Banking | Opinion

Investing in crisis period

In this era when there is so much turmoil in our financial space, it is not uncommon to find many Ghanaians in a dilemma regarding where to invest their money. Until the influx of Micro Finance Institutions (MFIs), banks were the safe haven for most Ghanaian savers/investors.

The presence of these MFIs changed the investment dynamics significantly because their upsurge created competition for commercial banks and investment companies.

For obvious reasons, they won the hearts of many Ghanaians partly because of the high interest they promised and mostly their proximity to their clients.

In less than half a decade, about 416 financial institutions (7banks, 23 savings & loans and 386 microfinance and microcredit institutions) have lost their licenses.

This makes it quite understandable that most savers/investors are gripped with fear and find themselves in a state of perplexity coupled with anxiety not knowing where to turn to with the little they have left after thousands and millions of their hard-earned monies were locked up in these collapsed institutions.

Against this backdrop, this article seeks to identify investment options available on the market amid these anxieties and uncertainties. But before I proceed, let me seize this opportunity to address one common problem regarding how most investors select institutions and financial products they invest in. It is quite unfortunate that a lot of people make this fundamental error of seeking investment advice from wrong sources.

For most Ghanaians, the recommendation to invest in a particular institution or instrument comes from friends, family and fools popularly known as the triple F or 3Fs, who may not necessarily be financial experts or are bereft of knowledge on investment and these lead to their unfortunate ends. I need not mince words about this, it is always advisable to talk to a financial expert or advisor before deciding to invest in a particular institution or instrument. It may cost a little but eventually, it will save you a lot. Of course, you don’t want to be “a penny wise and pound foolish”.

Let’s now dive into the issue on the investment options available during crisis periods similar to what we are currently witnessing. Below are a few of the options investors can consider, some may not yield very high interest but at the very least they will secure your principal as well as earn some decent returns.

Treasury Bills and Treasury Notes

Treasury Bills or T-bills are short- term investment which means they mature in one year or less, but their relatively longer types are the Treasury notes which mature over a year. They happen to be one of the safest financial instruments to invest in during times of crisis.

This is because they are technically deemed to be risk-free because your monetary returns are known and certain at the time of purchase. Additionally, T-bills/Notes are issued by Bank of Ghana on behalf of the Government of Ghana which makes them secured because their reputation is based on the full faith and credit of the Government of Ghana.

T-bills are sold at a discount to their par or face values. So, the investor pays less than the face value upfront for the bill and get the full value at maturity. The difference between what the investor pays and the face value represents the return on the investment.

Since T-bills are risk-free, their returns are equally low so they are not the investment option to consider when your aim is probably to double your investment within the shortest possible time but they are one of the safest options for keeping your money when there is so much chaos in the investment space.

Currently, the available instruments on our market are the 91-day and 182-day treasury bills, as well as 1- and 2-year treasury notes. These may be purchased with a minimum amount of GH¢500 and can be bought through banks or licensed brokers such as IC Securities, Databank, or SAS Ghana.


Apart from treasury bills and notes, investors can consider investing in bonds. Bonds are long- term debt instruments issued by governments and corporate bodies to raise capital from the general public. As debt instruments, they pay interest which are referred to as coupons and at maturity, the investors are given the face value.

The coupons are paid annually or semi-annually. It is worth noting that not all bonds pay regular coupons, some are zero-coupon bonds (pure discount bonds) and hence they do not pay regular coupons, but they are sold at discount like treasury bills. Investors’ return on a zero-coupon bond is the difference between the price they pay for the bond and the face value.

Because of the periodic coupons they pay, coupon bonds are good for investors who are interested in receiving regular income from their investment.

As noted earlier, bonds can be issued by governments, companies and in some jurisdictions, by municipal but only Government of Ghana bonds and Corporate bonds are common in Ghana. Government bonds are relatively safer and secured but before buying corporate bonds, get a financial expert to advise you on the credibility of the companies since a corporate bond is as good as its issuer. Currently, in Ghana, 3-year, 5-year and 7-year GOG bonds are listed on the Ghana Stock Exchange and can be bought through licensed brokers.

Mutual funds

A mutual fund is another option to consider as an investor. A mutual fund is a pool of monies from various investors which are invested in securities selected by a professional manager. With mutual funds, the investor shifts the responsibility of security selection and investment management to a professional manager. The investor becomes a part-owner of all the securities invested in by the fund manager.

The value of a mutual fund depends on the value of the securities it invests in. At any point in time, the price of a share in the mutual fund is the value of the net assets (the value of all its assets less any liabilities) of the fund divided by the total number of shares of the fund. The returns from securities held by the fund, such as interest or dividends are usually reinvested in the fund to drive up the price of the fund’s shares. So, for an investor in a mutual fund, you gain when the price of the shares rises and lose when it falls.

The advantages of investing in mutual funds include enjoying from the expertise of the fund manager who selects securities, creates a portfolio and manages it. In addition, the restriction imposed on how funds in mutual funds should be invested by Unit Trusts and Mutual Funds Regulations, 2001 ensures that funds are used to create a well-diversified portfolio which minimizes risk to investors.

In Ghana, Databank’s Epack, Mfund and Bfund are examples of mutual funds one can consider investing in.

Fixed deposits with “Too big to fail banks”

Fixed deposit or Term deposit has been one of the very common investment options for most Ghanaians but the recent occurrences in the banking space have caused some people to have a second thought about it. Fixed deposits allow an investor or save to set aside a fixed amount of money over a given period which they earn interest on. It is mostly a very safe way to build up capital though the rate of appreciation is very slow and low.

Regardless of what has happened in the past, fixed deposit remains a safe and good investment option but at this point, I am coerced to add a caveat that, an investor is very safe when such fixed deposits are done with “too big to fail” banks. The “too big to fail” concept is used to describe the idea that certain businesses, such as the big banks, are so vital to an economy that it will be disastrous if they collapse. For that matter, such institutions will surely be bailed out by the government because of their size and the crucial role they play in an economy.

Landed properties

Investing in landed properties has proven to be a wise decision and arguably the best form of investment. Though, it involves huge capital outlay the returns commensurate the investment. It is therefore not surprising that in accounting, lands are not depreciated. Granted you do your due diligence and you acquire a genuine land and have it registered, it qualifies as an asset which can be used as collateral or can be sold later at a profit if you don’t even intend building on it.

Fortunately, in recent times, some companies have flexible payment terms for persons who will like to purchase lands but do not have ready cash. Such persons are offered the option to buy and pay by monthly instalments. Depending on the location, a GHs500 per month for 3 years should be able to secure you land which can be developed or held for appreciation.

I would not want to go so much into intricacies of commercial real estate investment because the capital outlay may be too much for an average Ghanaian to afford but at an individual level, planning to own about 2 to 3 plots over a period of 10years is not a bad investment at all.

As an investor in lands, you gain from price appreciation and if the land is developed a rental income from it can serve you well especially when you are on retirement. But caution must be taken when considering this investment option and it is advisable to speak to experts to avoid being duped by unscrupulous persons.

These are but a few of the investment options you can consider during crisis periods. An exhaustive list cannot be given but whenever you are in doubt ask a financial advisor for help. Always remember this quote by Confucius “The man who asks a question is a fool for a minute, the man who does not ask is a fool for life.” Seeking financial advice can save you a fortune.