Your Investment Is Making Money. But Are You Actually Getting Richer?

Imagine investing GH₵10,000 and watching it grow to GH₵11,500 after a year. You have made GH₵1,500, representing a 15% return. It feels like progress. Your investment has grown, and your account balance is higher than it was a year ago.

But there is a question many investors forget to ask: Can you actually afford more with your money than you could before? That is the difference between making money and building real wealth.

An investment can generate a positive return while your purchasing power barely improves. To understand whether you are genuinely getting richer, you must look beyond the headline return and consider inflation, investment costs, taxes and currency movements.

1. Inflation: The silent cost of growing your money

Inflation measures how quickly the general price of goods and services increases over time. When prices rise, the same amount of money buys less than it did previously. Consider an investor who earns a 12% return on GH₵10,000. After one year, the investment is worth GH₵11,200.

If prices increased by 5.2% over that period, the investor’s money would have grown faster than the general price level, but the real gain would be smaller than the headline return suggests. Ghana’s year-on-year inflation rate stood at 5.2% in September 2026, according to the Ghana Statistical Service.

Using that rate as an illustration, a 12% investment return translates into a real return of approximately 6.5%, before fees and taxes.

The calculation is Real return = [(1 + investment return) ÷ (1 + inflation rate)] − 1

This gives a more accurate picture of how much purchasing power an investment has added. The inflation rate experienced by an individual may differ from the national average, depending on spending habits and personal circumstances.

2. Fees and taxes: What do you actually keep?

Investment returns are not always the same as the money that ends up in your pocket.

Depending on the investment, you may pay fund management fees, brokerage commissions, transaction charges, custody fees or other expenses. Taxes may also apply to certain forms of investment income or gains, depending on the instrument and applicable tax rules. Suppose an investment earns 12% in a year, but fees and applicable taxes reduce the return to 9%. If inflation is 5.2%, the real return falls to approximately 3.6%.

The investment is still profitable in nominal terms, but the amount of wealth it creates is considerably smaller than the original return suggests.

This is why investors should examine the net return after relevant costs and taxes, rather than relying solely on advertised interest rates, dividend yields or historical performance. Small annual charges can also have a significant cumulative effect when they reduce the amount available for reinvestment over many years.

3. Currency movements: Your foreign investment may tell a different story

For Ghanaian investors holding foreign stocks, exchange-traded funds or dollar-denominated assets, investment performance involves another variable: the exchange rate. An investment can increase in value in US dollars but deliver a different return when converted back into cedis.

For example, suppose a Ghanaian investor buys a US investment that gains 8% in dollar terms. During the same period, the cedi appreciates by 10% against the dollar. The investment’s cedi value would decline by approximately 2.8%, before fees and taxes, despite the positive return in dollars.

The opposite can also happen. If the cedi depreciates against the dollar, converting foreign investment proceeds into cedis may increase the cedi-denominated return.

Neither outcome should be assessed in isolation. Investors need to consider the performance of the underlying asset and the currency in which they measure their financial goals.

The relevant question is not simply whether the foreign investment went up. It is how much the investment is worth in the currency they ultimately intend to spend.

4. Stop comparing returns without comparing risks

A 20% return may look more attractive than a 10% return, but the figures alone do not establish which investment is better. The investments may have different risk levels, time horizons, liquidity constraints and costs. One may produce relatively predictable income, while another may experience substantial price fluctuations.

Investors should also distinguish between realised returns and gains that exist only on paper. A share price may rise significantly before falling again, while dividends or interest payments can contribute to total returns.

A proper assessment considers total return, the costs of earning it, the effect of inflation, the relevant currency and the risks taken along the way. Higher returns are not automatically better if they expose an investor to risks that are inconsistent with their financial goals.

5. Measure wealth by what it can do for you

The purpose of investing is not merely to accumulate a larger account balance. It is to build financial resources that can support future needs and goals.

That might mean funding a child’s education, preparing for retirement, purchasing property or gaining the flexibility to make career and lifestyle decisions.

Investors should periodically review their portfolios and ask whether their returns are keeping pace with their objectives. They should understand the fees they pay, the taxes that apply and how changes in the exchange rate affect their holdings.

They should also avoid assuming that a single year’s return tells the whole story. Wealth creation is a long-term process, and short-term results may not reflect an investment’s performance over an entire investment horizon.

The bottom line
A positive investment return is encouraging, but it is only the starting point. Inflation determines how much purchasing power your money loses or gains. Fees and taxes reduce what you keep. Currency movements can change the value of foreign investments when measured in cedis.

Before celebrating your next investment gain, ask yourself three questions… How much did my investment earn? How much did I keep after costs and taxes? And how much more can my money actually buy?

Because the ultimate goal of investing is not simply to have more money on paper. It is to build wealth that gives you greater purchasing power and more financial choices over time.

Mary Henewaa Karikari, ACCA, FMVA, is a passionate wealth literacy advocate who blends finance, storytelling, and personal development to help everyday people understand investing. She leads Finance Fanatic, a platform focused on simplifying investing and financial literacy for young people.

Contact: 0596565932
Email: [email protected]
https://www.linkedin.com/in/mary-henewaa-karikari-acca-fmva