I

nvest
ment
svsBusi
ness

Just
inMwangi|Dec23,
2019|

I
nvest
ment
s

Inv
estment sandbusinessaresimil
arinthatbothneedy outocommi tsomemoneyi n
anti
cipati
onoffutureprof
itorbenef
it.Thekeydiff
erence,however,
isthati
nbusiness;youare
acti
velyinvol
vedinmanagementwhi leininvest
ments,yourrolei
smor epassi
ve.Aninv est
ment
tur
nsi nt
oabusi nesswheny oubegi
nt ocontrolt
heoperations;t
heopposit
eisalsotrue.

Sayforinstancey ouhadt ochoosebet weenr unningabusinessversusbei ngashareholder.I

f
youchoset orunabusi ness,youwouldneedt obeact ivel
yinvol
vedinitsday -
to-
dayoper at
ions,
managei t,
andi nteractwithcustomersandal lstakehol
derstocreatevaluethenselli
ttoy our
tar
getmar ketforapr of
it
.Ontheot herhand,i
fy ouwer eint
erest
edinacqui ri
ngpubli
cequi t
y,
youwoul dgivey ourcasht oastockbrokerwhot henacqui r
esanumberofst ocksforyou.
Withouttoomuchi nterf
erencefrom you,yourshar eswouldearnyouar eturnwhentheygoup
i
npr i
ce(capitalappr eci
ati
on),orwhent hecompanypay sdivi
dends.

Bothoperat
ingabusinessandi nvest
inghavet heiradvantagesanddi sadv
antages.Star
tinga
busi
nessoffer
sy ouindependencebecauset heoretical
ly
,youarey ourownbossandcanpi ck
yourownhours.Inreal
ityt
hough,abusi nesswi l
lrequir
eal otofyourtime,especi
all
yifyouare
j
uststar
ti
ngout.Addedt othis,
thereisalsothest ressofdeali
ngwi thyourcompetit
ion,
handl
ingemployeeissues,andstakeholdermanagement .

Start
ingandrunningabusinessisalsocapi
talint
ensive,
whichwouldr
equi
reanentr
epr
eneurt
o
putinthei
rpersonalsav
ings,rai
seequit
yortakeondebt ,despi
tet
hefactt
hati
tcoul
dtake
severalmont
hsorev enyearsbeforethebusinessbreakseven.

I
ncontrast,i
nvestinginequitymaysoundl i
ketheeasierroute,
butt hisi
snotnecessar i
lytr
ue.
Withanyinvestment,therei
sar iskthaty ouwi l
lnotgettheanticipatedreturnsduet ovolati
li
ty
andmar ketfl
uctuati
ons.Thegr eaterther et
urn,thehi
ghert heri
sk.Theper f
ormanceoft hefi
rm
youareinvesti
nginandt hemar ketar eoutofy ourcontrol
.Anot herchall
engei sthatinvestor
s
oft
enexpectaqui ckreturnwheni nrealit
y ,t
ogett hebestoutofanyi nv
est ment,
al ong-ter
m
vi
ewisnecessar y.Aft
ercareful
lydoi ngyourmar ketresearch,yout henproceedtosel ectthe
fi
rmswhosel ong-term outl
ookisposi ti
ve.

Thi
siswher
efundmanager scomeinpl
ace.Thesearepr
ofessi
onalf
ir
mswi thexper
ti
sei
nthe
i
nvest
mentfi
eld.Fundmanagerscol
l
ectmoneyfrom manydif
fer
enti
ndiv
idualsand
organisati
onsandi
nvestontheirbehal
f.Theydiversi
fyandinvesti
nmanysectorst
hereby
reducingtheri
skofyourmoneyasani nvestorsuff
eri
ngal oss.Thefundmanagermonit
ors
mar ket,
economictr
endsandtracksecurit
iesinordertomakei nf
ormedinv
estmentdeci
sions.

Fundmanager sarealsoaff
ordableandenabl
eyoutoaccessinvest
ment syouwoul
dnothav e.
Agov ernmentbondinKenyarequiresamini
mum ofKshs100,000wi t
htopupsofatleastKshs
50,000whereasinafundmanager ,sayCyt
onnInv
estments,onecaninvesti
namoneymar ket
fundwithaslowasKshs5, 000wi t
htopupsofathousandshil
li
ngs.Themoneymarketf und
mayt henbeinvest
edi nt
hetreasurybi
ll
samongothervenues.

Allsai
danddone, havi
ngabl endofbot
hwi ll
alway scomeinhandy
.QuotingWar
renBuf
fet,
“Beingabusinessmanmakesy ouabett
erinvestorandbei
nganinvest
ormakeyouabetter
businessman.”Eachpursui
tteachesl
essonst hatareappl
i
cabl
etotheother