S1:EP3: Guidelines for Smart Investment Planning with Dr. Edward Odundo - The Executive Table скачать в хорошем качестве

S1:EP3: Guidelines for Smart Investment Planning with Dr. Edward Odundo - The Executive Table

Twitter (X) - https://x.com/wangari_wamae LinkedIn -   / wangari-wamae   Facebook -   / wangariwamae   TikTok -   / wangari_wamae   Instagram -   / wangari_wamae   Email - [email protected] Telephone - (+254)740-853-565 ----------------------------------------------------------------------------------------- Investment Diversification and Limits Effective personal financial planning requires a clear strategy for allocating investments across various asset classes. The Retirement Benefits Authority (RBA) sets guidelines for pension funds, but these principles can be applied to individual financial plans as well. Diversifying investments helps mitigate risk by ensuring that your portfolio is not overly dependent on any single asset class. For instance, holding only 5% of your wealth in cash ensures liquidity for immediate needs, while investing up to 30% in near-cash assets like fixed deposits and treasury bills balances stability with accessibility. Stocks and Market Volatility Investing in quoted shares offers potential for significant returns, but it also carries inherent risks due to market volatility. The RBA suggests an upper limit of 70% in stocks, which allows investors to capitalize on market growth while protecting their portfolio from excessive exposure to a fluctuating market. When investing in shares, it's crucial to focus on companies with strong fundamentals, governance, and growth potential. While young investors can afford a long-term perspective, older individuals may want to prioritize more secure options like government bonds. Real Estate and Liquidity Challenges Real estate is a popular investment choice, but it comes with its challenges. Immovable properties, while potentially appreciating over time, can become illiquid and costly to maintain. Many older buildings lose value as markets evolve, making them less profitable in the long run. Real estate investment trusts (REITs) offer a modern alternative, enabling individuals to invest in property collectively without direct management responsibilities. REITs provide greater liquidity compared to owning physical properties and reduce the burden of maintenance while still yielding returns. Balancing Local and Offshore Investments Diversifying across geographical markets can also enhance portfolio stability. The RBA permits up to 15% in offshore investments, allowing individuals to explore opportunities in global markets. However, low interest rates in some international markets make local options like government securities, which can allow up to 90% allocation, more attractive. A balanced approach ensures that your investments align with your risk tolerance and financial goals while maintaining flexibility to adapt to changing economic conditions.