What is the BEST investment product in Ghana?

best investment product

After reviewing a few feedbacks from readers, I realise that majority of questions centres around ‘the most lucrative investment in Ghana’, ‘the best investment option in Ghana’, ‘the best mutual fund in Ghana’, and other similar phrases. In a nutshell, the majority would like a particular investment product to be recommended to them as the best to invest in. Frankly, I may be one of the very last people to recommend a particular option as the best investment product in Ghana. It is not the general perception of best investment product that I frown on. However, my issue has to do with the attribute that potential investors perceive as being the only characteristic of best investment products. Unfortunately, whenever the subject of best investment product crops up, the focus is solely on higher interest rates. This one-directional emphasis can lead investors into making wrong investment decisions that may subsequently ruin their finances. As Databank’s CEO, Mr. Kojo Addae-Mensah, stated in the latest edition of their “CEO’s MESSAGE” series,

It is the singular focus on rates that has cost so many people their life savings.”

We all recall what happened to the savings of clients who had been persuaded with high interest rates by some microfinance institutions in the country. Higher rates may be sweet but need to be followed with caution. There is an Akan proverb that goes like “Bͻnyono bata brɛboͻ ho”, which translates as “The liver is closer to the bile”. Indeed, juicy rates come alongside risks. I had stated in a post on this site before that:

The risk that will take you to your grave is not worth it

Moreover, there is no one-fit-all investment product. What may be the best (and appropriate) for ‘investor A’ may not be the best for ‘investor B’. The financial needs and requirement differ from one investor to the other. Thus, the issue of finding the best investment product is subjective. Instead of focusing solely on rates (perceived to be the indicator of best investment products), there are equally other important factors to consider. These factors include, but not limited to, the company managing the investment product, their experience and how long they have been in operation, as well as the kind of businesses they invest the money in order to achieve those mouth-watering rates. Others include the age, risk tolerance and present financial circumstance of the investor. For instance, if you’re a parent with kids, you may be looking up for low-risk products than the one who is single and without dependants. If you have just begun your investment journey, you may wish to be conservative in your investment options, at least, for a while. This is unlike someone who already owns some investments and is willing to take further risks. Again, if you have ethical concerns, you may want to know where your money is being invested and thus select ethical investment products such as the Databank’s Arkfund.

Also, your investment goal (what you are investing the money for) depicts your options. Is it for retirement, to settle education bills, to buy a piece of land, to purchase a car or to send the family on a vacation? Definitely, the investment option for retirement (assuming you’re very young now) will be more of long-term investment products such as stocks and equity mutual funds. However, if you’re investing just for a family vacation, it would be better-off to incline your investment towards short-term products such as Treasury bills or even a savings account. It would be a mistake to invest most of your money that you don’t need for a very long time in short-term investment products, which pay low interests. On the other hand, you will not want to put your money in risky investments (even if the potential returns are high) if you’re saving for short-term goals. Imagine purchasing stocks with money intended for your next month’s rent to your landlord 🙂

You may also like:Mutual funds vs. stocks: A revision of the pros and cons

As stated earlier, it is also necessary to look into the track record of managers of the investment products before finalising your decision. For instance, Databank has managed mutual funds for at least 20 years now, making them reputable among their peers. There are other fund managers who have been doing quite well even though they have not operated for that long. FirstBanC, for example, has consistently won awards with their Firstfund mutual fund (due to their high returns). However, they have not been in the system for that long in comparison with other peers. It is worth to be cautious when investing with unfamiliar financial institutions.

Finally, remember that it pays to diversify. In other words, don’t put all your hard-earned money in a single investment product. You can minimise your risk by choosing varying investment products. As a head start, you may refer to the link below for a simple guidance on choosing the right mix of investment products.

Investment guide for selecting right investment products

3 financial institutions that promise high interest rates on fixed deposits

fixed deposits _high interest rates

As interest rates of Treasury bill continue to drop, finding alternative rates on the market seems laudable. Higher rates come with higher risks though. Therefore, investors must be cautious when making these decisions. A number of financial institutions claim to offer attractive interest rates on fixed deposits. Even though a few of these institutions openly publish their rates, the majority fail to publicly declare their supposed attractive interest rates. Of the few financial institutions that are open about their interest rates, three are listed below.

See also: Treasury bill investment: Choosing between 91-Day, 182-Day & 1-Year Note
 1. BOND savings and loans limited

BOND savings and loans limited is a non-bank financial institution which had been operated as a finance house since 2008. BOND acquired a savings and loans licence in its fifth year of operation and has since been mobilising deposits and giving out loans to the general public. Bond offers three main investment products. They guarantee to pay interest rates higher than that of Treasury bill on two out of the three investment products. These products are BOND fixed deposits (aka Daakye Dwetiri) and BOND Duapa.

The BOND fixed deposits are 91-day, 182-day and 365-day tenured investments with promising interest rates of (T-bill rate + 1 to 8%) depending on the tenure and the amount of invested money. In other words, the more and the longer you invest, the higher interest rate you are paid. The BOND Duapa is however a variable monthly investment that can be opened with a minimum contribution of GH¢100. The interest rates on BOND Duapa are fixed at (T-bill rate + 1%) for the 91-day, 182-day and the 365-day tenures. BOND savings and loans limited can be reached via their website at http://bond.com.gh/site/

See also: Ecobank introduces Treasury bills via mobile phones
2. New generation investment services (NGIS)

New Generation Investment Services (NGIS) Limited, an investment management firm, has operated for over a decade now. NGIS promises a premium rate of 2 to 5% higher than the prevailing Treasury bill rates for their fixed deposits. The minimum one can invest to earn these rates is GH¢500. NGIS can be reached on their website at http://ngis-group.com/

You may also like: Percentage rates of investments: Interpreting them correctly
 3. First Allied savings and loans limited

Since 1996, First Allied savings and loans limited has been providing financial services to the small, micro and medium enterprises. Their fixed deposit products come with negotiated rates (higher than the prevailing T-bill rates) depending on the amount and tenure of the investment.

Rates currently displayed on their website, as of today (10th January 2017), are *28%, *29% and *30% for the 91-day, 182-day and 365-day tenures respectively. In comparison, the prevailing Treasury bill rates are 16.2478% and 17.8796% for the 91-day and 182-day tenures respectively. Unfortunately, these published rates do not have any associated dates. Thus, it would be difficult to ascertain if their rates are up-to-date. A follow-up on their updated rates has still not yielded a response. First Allied savings and loans limited can be reached on their website at http://www.firstalliedghana.com/investments.html



A simple stock trading strategy for the risk-averse investor

simple stock trading strategy

There is no doubt that the internet is flooded with different stock trading strategies. At least, we have come across terms like active stock trading strategy, and passive stock trading strategy, to mention but a few. Whatever a stock trading strategy is, there are always risks associated with equity investment.

As investors, we all have our limits when it comes to the level of risk we can cope with. It may be low, medium or even high. One common investment risk is the possibility of losing some or all of the original investment. Losing part or all of an original investment is something that some section of investors cannot cope with. This category of investors may be classified under the risk-averse group.

The risk-averse investor prefers to invest with a very low risk. Many risk-averse investors would therefore look for low-risk investments such as Treasury bills and money market funds that may come with guaranteed profits. Unfortunately, these investment products do not yield high returns in the long term as compared to their high-risk counterparts such as stocks. Hence, the potential earnings of risk-averse investors are low.

As earlier mentioned, the internet is flooded with many stock trading strategies. However, it appears that no stock trading strategy considers the risk-averse investor in terms of investment risks. Thus, coming out with a simple and low-risk trading strategy may Continue reading “A simple stock trading strategy for the risk-averse investor”