― Stephen Richards
The decision to create wealth can be frustrating initially, but employing tactical and calculated steps with precision and focus can be rewarding and inspiring. The average man seeks to secure a good job, hope to purchase that prestigious car and dwell in that house he has long been dreaming about. The following are some tools that can be explored for investment purposes
1. Savings Account
The most basic form of investment, having a savings account is one way to store up the little contributions made for a better and wealthier future. In Ghana, banks and savings companies have been empowered by the Constitution to store and protect the monies deposited by account holders. The added feature of flexibility, which is, having access to the account, also makes this a very attractive option. Having a savings account also comes with the least risk. However, the interest accrued from savings can be quite little, with rates between 2 to 10%.
2. Treasury Bills
A treasury bill is a short term -debt issued and backed by the full faith and credit of the Ghana government. Treasury bills are low risk in nature due to the fact that government is seen as the most credit worthy institution. Interest rates associated with treasury bills are fixed. Maturity dates for treasury bills fall into three types: 91 days, 182 days, 1-year note and 2-year note. Both the principal and interest can be rolled over after maturity for higher returns. According to statistics provided by the Bank of Ghana on 4th January 2016, 91-day bills accrue an interest of 22.7%, the 182-day bill yielding 23.4%, the 1-year note yielding 23%.
3. Fixed Deposit
The banks’ version of treasury bills, a fixed deposit is an investment account into which money is deposited for a fixed period, while the interest remains the same. Fixed deposits also have a fairly low financial risk. Fixed deposits come in 30-day, 60-day, 91-day, 182-day and 1-year, 2-year periods respectively. Interest ranges vary from bank to bank and is averagely 15% per annum. The good deal with this is, you can negotiate for better interest rates depending on the amount and period chosen. Fixed deposits can also be discounted, meaning cash can be redeemed before maturity, albeit at a fee.
Shares or stocks are investments made in a company in return for dividends. In Ghana, the Ghana Stock Exchange regulates this transaction. Stocks are volatile, as such; they assume the greatest investment risk. Investing in stocks need the guidance of an expert called a broker, who will guide you into making the right decisions.
Bonds are long term financial instruments and have fixed interest rates. Bonds are considered low in risk because when there is bankruptcy debts are paid before equity.
6. Mutual Funds
A mutual fund is a professionally managed type of collective instrument scheme. It involves monies pooled from different sources that are then diversified into different money market instruments. The risk for mutual funds is relatively high due to the uncertainty of returns.
In conclusion, Its important to state that, creating wealth does not come on a silver platter but through dint of hard work and wise investments decisions. Investors are therefore advice to diversify their investments in the best way possible so as to minimize their exposure to risk.
Please remember the value of investments can go down as well as up and you may not get back the amount you initially invested. If you have any doubts about which investment product is right for you please contact your financial adviser.