An investment management consultant at Stanbic Bank has advised investors against taking hasty decisions to retire their investments following the significant drop in inflation to a single digit. Mr Kwabena Boamah said the drop had been matched by a drop in the policy rate of the Bank of Ghana, which had compelled banks to respond by lowering their base rates. Some investment analysts argue that these developments make it unattractive to keep investing in treasury bills and other comparable investment instruments. Mr Boamah, a Portfolio Manager at Stanbic Bank, who holds a different view said it was still early days yet for drastic decisions to move funds locked in treasury bills and other holdings because of the current improvements in the macroeconiomic environment. He argued that people were likely to look at the nominal value of their money today and take a decision rather than critically assessing the real value (the value adjusted against inflation). According to him, it was not entirely accurate for investors and potential investors to assume that since inflation rate had dropped, other investment instruments would offer them higher returns. Mr Boamah said returns on investment at the various financial institutions would still remain the same except individuals who invested in short-term instruments and in floating shares. “Government securities are now between 12.7 per cent and 13.5 per cent, implying that people still have some returns on their investments since the value of the money being saved remains the same,” he said. He added,“considering how long an investor wishes to invest in relation to the risk factors in the trading environment is another factor that potential investors will have to consider before engaging in an investment option”. The portfolio manager said the amount of money an individual held would also inform the kind of investment and the alternatives available to invest in, stressing “it is always important to know one’s financial status before undertaking any investment plan”. Mr Boamah explained that there was always an investment opportunity for every economic actor, the differentiating factor being how early the investment started because “with time everybody no matter the occupation can invest in anything that can earn some money”. The investment banker said the reduction in base rates and a possible reduction of effective interest rates by commercial banks would also benefit companies, especially those with debt financing as the cost of the debt was likely to decline. “In a time like this, there are great expectations on the stock market also to do better, which will be another alternative investment avenue for individuals who want to invest in instruments with medium to long term maturities,”he said. Source: Daily Graphic/Ghana