It is important to choose investments based on financial goals.

Currently the following are the available investment options in Tanzania:

1.      Savings Accounts (Banks and Non-Banks such as SACCOs)

2.      Fixed Deposits

3.      Government Bonds – 10 bonds listed with the DSE

4.      Corporate Bonds – 6 bonds listed with the DSE

5.      Company Shares/Stocks – 8 public companies listed with the DSE

6.      Collective Investment Scheme – Umoja Fund

Risk Management

Risk management is an important part of the investment process.  Any type of investment has risks the difference is the level of risk.  Different individuals have different risk tolerance levels.  

Risk tolerance level is the degree at which you are willing to tolerate the uncertainty surrounding the safety of your investment capital.  Your risk tolerance level can be affected by your age and your financial goals.  Income can also affect how much risk you are willing to tolerate because a situation where you loose all of your investment capital is going to affect your financial abilities in case that was all the money you were depending on.

Generally less risk means less returns or rewards. 

Even the investments that are most of the times deemed to be risk free such as government securities do have some amount of risk.  The risk of a rising inflation rate can considerably reduce the expected yield in government securities. 

The stock market is more volatile than other investments in the short term but delivers higher returns in the long term it is good long-term investment vehicle if you are ready to be patient.

People with less risk tolerance usually invest less in stocks and more in bonds while people with high risk tolerance such as the younger generation (not too close to retirement age) have a longer investing horizon so they can invest more in stocks and less in bonds.