Personal Finance Tips for the New Year

As the year draws to an end, I will be sharing with you some personal finance tips that helped me manage my finances and simply life as well as investing.

1. Bank Accounts:

Let's begin with bank accounts. In 2016, I stuck to the use of bank accounts as an outlet for cash inflows and simply as that.
Not even a peny was allowed to stay in it.
My Salary and other streams of income pass through it and are moved to where they really belong - (Investment accounts).
Keeping too much cash in your bank account is not something I'll advice. The worse form of this is when the bank account is a current account. You don't only lose the value of your money over time, you also get charged. 
Another thing to avoid is the little ATM or VISA charge. The more transaction you make, the more you pay.

2. Carry less Cash:
When you carry less cash on you, there is greater possible of you living within your means. This has been my way of controlling my spending. This is a powerful tool and if practiced well, you turn tospend less and even in the case where you have loads of cash on you, you won't feel like spending it on unnecessary items.

In my next post, I'll share some of the apps I use to manage movement of money and personal finance.

Why you should put all your eggs in one basket

Today I was reviewing my Investment Coaching notes and preparing for my next session and then I came across a quote from Will Rogers that says; 

“Don’t gamble! Take all your savings and buy some good stock and hold it till it goes up. If it won’t go up, don’t buy it.” 

 I think it is a very deep quote that will get you  to do more work on finding a good stock than you will expect. It seems as a good Investment policy to adopt but the questions that will follow are; how do you know it will go up? How do you get rid of some risk though diversification?

After thinking this through over and over again, I strongly agree that when the right work is done in finding the right and good stock / company, putting everything you’ve got in it is simple a smart move allowing yourself to achieve high long term growth even if that means accepting some significant short term swings in value.  I am very much aware of the squad at the other side of the room with the view that, it is unwise to put all your eggs in one basket.  My question to them is what if the basket is well protected and the eggs are so safe that nothing can go wrong?  

I see that form of investment as a way of building your wont small cap company and enjoying the returns. With you putting in more and more, you may even get to enjoy some degree of management control.  According to Rich Dad, Kiyosaki, this will require the Three E’s- Excessive cash, Education and Experience. He called it the Insider Investor.

Bottom Line: Spreading investment across a number of assets will eliminate risk but not all of the risk and hence you should rather Take all your savings and buy some good stock and hold it till it goes up. If it won’t go up, don’t buy it.

How do you find a great investment

I was listening to an audio by Robert Kiyosaki on this topic, "How to find great Investments" and I'll like to share with you some lessons.
Some people see saving with the banks as an investment, others refer to mutual fund investments as great investment but to Robert Kiyosaki they are not great. And I kind of side with him a little, knowing where he is coming from. With regards to the Ghanaian economy, gaining 20% to 30% on an investment like a mutual fund could be a great investment considering the effort and time put in it.
The best investments are the ones you can control, according to Robert. And education is what gives you control. The more you know about an investment being it Stocks, Businesses, Real Estate, Options or forex trading etc, the more you have control and the more you stand the chance of succeeding.
In order to be a successful investor, you need to look for VALUE. Yes, where is the value, and then you project the value into the future. How much will this be worth 5 years from today when I fix this or that or make this or that changes?

Real wealth builders should look at starting a business or real estate according to Kiyosaki.

Principles for Investment into Businesses:
1. Know how to read and interpret the numbers. The numbers tell a story and you have to be able to understand the numbers to understand the story. You need to have control over financial statements.
2. Learn the vocabularies involve in running a business.
3. Start small.
4. Note that it is your education that makes you money and not the amount you invessted.
5. Cash flow is key to growing a business. Look for cash flow. It is the amount of money that comes in and goes out.
6. Watch the trend. Know the trend because they impact your business. Some trends could be technology related. Understand the trend and the industry.
7. Look for great partners.

Principles for Real Estate Investments:
1. Invest first for cash flow and then for capital gains.
2. Use leverage when investing.
3. See investments with your mind.
4. Train your mind to see what your eyes cannot see.
5. Invest some time in your education.
6. Make the necessary links.
7. Dont risk your money investing in mutual funds.
8. Pit in the time and the effort.
9. Find a property that is losing money or not making money and make it into one that makes money.
10. The Income of your properties are affected by Your Rent, Vacancy Rate, (look for properties that are being mismanaged. High Vacancy is an opportunity) and finally Other Income (renting out parking space etc)
11. In finding a good investment, one of the first thing to ask yourself is, what's my experience, what are you good at.

Investing is a fun game to play. Start it and enjoy playing.

Living with an Emergency Fund

Live with an emergency fund: I've always had something wrong with this concept of "living with emergency fund"- that's saving an amount of money that you can refer to in case of emergencies, simply because I thought I don't have enough to buy stocks and other long term securities thus why should I keep some in emergency funds. However I think, it's the right thing to do in other to safeguard your valuable investments. I have had situations in my life that required me to quickly sell my investments before they matured. This is very unfortunate and in order to prevent deeping your hand in to your portfolio, it's always adviceable to ......... read more here: http://peagama.tumblr.com/post/67442400968/live-with-an-emergency-fund-i-always-had

Ghana Investment Report; Impressive? Find out the new developments

This afternoon I was reading the 1st and 2nd quarter Investment Reports by the Ghana Investment Promotion Centre (GIPC) and I must say I'm impressed about the report; not about the content but about the layout and how the content was put together. Again not that the arrangement or layout was great but just that my expectations were very low. 

Now let's look at some key aspects of the reports.

Mutual Monday: What you must know about EPACK, the 'Praise-the-Lord' fund.

It's another Mutual Monday and welcome to journey to mastering mutual funds and unit trusts. With reference to my previous post, (Mutual Monday: Investment Funds (mutual funds & Unit trusts) in Ghana), let's take the funds one by one and know more about them. Let start with EPACK.
EPACK is a mutual fund, established and managed by Databank Financial Services since 1996. It is a long term (from 3yrs) investment fund that pools money in different amounts from different people for investment  primarily in Shares listed on the Ghana Stock Exchange.

Mutual Monday: Investment Funds (Mutual funds & Unit Trusts) in Ghana.

Today is another Mutual Monday and welcome to my blog. In today’s post I would outline the various types of investment funds we have in Ghana and the fund managers of each. Mutual funds and Unit trusts are referred to as investment funds. Mutual Fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as bonds, stocks, money instruments and similar assets. Each shareholder or unit holder participates proportionally in the gain or loss of the fund. In my next posts, I would go into details and explain how it is managed or priced.

How to start investing (101), Preparing yourself for investment in Ghana.

In this era of hardship, low job remunerations, high dependency and a lot of responsibilities, people are now looking for new job opportunities whiles others want to properly manage their finances to cater for all their needs. Most people look for investment opportunities to make more money out of the little they get. One thing that serves as a hindrance is that, they do not know how to invest. Some people have money but do not know how to invest whiles others think they do not have at all to even invest.

In Ghana for instance, there are so many investment opportunities but before we look at them, let us know the necessary steps needed to start investing.

The first step to starting investment is for an individual to resolve all financial issues like debts. It is advisable to pay your debts and plan not to incur any more. Debts increase your liabilities and make it difficult for wealth creation.

Another crucial thing needed for starting investment is to develop a saving culture or habit. This means, you must get a plan to put money at the bank (recommended) or somewhere for future investments. It involves selecting a good bank and opening a saving account where you would regularly, perhaps monthly or weekly deposit an amount of money for safe keeping as you think about where to invest.

The third important thing is to review personal incomes and expenses. This involves taking note of the income avenues like your job or private businesses and expenses you make. Investors always make sure their incomes are more than their expenses and this makes it possible to get some money to save for investing. Meanwhile, if your expenses exceed your incomes, there is nothing to worry about. You can develop a rule for the use of monies that come to you. An example is the famous 10-10-80 rule. This rule means that, for all monies that come to you, 10% is set aside for investment, 10% for paying your tithe (esp. the religious) and 80% can be used for other expenses. Other people prefer the 20/80 rule, where 20% of all incomes are set aside for investment in a savings account and 80% covers important expenses. With this rule, anyone can get money to invest to yield attractive returns.

A practical example is that, assuming a person has $ 1000 expenses to make and gets $ 1000 income either through salary or any other means, that person can set aside 20% which is $200 for investment and used the remaining $800 for the expenses. And since that would not be enough, expenses must be cut down to meet the money available. In so doing, you would always pay yourself first before paying others and that would help accumulate money for investing.

It takes a lot of discipline to do this and this must be done for all incomes. You can also seek financial advice from experts on how to do this.

Please follow the next post to know the various investment opportunities available for you, where to find them, how much is required to invest in them and the risks associated with them.

First Time Investors on Ghana Stock Exchange

In 2009, I bought my first stock as a first time investor which was an IPO of ETI. I bought 500 shares at 0.29 cents (about GHC 0.34) per share. I bought this stock without any market analysis but just out of desperation to own shares on the GSE. I must say that I was also happy for the fact that the dividends were paid in dollars and at that time, the dollar-cedi rate was in favor of the dollar.
This stock performed badly when it started trading and now it has fallen lower than half its initial share price.
One lesson from this investment is that, an investor should not to rush into investing but to study the market very well especially IPOs.
As an investor, one must consider so many factors before buying a stock or venturing in the capital market. The Ghanaian Capital market is becoming robust every single day and hence requires more attention and advice to invest and gain from it. Brokerage firms are sprouting from time to time and that means people in Ghana are now seeing the need to take the investment job serious hence the need for investment advisers. Competition is getting keen but the question is how prepared is the market for first time investors- those that know very little about investing. Is it true that the majority of investors on the exchange invest with their sentiments with very little or no investment advice?

How many investors understand the GSE Security Depository (GSD) System and know the investment laws enacted by the Security and Exchange Commission (SEC)? Answers to these questions should caution the Ghana Investment Promotion Centre (GIPC) to be more active. I entreat all first time investors to study the market or seek advice from experts (brokerage firms) before investing. You can make a lot of money in the stock market, just ask how?

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