The culture of saving and investment is still a grey area in developing countries across the world including Ghana.
Due to the high unemployment rates and the meagre salaries of a lot of workers in Ghana, investments are privilege for a little few.
However, in recent times, there has been an increase in education on the benefits of investments and more Ghanaians, especially the youth, are engaging in it.
In an exclusive interview with Pulse Ghana, Chartered Investment Professional, Desmond Bredu, pointed 5 ways to invest your money in Ghana.
1 . Fixed deposits: Also referred to as term deposits are quite straightforward as they employ the simple interest formula for calculating interest. What is important is a principal(amount you want to invest), a given interest rate, a defined period. Eg. you may walk to bank XYZ to buy a fixed deposit 1000ghs (principal) @ 14% for a year.
For fixed deposits, at the end of the period, you get the 140ghs as interest using the formula [(Principal x Time x Rate)/365]. Thus you’re given 1,140 on maturity ie. Principal plus interest. The actual day counts for fixed deposits are calendar year specific.
2 . Mutual Funds: A mutual fund is a kind of investment that uses money from a pool of investors to invest in securities such as fixed deposits, equity, bills, bonds or other types of investment. A fund manager decides how to invest the money, and for this he is paid a fee, which comes from the money in the fund. One great thing about these investments is, it doesn’t matter your contribution, everyone in the fund enjoys the same return percentage-wise. Obviously,the money returns will be different if you have 20k in the fund as compared to someone with 5k but in percentage terms both will earn the same rate.
3 . Shares: It is basically a unit ownership in a company. Thus, anyone who purchases becomes a part owner of the company and is entitled to certain rights- all completely public in a document called Prospectus.
4 . Treasury Bills: Treasury bills/notes (T-Bills) are short term money market instruments issued by Bank of Ghana (BOG) on its own account or on behalf of the Government of Ghana (GOG). This is a common method used by governments to borrow money from citizens for development purposes.
The various types of bills/bonds listed on the Ghanaian money market are as follows:
- 91-day Treasury Bill
- 182-day Treasury Bill
- 1 and 2-Year Treasury Notes
- 3 and 5-Year Bonds
5 . Bonds: A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations.