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FAHAD BRUHAN JR: Don’t invest in rentals, business is better! 

watchdog by watchdog
3 months ago
in Conversations with, Op-Ed
54 1
FAHAD BRUHAN JR: Don’t invest in rentals, business is better! 
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I believe you’ve come across people who tell you this, or heard something similar to it. Personally, I have told people the same countless times.

Usually we say or you hear things like rental gives small annual return, recouping your investment will take longer.., Its not a wise investment etc.

Which is somehow true depending on which side of the table your sitting on. The table of inexperienced us or those who have been in the business world, experienced and succeeded.

Hill Water

The table of those who have knowledge about different investment vehicles and business or those who don’t..

The table one sits on matters alot when it comes to such decisions and choices. The person telling you doesn’t know which table you sit on.

We also give you claims that a business gives you 30 to 40 percent return. What we don’t tell you is, less than 10% of small businesses can guarantee you 30% plus return year after year for close to 5 consecutive years or more.

Most small business besides paying employees salary and business owners divident make small net profits, sometimes not at all. If they’re doing very well, you can make upto 50% or more return, but these are 1% cases.

We also don’t tell you that, of the fair but irregular return from these small businesses which we tell you to start, the risk involved is much higher (this is economic principle, higher return comes with higher risk). We don’t know your risk tolerance!

This means most small scale businesses have very high risks. The failure rate is alarming, around 90 percent failure rate. Starting a small business, your chances of success or being operational after 3yrs is less 10%.

We also don’t tell you that running business is hard, very very hard actually even experienced business people struggle. Add the fact that most African economic setups dont support small businesses with there unfavorable incentives like high taxes, license hurdles, lack of support, red tape etc makes it worse

And you, not being a business person before actually makes it worse. You lack basic skills, knowledge and experience about business. You are ok with the job and salary, you just want something to add on what you make.

Advising you to start a business rather than going rental without considering your risk tolerance, knowledge and skills, experience etc is not a good advise especially looking at the high risk involved and inconsistent returns.

We who somehow believe we can take the risky business or alternative investment journey, we shouldn’t tell you to do the same, especially when the facts we have are inaccurate and most times from inexperienced sources.

If you have some good income or saving, your not the business type, have limited knowledge about alternative investments, you have a good paying job, you don’t have time, then rental investment is good for you in the long run if you can afford its costs.

You can get small annual returns, but the return is 90 plus guaranteed and for good years to come. You have capital appreciation and above all, sense of security for you and your family. Don’t listen to us, do what is right according to your circumstances and financial plan.

Which brings me to the question, Do you have a Financial Plan?

Fahad Bruhan Jr Is a Thought Leader and Writer in the fields of BUSINESS, Investment and Personal finance.

 



Do you have a story in your community or an opinion to share with us: Email us at editorial@watchdoguganda.com

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