You can’t invest without a goal 

As the population of Uganda grows, the country is likely to face immense challenges arising from the increasing needs of a growing population. But it also poses an untapped opportunity to drive both purpose and profit.
Do you know the secret behind successful investors? Well, it is a strong sense of purpose.  
According to Joseph Areu, an independent financial advisor, investors are now driven by more than just profits. Purpose and impact are becoming increasingly important.
 Mr Areu says in his role as a financial advisor, many people seek financial advice in terms of what investment they want to make. They always ask: “How can I buy a bond? How can I invest in a unit trust? ”I hear of selling shares, but how can I get one?”

Purpose-driven investment
But the correct question to begin with is: What is the purpose for which you want to invest? 
 Mr Areu brings a scenario of a person who wants to invest in cows and their objective is to have milk, so that you can sell it and get daily income. He says in such circumstances, you are not going to buy bulls or any cows, you will have to buy a Friesian cow known for its high milk production.
 He explains that there is a link between the asset you buy, and the purpose for which you are investing. This is a similar logic with passive financial investment, whether it is a bond or  shares, understand the reason for investment. 

 “I would propose to people to think of at least four different purposes for which one would want to invest. The first one is short term investment. Think of this, you have some money which you would want to use in one year’s time or less, for instance you want to build and have some money. But it will take some time for KCCA to give you approval. Meanwhile, that money is lying idle in the bank,” Mr Areu says.

 Here are some key reasons for investment: short term, long-term and earning an income.
Mr Areu says, the best thing would be to save that money. But for a short-term period, that is, one year or less. In that case, your principal target objective is to make sure it is safe so you cannot afford to lose it. Secondly, it is liquid meaning you have easy access to it.
 For instance, when someone comes with an investment proposition to you, those are the main two questions to ask. First is: Is it safe and if it is, can I access it easily when I want it preferably at no or very low cost? That is one objective.

 Explaining that the second one is long term growth, whereby you are not in a hurry. Here, you have money which you want to put aside and you want it to grow over the long term. If it is money that you are not going to use tomorrow or next year. So, you want it to grow.
 So, find out at what rate you are going to earn. The higher the rate, the more you earn.
 The third objective you would want to think about is income. So think of a retiree, you no longer have a salary and yet want to have a regular predictable income coming into your account.
“Therefore, your purpose of investing in that case is to make sure that you have a regular, predictable income,” Mr Areu says.

So, when you get an investment proposition, find out whether it is safe. 
“How regular is the income that I will be getting from this? Are there going to be terms? So if I am promised income monthly, is there going to be a month where I might not get income?”Mr Areu says.
 He says the fourth objective, is safety. 

“Sometimes, all we want is to have an asset which is just safe. Come rain come sunshine, may be to pass on to your estate or children for transition purposes, all your interest is to make sure your asset is safe, ” he says.  
More to that, Mr Areu says you will then make a decision about which product you want to buy.
 After figuring out the purpose, align it to what you can invest in. 
He asserts that not all products will be able to satisfy all those objectives. When you have some money, which you need within a year or less, for example, it could be school fees or money for construction. You need to find out whether this investment idea is inappropriate. If yes, knock that out of your options.

Secondly, “Is it liquid? That is, how accessible is it?”
Mr Areu says if that is your situation, you can think about treasury bills. These come in very handy, as treasury bills are issued in periods of three months, six months and one year. Within that time, you will realise your investment will mature and you will get your money back.

 Even when you need your money earlier, for treasury bills all you need is to go to your bank, put it in writing and by the end of the day if you went early, you have your money in your account. This is very liquid.
 Alternatively, he says you can look at a unit trust. But ask for a money market unit trust because it is the most liquid, meaning you can access your money anytime during the period that you had planned to invest.
 Other than that, Mr Areu says the money market unit trust, by regulation is invested in very short-term investments. This means they are not going to put that money in some long term asset like shares or a bond. Meaning that the money is available anytime when the client needs it.

 He adds that the regulator makes sure they are invested in a way that the money is always available as and when they need it. 
In our market, those are the two most important options that you may have, if your objective is short term and you are conscious about security and liquidity. 

Goals
Some investment vehicles are best suited to specific goals than others.
When setting investing goals, you must understand your tolerance for investing risk-the amount of risk you’re willing to take when you’re investing in things like stocks, bonds and funds- and your timelines.

If you’ve got a high tolerance for risk, you are fairly comfortable with the chance of losing money in exchange for the potential to achieve higher returns. This makes you an aggressive investor.
But if you have got a low tolerance for risk, you prefer investments that are not likely to lose value. This means you are a conservative investor.