East African Business Week

KAMPALA, UGANDA - More people are turning to investment clubs to help them direct their money in businesses where they can earn a profit.
An investment club is a group of individuals who meet on a regular basis for the purpose of pooling money and retail investing. The clubs act as channels that enable members to pool their money together to increase their purchasing power, share knowledge, and network.
The dfcu investment clubs were originally started by the bank for women in business to enable women pool their resources to their incomes. As time went on, the bank opened the service to the men as well.
According to Ms. Damalie Mukiibi,  the Head of Small and Medium Enterprises (SMEs) and Women in Business at dfcu bank, there are currently over 100,000 investment clubs.
Mr. Felix Okoboi, the Head of Investments and Trading at ReNaissance Capital Limited  recently told a dfcu Bank's Investment forum for investment clubs in Kampala to diversify their areas of investment.
 "Have a clear idea about the risks of the investments you are thinking about. Remember, every investment, without exception, has risks. So it is only imperative that one spreads their investment options across a wide spectrum of undertakings", he said.
He also advised the investment clubs to take losses quickly and profits slowly. "If you are staring losses in the eye and you realise you made bad investment decisions, put that behind you and look for more profitable ventures. If you make profits do not be taken up by them, instead take your time and make a well informed investment decision", Okoboi advised.
He also told the clubs to always remember that they are the investor and not the advisors. "Do not accept 'I am the expert syndrome' . At the end of the day you are the investor and do not let the advisor coerce you into investing in what you do not believe in", Okoboi added.
He said that investment clubs can use their accumulated savings so that banks can advance venture capital to them so as to start up a business.
"Venture capital is the most rewarding but also the trickiest as most banks ask for a business' prior existence of at least two years before they can . Many of them only give growth capital and at a later stage buy out capital," he said.  
He advised  the clubs to invest in equities or stocks, real estate and fixed income or bonds according to an investment club's laid out plans and ambitions.
He said it is favorable to invest in equities and particularly the listed companies as they are less risky because they are highly regulated and have more transparency than privately owned companies.
The price of the shares is public knowledge, information on the company is more readily available and the returns are (typically over a long period of time) higher than returns on investments in land or fixed income instruments. He said stocks are a desirable asset without necessarily having to take the operational risks.