Friday, August 26, 2011

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.

Friday, August 12, 2011

What is Short-Selling and why the ban in some European markets?

Short Selling as I explained to my younger brother is that; I borrow his nike school bag and sell at a price let's say GHC 2.00 and then hope for the price of the same nike school bag to come down to GHC 1.00 in the market. And after that I quickly buy the same nike school bag for him at the current market price of GHC 1.00 leaving me with GHC 1.00 of which I pay him a lending fee ( 0.20p) and keep the rest. (0.80p).
It is quite obvious in the case that, if the price of the nike school bag rises from GHC 2.00 to GHC 3.00 after I bought from him, I would make a loss of GHC 1.00 since I have to return his nike school bag (by buying) for him to go to school. In a more matured example, I approach an Investor of Company A to lend me 1000 shares which currently trades at $ 100 per share. (i.e. $100,000) then I sell those shares at $100 per share hoping for the price to drop to $50 per share. When that happens, I buy the same 1000 shares of Company A at $50 per share and give back to the Investor of Company A with the lending fee whether the value decreases or not. The market can turn in favour of the Investor too.
Short selling of assets mostly occurs in the securities markets and most experts allude market volatility to it. In most European markets, short selling has been banned to reduce market volatility. France, Spain, Belgium and Italy are prohibiting short sales on bank stocks and it is likely other countries would follow.
Investors are now skeptical of what would happen to the market now that short-sellers are out.

Thursday, August 4, 2011

What you should know about Accra Hearts of Oak and their IPO

Accra Hearts of Oak Sporting Club popularly known as PHOBIA was one of the earliest clubs to be formed in Ghana in November, 1911. This sporting club has currently issued an initial public offer and this is the first of its kind in Africa. If this IPO is successful, shares would be listed on the Ghana Stock Exchange and would make a historic mark in the IPO records in Ghana and Africa as a whole.
There are so many things that make an IPO successful and some important factors to consider are the financial status and future prospects of the company. Accra Hearts of Oak although currently in debt has assured the public that its operations would change drastically in a positive way after the IPO. The Board Chairman, Mr. E. M. Commodore-Mensah says the capital from the IPO would be used to enhance activities in the club. Experts are predicting that, this IPO would be successful because of the support or fan base of the club and the sentiments attached to the club by the fans. Apart from Kumasi Ashanti Kotoko (a football club), Hearts of Oak has the largest fan base in Ghana.  Nevertheless, people are with the view that the price per share (0.50p) is too expensive looking at the stature of the club.
Hearts of Oak has won twenty (20) titles in the Ghana Premier League and six of them were consecutive (1997 to 2002). The Sporting club has also won nine (9) championships in the FA cup and had one CAF championship league title in 2000. In addition, they are seven times winners of the Ghana Telecom Gala. One of the most prestigious cups in Ghana is the Top Four Cup and Accra Hearts of Oak has won it for three (3) times and was African Super Cup champion in 2001.
With all these wins, it is quite obvious that there is a lot more to do, now that the Ghana Premier league and other leagues are developing. Moreover, their closest rival, Ashanti Kotoko has remained a force to reckon with.  
The financial statement of the club showed impressive results for last year despite the bad performance in the league. Would this affect the IPO subscription in anyway? The shares of the club are to be traded in the OTC market and this could also affect the subscription of the IPO, meanwhile, lead brokers SAS Brokerage Services denies that.  The truth would be out after the offer ends on 29th August, 2011. They ‘never say die until the bones are rotten’

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