 million a month, it is normally valued around Shs100 million. However, skilled developers can achieve better returns by constructing properties rather than buying and reselling land.

The market may seem opaque, but there are hidden gems—if you have the expertise to find them.
Real estate prices in Uganda are climbing, and housing is becoming a serious challenge. A starter home (a three-bedroom located 25Km from the city) costs Shs70 million to Shs80 million.

If you earn Shs1 million a month, it would take you six to seven years of saving every penny to afford a home. With Uganda's rapidly growing population, prices will only continue to rise, making early action key.

Standalone homes are becoming too expensive, leading savvy investors to look at condominiums. These are not just for the wealthy—they are increasingly appealing to middle- and lower-income groups.

Building on Kakiika’s emphasis on saving and leveraging collective investments, Kukunda advises that young professionals should diversify their portfolios, mixing higher-risk assets such as equities and land with safer investments like bonds.

Mohammed Kakiika, an educationist and entrepreneur, disagrees slightly, suggesting that young professionals should aim for a mix of liquid and fixed assets.
He argues that salaries alone often are not enough to build significant savings or purchase property outright and that many financial products like unit trusts, treasury bills, and bonds are more savings vehicles than true investments.

This is where Kakiika notes that after accumulating those savings in those aforementioned vehicles, you dive into the risky ones to maximise your cash flows.

Compulsory savings
His principle is: If you can not save, you will never have the capital to invest in anything meaningful.
“Even high-income earners—those making Shs50 million per month—often struggle with financial discipline, taking overdrafts to cover expenses. So, what about young professionals earning Shs 1 million to Shs3 million? The key is structured, compulsory saving,” Kakiika notes, adding that for young earners—corporate professionals—it is crucial to automate savings rather than leaving it in a bank account where it is easily spent.

One example he gives is that if you earn Shs3 million, allocate Shs400, 000 monthly into a unit trust fund or a low-risk financial product.

After four years, you will have a substantial amount to buy land or make an initial high-risk investment.
“This is how real wealth-building begins—by using financial products as a bridge to investment, not the end goal,” he advises but adds, “Saving alone won’t make you wealthy.”

His strategy is that after a few years, take a bold step into a high-value investment that is strategic like land (but not in overpriced areas), agriculture (higher returns than real estate, but requires patience), or selective business ventures (avoid overly competitive, low-margin sectors).

That is where financial securities like Treasuries come in to provide a safety net because real wealth requires a strategic, calculated risk.

Investing smart
In Uganda, land is king—or at least it is treated like it. But is it always the smartest move?
Cindy Hannah Kukunda, a portfolio manager at ICEA LION Asset Management, argues that the real key to wealth is diversification—knowing when and how to spread your investments across various assets to maximise returns.

For young professionals (aged 27–35), risk appetite should be at its peak like in equities (stocks) and land.
Financial markets have a simple rule of thumb: 100 minus your age. So, if you're 30, about 70 percent of your portfolio should be in higher-risk assets such as stocks and land, with the remaining 30 percent in safer investments such as bonds or treasury bills.
As you age, the equation shifts. The older you get, the more security you want and the less risk you are willing to stomach.

Why? When you are younger, you have time on your side. If the markets dip, you can recover over time. But for retirees, liquidity becomes a priority—having cash readily available for medical expenses, emergencies, and daily living costs.
That is why their portfolios tend to lean more heavily toward low-risk, income-generating assets.

Here is the differentiator: While many people think of land as the ultimate inheritance, financial securities can be just as transferable—without the family feuds.

A Central Securities Depository (CSD) statement ensures clear ownership, making it easier to pass on wealth without disputes. Plus, financial assets come with added perks, like boosting your chances for a visa application.
So, while land is still a prized asset, don’t underestimate the power of financial securities as part of your investment game plan.

Diversify
The takeaway? Diversify—not just by asset type, but by location as well. Don’t pour all your money into one region or asset class. Diversification spreads risk and positions you for long-term growth.

Are government bonds truly risk-free?
Government bonds are often viewed as low-risk, but not risk-free.
So, before diving into government bonds, assess the country’s financial health. 

Investment returns
Returns on investments follow a pattern that is both predictable and full of potential. 
•  Equities, for example, offer the highest returns but come with significant risk. Some stocks, like MTN Uganda, have surged from Shs200 to Shs275 since listing, and Umeme from Shs170 to Shs410. 
While picking the right stock could yield 10 to 20 percent annually, with the occasional 50 percent if luck and timing align, it is a game for those with a high tolerance for risk.
•  Real estate, on the other hand, is solid but unpredictable. The high upfront costs, long holding periods, and challenges with liquidity make it trickier for investors. 
•  Meanwhile, bonds and treasury bills provide a safe, predictable return, making them ideal for those seeking stability, though their yields are lower(between 13 and 17 percent per year).
•  The beauty of financial markets: low barriers to entry –you can start investing in equities with as little as Shs30,000 and diversifying your investments—across stocks, bonds, and real estate—provides flexibility, growth, and security.
•  When considering fixed-income assets, such as unit trusts, they offer an average yield of 11-13 percent annually and come with a tax exemption. 
•  If you are eyeing real estate but lack the capital, Real Estate Investment Trusts (REITs) provide a way in without owning physical land. REITs pool funds to invest in properties including commercial buildings, retail spaces, or agricultural land.   Investors earn rental income, and with REITs legally required to pay out at least 80 percent of net profits, they offer steady cash flow. This model is growing.

A strong economy reduces the risk of default, making bonds a safer bet—but, like anything, not invincible.
Take Uganda, for example. The country holds foreign reserves worth Shs3.4 trillion, which can cover nearly four months of imports. Its debt-to-Gross Domestic Product (GDP) ratio is at 46.9 percent, well below the 50 percent danger zone, signaling that Uganda’s government is in relatively stable financial shape.

The Ugandan government, for instance, is a far more reliable borrower than the average Ugandan citizen. Unlike individuals or businesses that may struggle to repay loans, the government can raise funds by increasing taxes, boosting exports, or restructuring its debt, making defaults highly unlikely.

This stability makes government bonds attractive for those seeking a low-risk investment.

On the flip side, corporate bonds come with higher risk and higher rewards. These involve lending money to private companies, often startups or established businesses.

While the interest rates are appealing, there is a catch—if the company goes bankrupt, getting your money back can be tough. Before jumping into corporate bonds, Kukunda stresses the importance of due diligence.

Work with professional fund managers to assess the company’s cash flow, market potential, and overall risk profile. A promising start-up may sound like a golden opportunity, but without a thorough financial check, it could quickly turn into a disaster.

Investing is not just about returns—it is about knowing your risk tolerance.

High risk tolerance? You might invest in corporate bonds, equities, or start-ups.

Low risk tolerance? Stick to government bonds, unit trusts, or treasury bills.

But here is the golden rule: You should never invest 100 percent of your income in risky assets—especially if you lack a stable fall-back plan.

If you have a high-risk appetite but lack the financial capacity, advisors will steer you toward safer investments that match your situation.

Start small, remain consistent, and let compounding do its work. Whether it is bonds, stocks, or REITs, the real game is in understanding returns and making disciplined choices.