Choosing what to Invest in

What you will learn in this post

  • What is an investment
  • Factors to consider when making an investment
  • How different investments make you money
  • How different investments require varying initial capital
  • How regulation differs among investments
  • Which investments are most volatile and liquid (easy to get your money out)


Once you know why you should be investing then you need to know what to invest in.

Before choosing what to invest in, we need to first understand what an investment is.

What is an investment?

An investment is a mechanism or purchase that will make you money over time.

This definition shows that many things can be investments ranging from buying shares, buying bonds to selling produce. So to make it easier to decide on what to invest in, we will highlight the 5 key factors to consider when choosing what to invest in.

  1. Strategy: How does the investment make you money
  2. Initial Outlay: How much capital is needed to start
  3. Regulation: How well regulated is the investment and the protections it has
  4. Volatility: How risky is the investment i.e. how much can potential returns change over time
  5. Liquidity: How easy it is to get your money back i.e. turn into cash


1.  Investment Strategy: How does it make you money?

Investments make you money in two main ways;

  1. Regular Income: You make money due to a regular cash payout. Examples include:
    • bond that pays out 12.5% per year
    • real estate building that you collect rent for every quarter or year
    • shares that pay dividends
  2. Price Appreciation: You make money when you sell the investment. Examples include
    • share price goes up and you sell it for more than you bought it
    • sell a building for more than you bought
    • buy gold and sell it for more than you bought it for.

Have a look at the table below it shows how key investments are more likely to make money for you.

Table: Investments classified by type and ordered by likelihood of make money that way.
Regular IncomeCapital Appreciation
1. Bonds1. Alternative Investments e.g Gold, Land
2. Real Estate2. Shares/ Equities
3. Mutual Funds/ Unit Trusts3. Private Business Investment
4. Private Business Investment4. Real Estate
5. Shares/ Equities5. Bonds

2. Initial Outlay for Investment: How much capital is needed to start?

An initial amount of cash/capital usually needs to be exchanged to purchase or start an investment.

The table below shows which investments require a small or large initial cash/capital outlay

Table: Investments classified by initial capital outlay and ordered by size of potential outlay.

Low Capital OutlayHigh Capital Outlay
Shares/EquitiesAlternative Investments e.g. Gold, Land
Mutual Funds/ Unit TrustsReal Estate
Private Business Investment


3. Regulation: How well protected is the investment?

Different investments have varying levels of laws and regulations around them to protect the investor.

Regulation of an investment is important before and after you invest.

Before because it is important to know that what you are investing is transparent, provides you with the right information and obeys the law of the land. After you make an investment, it can go very well and you make lots of money or it can go wrong and you lose money – when you lose money, it is good to know if you have any recompense; and when you make money, it is good to know how you can ensure you get all the profits you were promised.

The table below shows which investments are highly regulated and those less regulated.

Table: Investments classified and ordered by level of regulation. Order is  Heavy to Less regulation.

Heavy RegulationLittle Regulation
Shares/EquitiesReal Estate
BondsPrivate Business Investment
Mutual Funds/ Unit TrustsAlternative Investments e.g. Gold, Land


4. Volatility: How risky is the investment?

The more volatile an investment, the riskier it is. Volatility refers to how much potential returns change over time.

A good comparison is shares and bonds; share prices can change every day but usually the bond coupon/interest is the same throughout the length of the bond. Volatility can be good and bad, it can mean higher returns but it can also mean bigger losses so consider this before you choose an investment

Average volatility ranked for different investments ( from high volatility to low volatility)
  1. Shares/Equities
  2. Alternative Investments e.g. Gold, Land
  3. Private Business Investments
  4. Mutual Funds
  5. Real Estate
  6. Bonds


5. Liquidity: How easily can you get your money back?

The purpose of any investment is to make you money. Once it has made money then it needs to be converted to cash so you can make other investments or spend it on your dreams/goals.

The ability or ease to turn your profits from an investment into cash is what we call liquidity.

A liquid investment is one you can acquire easily and get your cash out easily, a non-liquid investment is one where it has hard to acquire or get your cash out. Lack of liquidity can be due to many reasons like lack of sellers to transfer/buy the investment too, non-transparent pricing of investment or just a very small market e.g. land in an undeveloped area.  Therefore before you make an investment consider how easy it is to get your money back.

Average liquidity ranked for different investments ( from high liquidity to low liquidity)
  1. Shares/Equities
  2. Mutual Funds
  3. Bonds
  4. Real Estate
  5. Private Business Investments
  6. Alternative Investments e.g. Gold, Land



They are many more factors to consider when choosing what to invest in but these are the 5 we have found key again and again. They are also many more investments but we included the most common or well known. Please mention any others you would want us to discuss in the comments.

Before you consider what to invest in, look at these factors and ask yourself these questions to inform the your decision on what will want to invest in;

  1. Do you want an investment that gives you money regularly or willing to wait until you exit/sell it?
  2. How much capital can you afford to invest?
  3. Is the investment adequately regulated for your comfort?
  4. Is the potential level of volatility going to affect your financial goals?
  5. How easily can you get your money out or back? provides analysis and insights on different investments so that you can make informed decisions.

“An investment in knowledge pays the best interest.” – Benjamin Franklin

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About Andrew Kwabena

The Editor of MoneyInAfrica

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