Don't save money if you have no plan to invest it

Jaluum Herberts

The other day I was talking to someone and they made mention of their savings group.

They are about 6 people and they've saved about Shs 70 million in under a year and a half.

"So what are you going to do with that money?" I asked.

"We don't know he admitted. The issue is, looks like we can't invest it because every time some one comes with and idea the other five don't agree with it. Everyone thinks only their idea is the best and safest investment. So this has left us in a situation where it's either my idea or no other idea," a member told me.

I still don't get it. Why would you save 70M in about a year and three months and you've never tried to do anything with the money?

Not even tried risking Shs 10 million if you fear losing the whole amount.

Truth is, you are collecting money for the bank to use and if you've realised banks have been promoting saving by investment clubs and savings clubs which is a way to get interest free money to work with.

They even made competitions to reward you for saving after all even the money you win you'll put it back into your account and keep there and they'll use it too to make money as you figure out what to do with it year in year out hahaha.

The main purpose of saving should be clear.  Are you saving for an emergency like we have now?

Are you saving for fun just to feel nice about yourself or are you saving to invest!?

Once that's clear then you can move to the next step.

If the reason for saving is investment then you have to decide whether your'e going to invest alone or you are going to invest with a few couple of people (group investment) which is much harder.

If you're going to invest alone then you move to the next step if you are going for group investment then ask you're self with whom am I investing?

Do they all understand what you are trying to achieve? Is the mindset the same across board?

Do you all agree on what it is you want to invest in?

Don't just collect people together and then start saving with the mentality that when you have enough money you'll see what to do with it.

Chances are that you won't do anything with it. You don't collect money then look for where to deploy it.

You come up with an investment case then look for the money to fund it. Imagine going to the bank and asking them for money to invest.

Of course the bank's question would be: 'what are you investing in?' And your answer is 'I am not sure, but give me the money I'll see what to invest it in along the way.'

What are the chances that they'll continue listening to you any longer after that statement?

Yes and here's exactly where people get it wrong. Before you start saving, be clear about what it is you want to invest in and also how much you need because your not going to keep saving till all of you drop dead.

I'll give you an example, a year ago we raised about $8000 for campus doctor. The target was to raise $10,000 and it was to be done in not more than a year (12 months).

Everyone who contributed knew what they were putting money into and what exactly it was going to do.

Buy computers, improve the app, marketing and hire full time medical staff to attend to medical queries and questions on the app and social media.

This was because initially we were working with volunteer medical personnel and the responses on the app weren't timely leading to a high drop off rate.

So we needed money to hire three full time medical personnel with money to cover operational costs for year.

So we had a figure, a timeline and most important of all the objective was clear for why the money was being raised and every one knew.

As soon as we hit the target the money was to be deployed not kept in the bank. It wasn't going to be raising money for life even if the whole project requires about $150,000 (most of it going to into setting up medical facilities for our prepaid medicare which is the bigger picture) to fully roll out.

This year our is target $20,000 (minimum) and we already have 1/3 of the money. That's how you save up and invest.

Money saved needs to quickly be put use whenever you have some significant amount that can do something.

You dont wait till you have a billion in your account and start investing.

You also don't wait till you've saved that much (a billion) to decide what your are going to do with the money.

Some of those decisions have to be made before the money even comes into the picture because money stirs up emotions and it's hard to make reasonable/rational decisions with money when emotions set in.

So be clear about what it is you want to save for, what it is you are going to invest in, how much is required, at what stage do you start spending or else you end up merely stockpiling money in the bank for the benefit of the banks not yours.

And know that investment isn't an overnight thing. It takes time depending on the magnitude of the investment you are looking at. If you are not ready to lose money you are not ready to make money.

Jaluum Herberts Luwizza is a founding partner and COO at Young Treps,Campus Doctor,Boroboro, a Keynote Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business & Investment Consultant with YOUNG TREP East Africa's No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.

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