Build your wealth from passive assets

Keith Kalyegira, the chief executive officer at Capital Markets Authority. PHOTO/file

What you need to know:

Instead of saving your money on the account that attracts a monthly charge, you could invest in a financial instrument, where you deposit a minimum of Shs100, 000 or Shs200, 000 even more on monthly basis into a unit trust to earn a reasonable return.

Do you ever think of the possible investment areas you can venture into given that you may not have the time to supervise a business?  Look no further than passive assets. These assets in form of unit trusts in financial markets could be your ideal option for saving and investing.

About five years ago, only 3,000 Ugandans had opened up a central security depository account in the Central Bank to purchase bonds and Treasury Bills. With more enlightenment about financial markets, Capital Markets Authority (CMA) has registered a ramp up of 11,500 clients. 

In 2014, the unit trust space was worth Shs8 billion in assets in collective investment schemes. It has now grown to Shs499, 500 billion with an upturn of 12,000 clients. In the next four years, CMA believes these assets will stockpile to about Shs2 trillion. The beauty with equities alongside the right advice of a broker is not only do you gain the capital appreciation but also the dividends. It is a good place to be in a long haul.

While speaking at the National Social Security Fund (NSSF) financial literacy programme, Keith Kalyegira, the chief executive officer at CMA simplifies it as the market where those who have money get those who need money. CMA is mandated to license, protect investors and regulate the business.

The webinar themed, “The Financial Vs non- financial markets”, informed the public on the viable financial options that productively boost their savings.


Kalyegira says the whole game of investment is about return on investment. You need to compare rates of return on each investment before you commit your money. Then make the leap.

“Instead of saving your money on the account that attracts a monthly charge, you could invest in a financial instrument, where you deposit a minimum of Shs100, 000 or Shs200, 000 even more on monthly basis into a unit trust to earn a reasonable return,” says Kalyegira.

This unit  typically has different types of funds; money market funds that invest in treasury bills, income funds that invest in treasury bonds and equity funds that invest in shares in the stock exchanges.

Surrender your savings to a licensed money manager or fund manager whose job is to analyse which stocks to buy, whose bonds to buy and who can give you your money when you need it.

On the non-financial markets that include any business activity, Robert Kabushenga, a farmer and former chief executive officer of Vision Group advised participants to develop a behaviour pattern towards saving.

“You have to discipline yourself not to consume everything you have. Young people of today need to train themselves delayed gratification and avoid consumerism. This false consumerism does not reflect our economic activity but rather reflects on desires and wishes from elsewhere instead of our reality,” Kabushenga assures.

“If you have two million shillings from a relative, why are you buying a phone of Shs2 million? It is a behaviour issue of how people are raised and brought up,” Kabushenga explains.

He notes that the less one is able to live on, the more they are able to save.

Kalyegira says unit trusts are the safest place to go to because these are basically managed by fund managers whose job is to analyse what to do on your behalf.

“Seek investment advice on where to invest your money and how to save it. When you do it yourself, luck might be on your side.”

Invest small amounts of money into unit trusts with as low as Shs100, 000 per month as opposed to going directly into bonds or shares.  Shares have a high return and high risk while unit trusts have a guaranteed low return. This is an alternative to investing idle savings. There are five unit trust managers licensed by CMA that include Britam, Sanlam, Xeno, UAP and ICEA.

Asymmetric thinking

Have your own agenda as opposed to following crowds. If you are too busy, do not try and do something you cannot supervise.

Kabushenga shared that when you are making choices and decisions, it pays to be asymmetric in your thinking.

“You are not going to put money in a farm in Kyenjojo and sit in Kampala to start calling the farm manager to find out. If you are going to put the money in the farm, you are also going to take your life and live it there.” So be asymmetric, if you want to invest money somewhere, do what other people don’t do.


There is an adage saying, ‘Never put all your eggs in one basket.’ It is always good to diversify if you can but it is not easy to diversify a small amount of money. Work hard, improve and invest in yourself to a point where you can grow your income as well as grow your savings. It is important to know yourself at an early age.

Do a Strength Weakness, Opportunities and Threats (SWOT) analysis in the area you are likely to be more productive’. Be overweight where you think your strengths are and underweight where you think your weakness are.

For those who plan to mint money from gardens, Kabushenga assured them to have bigger reasons to join farming. Money in farming is not an objective but a consequence of certain farming objectives.  Go into farming with bigger objectives for instance if one chose to breed the finest pigs, you will never have to walk out of your farm to look for the market.

Have a long term view for both financial instruments and non-financial activities like farming, real estate among others.


Diversification of Risk

Investors can secure a much wider diversification of risk, because these funds usually invest in different investments. Studies show that the greater the diversification of a portfolio, the lower the risk in relation to the return.Those who invest in Collective Investment Schemes (CISs) are therefore seeking to lower risk in relation to their return.

Access to Securities Investments

By investing a small sum(either in a lump sum or on a regular saving basis), an investor through the CIS can achieve a personal portfolio spread over several securities.

Lower transaction costs

By investing in a CIS, investors incur lower costs than if they were to buy and sell a portfolio of individual securities directly.


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