Wednesday, September 11, 2013


Recently a retired Bank of Uganda official was reported as saying that as an employee it is impossible to plan for your retirement. According to him the salaries are a low and the cost of living is ever rising making it impossible to save for the future.

He has managed because he got a hefty gratuity package on retirement and with that he has put up some rentals, whose income he is now living off.

Thankfully this article was buried deep in the paper and probably got little attention.

As an employee earning a regular salary and wanting to retire in some comfort, here are my seven recommendations to make this happen – without stealing.

#7. Change your mind

It all starts between your ears. You need to understand money and how it works. You can learn this by raw experience or making it a decision to deliberately go out there and learn how money works. Money has its own laws and you flout them to your own detriment. Learning how to handle money is not a God given talent (that’s an excuse not to even try, to roll over and wallow in your poverty stricken misery).

Earning money is done through selling your labour, while making money is when you make money work for you.

#6. Think of your life as a balance sheet not as an income statement

The income statement shows income and expenditures, while the balance sheet shows assets and liabilities. The income statement decides your current standard of living the balance sheet determines the sustainability of that lifestyle.

It’s all very nice to be make more and more money as your career progresses but to ensure a comfortable retirement it’s not how much you earn but how much you keep that counts.

The trick is to grow your asset (where your money sweats for you) column using your income and liabilities, to the point where the income from your assets overtakes the income from your job.

#5. Saving is good, investing is better

Savings are an addition to your asset column but whereas the zeros can increase from month to month and year to year, the value of your money can be eaten up by inflation. Investing is committing money to an asset class with the hope of getting your money back and with something extra on top. It takes discipline to save, it takes greater discipline and study to invest. Google investing.

By the way you save first and spend after not spend and save what is left over – there is never anything left  over.

#4. Respect the law of compounding

Compounding is when more is built on more. The more you have the more you can build on it. This does not only apply to money, it applies to knowledge, friends,  business partners. If you have a thousand shillings earning 10% or sh100 in the bank, next year you will earn 10% on sh1100 or sh110 and the next year you will earn 10% on sh1210 or sh121 and on and on and on. In school you learn how to count, then add and subtract, then multiply and divide, the integrate and differentiate and on and on. Things build on other things,  Albert Einstein called it the eighth wonder of the world. And even Jesus said to those who have more will be added into them.

#3. Business is not opening a shop, only

As you grow you asset base, commit to continuous study – read, talk to mentors, learn from your own experience, to improve your capacity to spot and take advantage of opportunities around you. Learn how to build a structure around what you know to make money. It need not be selling second hand clothes.

#2. Have a long, long term vision

The most financially secure people, those who have learnt how to make their coins work like slaves, know that money is not for spending but for making more money. They also plan that their money will be passed down the generations. No one in their line will lack for shelter, clothing, food and university fees. When you think beyond your own stomach – finishing your money before you die,  it changes the kind of business you are in, your ethical standards and your ability to make more and more money.

#1. Think Kiprotich, not Bolt

The best time to start investing is 20 years ago, the next best time is now. Assuming an investment that shows a return of 10% a year, it means you will double your money every eight years. The sooner you get on your journey the better. Don’t be, seduced by the super quick returns, enthralled by the yesterday-he-was-broke-today-he-is-a-billionaire tales of tycoons – yesterday may have been 20 years ago. Focus on what they did to get  where they are  -- the process, overcoming disappointment, practicing delayed gratification rather than what they are doing now – own big mansions, ride in new limos and having little brown things hanging from every arm, when they have arrived.

Retirement planning is a marathon not a sprint.


  1. thanks paul. this article has got my head racing.

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