Tool #10 of 104 tools is to plan for your retirement by investing wisely

“A wise man thinks ahead; a fool doesn’t, and even brags about it!” Proverbs 13:16 When a Nurse who had worked in Hospice as

“A wise man thinks ahead; a fool doesn’t, and even brags about it!” Proverbs 13:16

When a Nurse who had worked in Hospice as a caregiver for over 20 years was asked what key message she had learnt caring for the terminally ill, she replied “plan for your retirement.” She revealed that many patients in the face of death use their last breath worried about how their children and close dependents would survive past their demise.  And wealthy patients with well-off children and close relatives appeared ready and willing to move on to the next world. So, why are poor folks afraid of the next world when they should be the ones optimistic? Our Lord Jesus Christ, raised from the dead. He defeated death! As Christians we believe in life after death. Then why worry at the last hour? In the Gospel of John 11:1–44, is one of several miracles in which Jesus resurrected Lazarus of Bethany back to life four days after his burial.

This tool is not about life after death. It is about avoiding last minute worries. How do you plan for your retirement? As previously written on this page, the quality of the choices you make will make or break you. Now is the time to decide about where to invest your small savings. Below are the three rules to follow as you do this.

Put your money in investments with a positive financial present value (NPV) and whose return on investment (ROI) is higher than the cost of capital. Today, the interest rate by most commercial banks is at 19% to 35% depending on the assessed risk of the borrower, the bank you go to and your kind of business to invest. That is the cost of capital. If you borrow to invest in any business, the return on that business must be higher than your borrowing rate! For this reason, many people who borrow from money lenders end up badly losing all their private assets that were used as collateral. Because there are few businesses that can give such high returns, borrowing for small scale businesses in Uganda rarely works for most people. If you want to start a business, form a savings group, join a Sacco or fundraise from friends and family and instead of that massive wedding, go start working on your retirement. Today, banks pay 9% to 12% when you put your money in fix deposits for at least a year. That is no hassle income. You have an option of taking risks by investing in small businesses as they have potential to deliver higher returns in future. The challenge is finding great small businesses with serious youngsters to help grow your equity. Whatever you do, at worst focus on preserving your wealth.  Investing is the best option.

Put money in businesses that have a short payback period. This the time it takes you to recover all the money you put into the business. If you buy land at Ugx. 200m. Build rentals at Ugx. 300m. Your total investment is Ugx. 500m. If you earn a net of Ugx. 3m monthly from all the rentals. It will take you 13.8 years i.e.  Ugx. 500m/(Ugx 3m per month x 12 months) to recover your initial investment. This assumes you have full occupancy, and you develop the land quickly. Whereas land tend to preserve wealth, it usually has a long pay back period. In 10 years’ time, someone who started a small business would have made huge progress!

And focus on getting small profits from so many customers. A business that serves a wide clientele base is more stable with lots of growth potential even if you get small margins. Most fast-moving consumer goods like soft drinks, sweets, confectionaries, and manufacturing companies use this rule to invest. I wish you success.
Bernabas M. Mugisa, Mr. Strategy, helps plant the seed of transformation. Visit to become a better Board member TODAY.


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