Types of Investments for beginners (No Finance Degree Needed)

 Alright dear, now that we've talked about how to start investing. Let's talk about what you can actually invest in. Because investing without without explaining the options is giving...finance bro energy, and we're better than that.

So here's your no stress guide to the main types of investments you'll hear about and what they actually mean for people like us who want to build wealth without crying into our bank accounts.

1. Mutual Funds/ Unit Trusts

aka: "the chill no stress group project of investing"

In here, you put your money in the fund, can be via buying units of the fund or just depositing money and the fund manager spreads it across a number of assets like shares, bonds and other securities. You don't do anything yourself, you just let the pros do the work for you. 

Good For;

1. Beginners 

2. People who want low effort investing and low risk

3. If you want to start small. Some funds minimum investment entry is as low as TZS 10,000 and have no maximum limit. 

Some funds do have fees that help them sustain because at the end of the day they're not doing it for free. Exit fees from the fund are usually between 1% - 5% of the total of what you invested in. 

There are a total of 12 funds so far in Tanzania managed by various fund managers including UTT Amis, iTrust finance, Orbit securities, Zan securities, Watumishi Housing Investment and any other that i have missed. You can give them a call and also do research on which one will best suit your needs.

2. Stocks/Shares

aka: "Owning a little piece of the drama"

Buying a stock means owning a piece of a company. If the company does well, the value of the stock goes up and you gain more that what you bought the share for, but if it goes down....well meh it sucks but that's investment. 

It's exciting but a little chaotic and hectic if you don't know what you're doing. You need to do plenty of research before buying a piece of the company that you want. 

Good For:

1. Long term investing and wealth building.

2. People who want to learn more about the market

3. If you're okay with a bit more risk.

The risk level of stocks is Medium and can be reduced of you actually do know what you're doing. Plan your investments strategy and actually know what you are doing (I cannot put more emphasis on this). 

3. Bonds/Treasury Bills

aka: "The quiet, dependable always there friend group"

You lend your money to the government or company. They pay you interest and at the end of the loan term they give you your money back. It's calm. Predictable. No drama.

Good for:

1. Saving long-term safely

2. People who get nervous about stocks

3. Balancing out your portfolio

Risk level: Very Low

Effort level: Low

4. Real Estate

aka: "The big bag energy investment"

In here, you either buy property and rent it out or buy properties flip them and then sell them for higher prices. One can even invest via real estate companies.

Good for:

1. People with long-term goals.

2. Anyone interested in passive income from rent or growth

3. When you're ready to level up

Risk level: Medium

Effort level: High if you're buying physical property

This type of investment is expensive to start but it is worth thinking about and indulging in.

5. Digital Assets (Crypto...etc.)

aka: "The wild child of investing"

Crypto and digital currencies are volatile. It's not for the faint-hearted. Do your homework twice before you touch it.

Risk level: High

Effort level: High

So, What Should You Choose?

Honestly?

Start with mutual funds, government bonds, or any platform that lets you invest small and learn as you go. Then build up to stocks or other options as your confidence (and bank balance) grows.

Next up?

Let's look at how to choose your very first investment  like, step-by-step. Because girl, scrolling through options without a guide is exhausting.

Till next time, (I swear I won't take long this time)

~Your WalletWhisperer💅📈