How Do I Start to Invest My Money by MaryJeanMenintigar

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									  SAVING & INVESTMENT, THE SURE WAY TO FINANCIAL
                  INDEPENDENCE
God reveals to redeem.
How many graduates from our universities know what the stock market, equities, shares
or stocks are? Unfortunately a staggering 90% are ignorant.
Such is the bottomless depth of our financial illiteracy in this great land of ours. If this is
the case with the graduate, I shudder to think of our rural folk.
Such was my situation as a fresh graduate. During my days as a student I succeeded in
“chopping” every “pesewa” of my loan and grants from home with the lame excuse that
it was too small to save anything. Little did I know that I was suffering from the Chop-it-
all syndrome (C.I.A.S). It is a life threatening disease. If you doubt this, just take a stroll
into any hospital and interview the patients and I assure you that many of the ailments are
due to poor sanitation, etc. They are all symptoms of the last stage of (C.I.A.S), Known
as POVERTY.
By God‟s grace, I was delivered when one day during my national service I chanced on
“Financial Whizzdom” by Yaw Perbi and since then I have never looked back.

When people say we are suffering because the government has increased the prices of
petrol, and that prices of goods have gone up, I often reply, “You and who?”
Please good people of Ghana, stop it. Why should you allow a politician or a political
party‟s ideologies determine how you live your life?
The next time you are buying something and the price is rather high, solemnly reflect and
ask yourself these two questions: “Why can‟t I afford this?” and “How can I afford it?”
Do you know that CEOs of Big companies don‟t pay for petrol, rent, phone bills, hospital
bills of his family, etc just to mention a few. Hence his salary is virtually untouched. So,
ask yourself, “You and who are suffering?”
Let me inspire you with this verse. “The wise man saves for the future, but the
FOOLISH man spends whatever he gets” ( Prov. 21:20)
 Are you not tired of hearing, “the government should increase salaries” or “salary levels
are too low”? Jokingly, I often tell my friends, “Never become a civil servant”. This is
because in a lot of economies one of the worst „kind of people‟ you can ever work for is
the government. I heard someone saying that “in Ghana the government pretends to pay
her people and the people pretend to work”. Young people, we are enthusiastic and full of
fresh ideas, try starting something on you own and you will be amazed at the gold mine
of opportunities in Ghana.
Once I was at the bank and beheld a very sorry sight of some senior citizens coming for
their pension. Their situation was pathetic if not lamentable. At that time my national
service allowance was more than what they were collecting. This is exactly what happens
to you if you work for the government and refuse to save and invest alongside.
At 60 years, I must also be able to play golf like the Asantehene on Monday mornings
when others are hustling through traffic to work.
My brothers and sisters, Poverty is a choice and so is wealth. No matter the job you end
up with, you can retire a millionaire if you decide to judiciously save 10% of your
income every month. Nobody is too poor that he cannot save. Saving just ¢100,000 every
month for 40 years at the interest rate of 17% will yield you ¢9 billion, think about it.
For most of us, our problem is PLAIN LAZINESS. The lazy will never be rich. If you are
lazy, going to church to “Kabee” about your poverty everyday won‟t solve anything; in
fact, you may even die while praying- “The sluggard‟s craving will be the death of him,
because his hands refuse to work” (Prov. 13:4).

My aim is to introduce a few principles you would be required to know if you want to
attain financial independence.
Financial independence means having the ability to sustain ones lifestyle if one chooses
not to work to earn a wage or salary.

SHUT DOWN LIABILITIES, START UP ASSETS
In order to become financially independent, you must try as much as possible to increase
your streams and block your leakages.
A stream- a source of income (Asset).
A leakage- a source of expenditure (Liabilities).
The secret to the rich is that they spend the first half of their life‟s resources to build
assets (things that are inherently income-generating or money-making machines). Now,
in the evening, they can afford to sit back and relax without moving a finger and enjoy
free money.
An asset is anything that puts money into your pocket; examples of assets are shares, real
estate, business, land etc.
A liability is anything that takes money out of your pocket. Young people, let‟s cut down
on the unnecessary designer „foot‟ and „wears‟ and making unprofitable calls on our
overly expensive mobile phones. It is ironic when after lecturing, a student comes asking
for money since he hasn‟t eaten the whole morning, and then suddenly his phone starts
ringing, he picks the call, and then you see the type of phone he pulls out. Something that
is about two times my salary!
If you should stop working today, your assets will FEED you; your liabilities will
EAT you up.
The rich buy assets. The poor only have expenses. The middle class buy liabilities they
think are assets.
In order to build your assets, first start by paying your self first.

PAY YOURSELF FIRST
For Christians we may say “pay yourself next”. Next, being only second to having paid
God His tithe. Incidentally, you pay the government first (income tax), then ECG, GT
and Ghana Water Company etc. You end up paying everybody but the one who actually
did the work and got a pay cheque for it –you-. The point is that you will never have
money which you have absolutely no use for. There is, and always will be, pressure on
your money, hence it is important to develop the discipline of paying yourself first. It is
not wise to invest what‟s left after you‟ve settled all your financial obligations – in fact
none will be left. Set aside a percentage (10% is recommended) of your total income that
automatically goes into acquiring some financial instruments or other assets. You can
decide to save this 10% in the bank (not recommended) or invest (highly recommended)
in shares, treasury bills, acquiring real estate, lands or starting a business.
DON’T JUST SAVE, INVEST
The most apt illustration of the fact that saving and investing are not the same is the
parable of the Ten Minas that Jesus told (Luke 19)…
A CEO who was traveling to a far country decided to give each of his 10 servants some
capital – 3 months‟ wages each. He specifically instructed them thus: “PUT THIS
MONEY TO WORK”. And that is the definition for investment: Putting your money
to work, making your money work for you. The 1st invested his money and made 10
times within the time period. This is not far-fetched, since some have made 30 times this
profit. Anyone who bought Stanchart shares during the early 1990‟s for ¢200 share, had
made 300 times that investment already by the end of 2003!
The second servant did not do badly at all; he made 400% returns. Anyone who bought
Social Security Bank shares in 1998 would have had share price appreciation of 429.50%
as at 2003. The last guy buried his money in the ground. The CEO praised the first two,
and after rebuking the last guy, what he said was most revealing: “Why didn‟t you
deposit my money in the bank so that I could at least get some interest on it?” This
comment gives the impression that the LEAST you could do is to save your money in the
bank; but the best you can do is to make your money work for you. (Invest it)
Saving is putting your money to sleep and waking it up some day in the future when you
need it. Investing is giving your savings shoes to go out and work for you.

DON’T FEAR RISK-TAKING
 In fact, one of the sure formulas for failure in life is refusing to take risks.
Incidentally, the higher the risk involved in an investment venture, the higher the returns.
Many do not like the topsy-turvy nature of the stock exchange but historically, world
wide, in the long haul (up to 10 years), no financial instrument comes anywhere close
shares, in terms of returns – sometimes even as much as 10 times Treasury Bills.

REDUCING OR MANAGING YOUR RISK
  1.  Diversification
  2.  70/30 rule
  3.  The mutual way

DIVERSIFICATION
You do not put all your eggs in one basket. As one purchases „high risk‟ shares, one may
also invest in some low risk money markets like Treasury Bills.
Even among shares, one must learn to diversify in terms of the kind of broad groups to
invest in.
Example: You could invest in: (a)-manufacturing industry (Unilever)
                               (b)-automobile industry (Mechanical Loyd)
                               (c)-banking sector (GCB etc.)
So that if anything happens to cripple the banking industry the other 2 would cushion
you.

70/30 RULE
Investment advisors will generally exhort one who is in the range of 70 years to invest
70% of his capital investment into safer (but less yielding) financial instruments and 30%
into the more risky (but more rewarding) equity market. The converse will be true for a
young man of 30 years. This is so because the 70 year-old man may collapse and die if he
sees a drastic fall in shares. The young man on the other hand, even if he looses
everything, has time to rebuild his investment portfolio.

THE MUTUAL WAY
A mutual fund mobilizes funds from the shareholder (investors) into a big pool and
isprofessionally managed by a firm like Databank. Examples of such mutual funds are
Epac and Mfund.
Almost everything about investing in a good mutual fund serves to cut down the degree
of risk. In the 1st place, the government has a regulatory body, the Securities and
Exchange Commission which ensures that investors are protected against unnecessary
high risks or excesses. Secondly, historically, mutual funds within and outside Ghana
have done generally well so entering one is not an uninformed or uncertain decision.
Thirdly, because a lot of people have brought their monies together, the risk is spread
among them. They also have monthly to quarterly reports; it is up to you to read the signs
and advise yourself accordingly. Mutual funds allow you to take advantage of huge
investments which otherwise only high net-worth people would be able to, yet without
risking much money as they would do. But perhaps the most important of all the risk-
salvaging mechanisms is the fact that it is professionally managed.

MONEY HAS PROBLEMS: While the lack of money has its own problems, those are
no where near that of the “love” of money. Right from the mere desire, to its acquisition,
to its storage and the spending of it, there are problems.
DESIRE: But those who crave to be rich fall into temptation and a snare, and into many
foolish and hurtful desires that plunge men into ruin and destruction and miserable
perishing. (1 Tim. 6:9).
STORAGE: Do not store up for yourselves treasures on earth, where moth and rust
destroy, and where thieves break in and steal. (Matt.6:19)
These statements are not meant to scare us but are for caution. It simply means you have
to consciously take precautions and wisely- calculated steps with the fore knowledge that
you are choosing to expose yourself to possible disaster. Don‟t ever become a slave to
money.
WEALTH IS BUILT DAILY, NOT IN A DAY
-Kwame Anane-Fenin.
References :
    1.         Rich Dad, Poor Dad (Robert Kyiosaki )
    2.         12 Keys to Financial Success (Prof. Stephen Adei)
    3.         Financial Whizzdom (Yaw Perbi)
    4.         Secrets to wealth creation (Emamanuel Dei-Tumi)
    5.         Building your dream business (Albert & Comfort Ocran)

								
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