A significant portion of Namibians are hesitant to invest, and many who can invest avoid taking risks.

This is contained in the 2023 Old Mutual Financial Services Monitor (OMFSM) availed to Nampa on Monday, which indicates that 37% of Namibians are unwilling to engage in any investment risks. This cautious approach is particularly common among younger individuals.

“The Namibian financial market presents a variety of investment products across banking and non-banking sectors. Risk tolerance differs significantly across the population, with a substantial number preferring safer, low-risk investments. Many people opt for savings accounts or similar low-risk alternatives instead of higher-return investments,” it said.

This, it added, is largely due to a desire for financial security and the avoidance of potential losses, and investors typically favour options that provide steady, if lower, returns over time.

Risk aversion is further driven by concerns over market volatility. High-return investments often involve uncertainty, which many choose to avoid. The preference for stability leads investors to favour products with predictable growth, it said.

“On the other hand, those more inclined to take risks understand that higher returns generally come with increased risk. These investors are often drawn to short-term opportunities, but they must be prepared for market fluctuations and potential losses. Investors with a higher tolerance for risk usually adopt a long-term perspective, which helps them navigate periods of market instability,” it stated.

It further noted that for younger investors, the willingness to accept risk may be influenced by a longer investment timeline. With more time to recover from potential losses, younger individuals may feel more comfortable taking risks. However, this inclination can also stem from a lack of experience, as younger investors may not fully grasp the complexities of riskier investments.

“Investment strategies in Namibia continue to be shaped by individual risk tolerance and financial goals. Safer options such as money market funds, savings accounts, and other secure financial instruments remain popular among those who prioritise preserving their capital,” it said.

At the same time, for those seeking higher returns and willing to face greater risks, numerous opportunities exist in the financial market. The divide between risk-averse and risk-tolerant investors reflects broader patterns in the country’s investment landscape, it said.