Try these easy steps to save and invest the right way

By: Isaac Quansah

“In the morning sow thy seed, and in the evening withhold not thine hand: for thou knowest not whether shall prosper, either this or that, or whether they both shall be alike good” Ecclesiastes 11:6

Whenever a farmer wants to reap a harvest, he starts with preparing the land and sowing seeds. He then must apply discipline by watering, weeding, pruning and finally harvesting.

Seed sowing is a concept that must be understood and adopted by every entrepreneur because it connotes deeper meaning and applies to every facet of life.

When a woman gets pregnant, we mostly say she has taken “seed” which mostly requires nine months for full growth and development of the baby.

In Genesis 1:11 it states, “And God said, Let the earth bring forth grass, the herb yielding seed, and the fruit tree yielding fruit after his kind, whose seed is in itself, upon the earth: and it was so.”

I will use the seed concept to expound on saving and investment habits subsequently.

I am pretty sure growing up, you once kept a piggy box or what we mostly refer to as money box or “Susu’ box.

We used them mostly when Christmas was fast approaching and you would wish to buy that toy gun, wrist watch or spectacles. Every pesewa earned or received was sure to end up in that piggy box.

Savings is one habit we are imbibed with very early in our childhood in our part of the world.

However, investment, on the other hand, requires greater discipline and conscious efforts to nurture in one’s youth or sad when one is nearing retirement.

I will attempt to simplify for easy understanding and application but let us establish the definitions of some keywords.

Savings: Just like the piggy box example, savings simply is the habit of keeping money safely at the bank for some form of interests; withdrawal when you required with less risk. Savings can be a good vehicle for gain; it protects investors against risk and from incompetent or unscrupulous advisors.

Investor: A person who puts money into a financial scheme, property, project with the expectation of achieving profit or gain. We have different types of investors. We have those with a high-risk appetite, low risk and the medium. A person’s risk appetite is established by choosing a number from 1 to 10.

Risk:  Risk is the potential for gaining or losing something of value. Risk measures the uncertainty that an investor is willing to take to realize a gain from an investment.

Leverage: There is one word that separates an investor and a saver, and that word is leverage. One definition of leverage is the ability to do more with less.

Mutual funds: Is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as shares, bonds, money market instruments and other assets.

What is Investment?

Investment is money or other assets purchased with the hope that it will generate income, reduce costs, or appreciate in the future.

In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.

In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. And usually, it also has a risk of some sort.

In general terms, investment means the use of money to make more money. Investment is often associated with the act of investing money in something. It could also mean the act of giving time or effort to a particular task in order to make it successful.

Surprisingly, the latter is what most people prefer to talk about and not the money aspect of investment.

Spending time with family or loved ones is priceless, but doesn’t settle the bills. Needless to say, one of the best investment vehicles in life is getting an education.

It is worthy to note that your knowledge or your qualifications would not be enough if you don’t apply yourself to understand the rudiments of investing money over a period of time.

Currently, one common investment in Ghana is the acquisition of land regardless of its location because with time land appreciates in value.

Hence, there is a vast difference between savings and investment but the two are interrelated and must be practised simultaneously in life to achieve maximum benefits.

This is because they serve different purposes.

Savings have to do with putting your money to sleep while investment is making your money work for you.

We have different reasons why we save money: to keep it safe, to support family and friends, to buy something you need, for education, marriage, to give an offering at church, etc.

The list could be endless because we have different individual preferences and lifestyles.

Way forward

In order to be good at investment, one must develop the savings culture regardless of the amount of money they earn each month.

It might be difficult, just like sowing in tears, but you will undeniably reap the harvest.

There are a lot of options available, but do well to walk to the nearest bank to get first-hand information and make your decision on what works for you, but please make it a conscious habit to save frequently.

Also, do well to do your background checks on the investment firm that appeals to you before you part with your money.

Speak to experts while you visit the websites of the Bank of Ghana (BoG) which regulates banks and financial institutions, and the Security and Exchange Commission (SEC) which regulates investment firms in Ghana.

If you earn like GHc1,000.00 a month and spend it entirely on things that do not bring you extra income or revenue; trust me, the investment may never cross your mind.

Then again, you don’t need huge sums of money before you start investing. There are many investment firms around which are operating mutual funds.

With as little as Ghc 20 monthly, you would be amazed at how much you’re able to accumulate in ten years’ time when the interest is compounded.

That notwithstanding, it is important to consider getting financial advice before buying an investment.

An adviser will look at your individual circumstances and needs (which include your risk appetite) before making a recommendation and will explain any investment risks.

Before making a recommendation, financial advisers must:

• Ask you in detail about your financial situation and needs.
• Explain why the product they recommend is suitable.
• Give you clear information about the costs comparing the service and products on offer.
• A financial adviser must also give you a ‘key features’ document before you buy any investment product. This will describe the nature, aims and risks of the scheme in a standard format to help you understand and compare it to other products. It will also confirm how your adviser will be paid.

Ben Franklin found the right words for this subject when he said: “Beware of little expenses, because a small leak will sink a great ship,” learn to review and control the use of your finances and other resources, especially your time.

The regular “leaks” you are overlooking can sink the ship of your business; career, etc and learn not to be afraid of making mistakes because you can’t make a difference if you always follow the status quo.

In Conclusion

Wealth is accumulated. There is nothing like luck but hard work and sacrifice.

Whatever comfort you have now may not stay with you forever if you don’t safeguard the future. Don’t despise small beginnings (seed) available to you now. Work with it as I leave you with:

• “Now may God who supplies seed to the sower, BREAD for food, supply and multiply the SEED you have SOWN and increased the fruits of your righteousness.” – 2 Corinthians 9:10. “For everything (money, business, friendship, ideas, character, knowledge) there is fruit and there are SEEDS.

The seed is an investment for the future; the fruit is sustenance for the present – a reward for PRIOR investment. It is the SEED He (God) multiplies not the bread. God does NOT increase you by how much you consume, He increases you by how much you SOW, and how much you invest” – The Dominion Mandate by Pastor Mensa Otabil