Asset Decluttering: Balancing Cash and Assets for Optimal Investments


In recent times, a thought-provoking conversation on the topic of "Asset Decluttering" has gained traction, thanks to a compelling recording by CPA Francis Kamulegeya. This discussion has sparked online debates regarding the dilemma of being asset-rich and cash-poor versus cash-rich and asset-poor. In this article, we will delve deeper into the concepts of asset decluttering, asset-rich individuals, cash-rich individuals, and the importance of asset allocation strategies based on one's financial goals and risk appetite.

Understanding Asset-Rich and Cash-Rich Individuals

An asset-rich person primarily invests in illiquid assets, such as real estate properties and investment land, which typically appreciate over time but may be challenging to sell quickly. On the other hand, a cash-rich person possesses investments that can be readily liquidated. It is important to note that being cash-rich doesn't imply having large sums of physical cash but rather includes easily liquidatable investments such as unit trust funds, treasury bonds and bills, fixed deposits, and businesses.

Choosing the Right Investment Strategy

Determining the most suitable investment strategy relies heavily on an individual's stage in life and their desired investment portfolio, which should align with both short-term plans and long-term goals.

Understanding Portfolios and Diversification

A portfolio refers to a collection of assets owned by an individual, either individually or through collective investments like investment clubs or companies. Assets can encompass a wide range of investments, including real estate properties, rental apartments, family houses, publicly traded stocks, treasury bonds and bills, unit trust funds, and more.

Diversification within a portfolio is crucial. It involves owning assets that are diverse and distinct from one another, reducing the overall risk and increasing the likelihood of achieving financial objectives.

Tailoring Asset Allocation Strategies to Financial Goals

Different asset allocation strategies are employed to attain various financial goals. For instance, individuals seeking regular income might allocate a larger portion of their investments to bonds rather than acquiring additional real estate properties.

Asset allocation also aids in managing the volatility associated with market cycles, as not all assets will underperform simultaneously. By diversifying across different asset classes, investors can mitigate risk and potentially enhance returns.

Investing According to Age and Risk Appetite

Young investors possess a considerable time horizon and numerous working years ahead, enabling them to take advantage of the power of compounding. It is advisable for young investors to diversify their portfolios across various categories, embrace higher-risk investments, and acquire assets that align with their long-term investment objectives.

Conversely, older investors nearing retirement should prioritize capital preservation and minimize the risk of losing their savings. Fixed-income and low-risk investments often present attractive options at this stage. As retirement approaches, Francis Kamulegeya's concept of "Asset Decluttering" becomes relevant. It is essential to strike a balance between being asset-rich and cash-poor, as excessive illiquid assets may pose significant risks for a 55-year-old investor.


In conclusion, the concept of asset decluttering and the balance between being asset-rich and cash-rich have sparked meaningful discussions among investors. It is crucial to align investment strategies with one's financial goals, risk appetite, and stage in life. Diversification within a portfolio and thoughtful asset allocation based on a comprehensive analysis of different asset classes are vital for successful investment journeys. By understanding the principles discussed in this article, investors can make informed decisions and potentially reap the benefits of Uganda's capital markets.

If you found this article insightful, please consider sharing it with your friends and family. Wishing you a productive week ahead as you explore investment opportunities in your respective markets.

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