Which medium return investment options should I explore with Sh6m?

The higher the risk, the higher the possibility of return.

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Qn. I have 6,000,000 in cash and I will receive 150,000 a month from a pension for the next 10 years. What are some medium risk/return investment options that I should explore?

The principle of risk and return alludes to the fact that the higher the risk, the higher the possibility of return. The concept suggests that as you take on more risk, you must be prepared to potentially lose an equivalent amount of money. 

While this principle serves as a guide for potential investors, it may only sometimes be true. However, for someone like you seeking medium risk/return investments, you can hedge against high risks while still getting income. 

You can grow your wealth through proper asset allocation and prudent security selection. Based on your risk profile, consider generating passive income to earn returns from your investments without active involvement. 

Below are some investments that you may consider:

Money markets

Money markets are short-term fixed-income instruments that yield interest gains and often offer a higher return than conventional savings accounts. The money market can offer such high returns as fund managers invest in high-quality liquid asset classes like call deposits, treasury bills and commercial paper. 

With the money market, you are assured of enough liquidity, competitive interest rates, low risk and access to your finances based on the terms and conditions of the fund manager. The potential payback period is short-term, often less than a year. 

Before selecting a money market option, ensure it is licensed by the Capital Markets Authority and has a reliable trustee and custodian in place. Additionally, compare the returns offered by different money market options, assess the credit quality of the underlying assets, consider the fund's liquidity and accessibility of your funds, evaluate any associated costs, and monitor interest rate trends.

Government bonds

The national government issues bonds to finance the budget, fund public projects, and repay existing loans. Bonds will generate returns based on their predetermined coupon rates. Bonds provide periodic interest payments and full repayment of the principal at maturity. This financial asset is generally considered safe as the risk of default is relatively low, ensuring you have a stable income.

However, it is worth noting that bond prices have an inverse relationship with the movement of interest rates. This means that if the prevailing interest rates increase, the value of the existing bonds decreases and vice versa. It would be best if you considered monitoring market trends, inflation levels, and changes in interest rates.

Corporate bonds

When you think of corporate bonds, what should come to mind is lending a company money to finance its operations, growth or repayment of previous debts at a gain. Once you lend money to an organisation, you get periodic interest payments and a return of the bond’s face value on maturity. Notably, you can achieve a capital gain by selling the bond to another investor at a higher price, thereby making a profit.

Corporate bonds are generally perceived to be less risky than equities and have predictable returns. However, if you invest in a company without conducting a thorough fundamental and technical analysis, you risk losing all your money. Before investing in a corporate bond, conduct a thorough credit risk analysis, monitor interest rate movements and market conditions, and carefully read and understand the fine print of the debt agreement.

Preferred stocks

Preferred stocks are financial securities that represent ownership in a company. The shareholders get priority when it comes to payment of dividends and claim of assets in the event of liquidation. Preferred stockholders get a fixed dividend, thereby offering consistent and predictable income. 

However, unlike common shares, you lack voting rights and cannot participate in major decisions regarding the company's operations. Before purchasing preference shares, evaluate the stability of dividend payments, the financial health and reputation of the company issuing the shares, market conditions, and the potential call risk.


Food is a basic need, and you can never go wrong with strategic farming. You may choose to farm on your existing land, lease land where you can grow cash-generating crops or engage in agribusiness operations. 

Before engaging in farming, hire a professional who can guide you on the viability of the proposed crops. The specialist will assess the soil and environment and advise you on the best crops to plant. You may also choose to rear animals such as cows, goats, sheep, or whatever you are well-versed in. 

The payback period for farming investments can vary widely based on the type of farming, market conditions, and weather patterns. 

However, farming investments carry significant risks, such as climate variability, disease outbreaks, market price fluctuations, and high initial capital requirements. Before starting farming, do a proper market analysis to assess the demand for the crops you want to plant, check variable and fixed costs, evaluate the suitability of the land for the intended crops or livestock, and read through any regulatory requirements and potential subsidies from the national government. 

Lastly, ensure you have a proper plan to manage risks such as drastic weather changes, market fluctuations and mitigation strategies.

In as much as each of the investment options will offer you medium-term risk and return, it is not always guaranteed that you will get your perceived return. Ensure that you do thorough research on each asset class and start immediately so that you do not lose value for your money. Further, evaluate your risk tolerance, investment goals, and time horizon before making investment decisions. Always remember to be keen on diversification to benefit from the performance of various investments and not put all your eggs in one basket. 

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