BY EVELYN SITUMA, 2 FEBRUARY 2012
Article from All Africa
We all desire to achieve overall financial freedom at some point in our lives.
However, attaining this status is an uphill task. For many, it requires sacrifice as one juggles between full time employment and income generating side projects. However, things should not be too gloomy for you.
Following a number of tried and tested approaches, can get you where you have always dreamed of, racking in lots of money, if you do things right.
According to Isaac Maaluki, a personal finance and investment expert, there are generic ways of achieving financial freedom.
Switching from primary income to having a second source of earnings is the universal step considered by the majority.
Although employers view this in a bad light, as it would impact negatively on an employee's output, it is the way to go for anyone who wants financial independence, in the long run.
This guarantees one financial stability in case of loss of a job. It puts you on the right path to attaining your life's goal. However, to succeed, you must observe the requisite ethics.
Do not shortchange your employer in deals or use up their working hours for your benefit. If you think this conflict of interest may happen at some point, it is best that you quit and concentrate on your alternative income stream.
However, the investment we are look at is capital intensive. It is an investment that requires a considerable amount of capital to start. According to Maaluki, if your side-business is capital intensive, then consider ventures that are not labour and time intensive.
Securities that take less time to manage and bring in more returns are what you should consider as s appropriate and worthwhile.
For those that are thinking of this kind of investments, he lists three things that should be emphasized when making a decision.
Capital
Capital investments take many forms. However, investing in property is the best option for someone who wants to invest in an area that takes less of their working time. "Anyone with a fulltime job needs to look at investments that do not require too much of their time. Investing in property is usually the best option," says Maaluki.
Using the example of an individual with Sh15 million to invest, he gives two approaches: investing in low cost real estate residential housing or a hotel. Whichever of the two one opts for, he advises that one must evaluate the investment cost vis a vis the returns.
"Compare the two businesses and decide on the one that will give you better returns and needs less of your time to manage, " he says.
Offshore investments
Investing offshore depends on the risk one is willing to take. According to Maaluki, what you need is to put money aside to invest abroad on monthly, half yearly or yearly basis.
He, however, advises the investor to make sure they have access to their money immediately it is confirmed as an investment.
Local investments in bonds and stocks are for those not willing to take the risks of investing abroad. According to Maaluki some take a minimum of 18 months to start showing returns as opposed to offshore investments which are instant.
Investments in the service sectors
Investment in the service sectors like transport, (matatu and buses), according to Maaluki is not a good idea. Such ventures tend to be labour, capital and time intensive especially for the actively employed individuals.
Before you embark on that side-project that you hope will give you that yearned for financial freedom, it is important to do all the homework necessary in the areas of investments you wish to engage in.
Bear in mind that time, volumes of returns and labour are the three vital things you should base your investment decision on. For you to make any headway in your chosen project, Maaluki offers the following advices as a measure that will guide you.
Passion
Whatever you wish to invest your time and money on, make sure you have a passion for it. Without this, you will find yourself moving from one failed project to another with no tangible results to show for your efforts.
Time
Make sure the investment project you opt for does not take too much of your time. If you are employed, your attention will be divided, meaning you will not perform at your best on both fronts.
ConsistencyChoose be something that you can project a certain income amount on. This will help you plan effectively on where next to place your returns. The worst thing is to start on a project whose financial outcome you are not sure of. It is good to do thorough research on whatever investment you want to embark on.
Talk to those who have been there before you and weight all the options before you start, " advises Maaluki.
Article from All Africa
