INVESTMENT OPPORTUNITIES IN GHANA

Investment is putting money into something with the expectation of a gain. Or in simple terms “the use of money with the hope of getting more money”
The Bible supports investment Matthew 25:14- 30 (Parable of the Three Servants)
First servant given 5 talents, Second servant given 2 talents third Servant given 1 talent
The government also supports Investment – Legislation on compulsory contribution by workers towards pension - SSNIT

Advantages of Investment/Why should we invest
1. Saving money for a future need
2. Making your money work for you. i.e. earn an interest. E.g. A fixed deposit customer who earns interest of about 50,000 a month. (Time value of money)
3. Can provide a needed startup capital for a business. (“Little drops of water make a mighty ocean”. For example if you need GHS 1000 to start a business, you can save GHS 100 a month and within 10 months you will raise the capital.
4. To meet unexpected expenditure in life “Family security”

Why we are unable to save and invest

1. Lack of planning/budgeting
2. Peer pressure/lifestyle – want to follow our peers
3. Impulse buying
4. Poor healthy living which will swell our budget on health.
5. Societal perception/expectations
6. Lack of funds due to overspending
7. Lack of trust for strangers handling their money.
8. Lack of knowledge on investment

Types of Financial Investment Instruments

• Savings Account
• Fixed Deposit Account
• Government Papers – Treasury Bills
• Shares/Stocks/Bonds
• Mutual funds

SAVINGS ACCOUNT
- Risk free
- Interest in variable – the higher the amount, the higher the interest
- Flexible – can have access to the funds at anytime
- Interest currently ranges between 2 -10% per annum depending on the amount and the institution.
- Can start with a relatively small amount e.g. GHS 10

FIXED DEPOSIT ACCOUNT
- Risk free
- Certain Returns - Fixed interest rate
- Fixed maturity period
- A relatively higher interest rate than a savings account
- Principal and interest can be rolled over upon maturity
- Types – 30 days, 60 days, 91 days, 182 days and 1 year.
- Interest currently ranges between 11– 18% per annum depending on the amount and the period. However interest can be negotiated for higher amounts.
- Can be easily discounted. However there is a fee for early redemption.

There are other similar deposit products which makes it possible for investors to top up on monthly basis.

TREASURY BILLS

- Risk free
- Issued by the Government
- Certain Returns - Fixed interest rate
- Fixed maturity period
- You can start with as low as GHS 50
- Types – interest rate for the week ending 7th March 2014
91 days T-Bill - 21.23%
182 days T-Bill – 20.99

Treasury bills can be bought at cost or face value.

SHARES/STOCKS

- They are investment in Companies
- Buying it means you are part of the owners of the company
- Uncertain returns – quite risky
- Traded on the Ghana Stock Exchange
- Earn dividends
- Value appreciates/depreciates
- You need an expert(broker) to advise you on the type of company to invest in
- You have to monitor the performance of your shares on the stock market

Best Returns on the Ghana Stock Exchange – Year to date 2013

BONDS
- Long term instrument
- Has a fixed interest rates
- Considered as a lender to the organization whiles you are considered as an owner with shares
- Lower risk than shares – when there is bankruptcy, debts are paid before equity
Rate for Government bond at at today.
- 1 year note - 17%
- 2 year fixed rate - 17.5%

MUTUAL FUNDS

- Professionally managed type of collective investment scheme
- Diversification
- Liquidity
- Pools money from many investors and invests typically in securities, such as stocks, bonds, short-term money market instruments etc.
- Returns are uncertain – quite risk
- Can start with relatively smaller amounts e.g. GHS 10

Example of Mutual Funds in Ghana and their returns

Other Business Venture –An emerging business opportunity

1. Leasing (Operating lease and Finance Lease)
Emerging business opportunity. Talk more about finance lease – Car work and pay methodology.
- Transfer the risk (Comprehensive insurance) to very reputable insurance companies who pays claims promptly like MET, Vanguard etc.

Mr. Samuel GBOR is the branch Manager of Stanbic Bank, Wa, UWR.