Economic lockdown? Decisions with your money in these times.

One of the joys of investors is whenever rates on the monies to be invested look juicy and tempting. Even the most risk averse investors take shots at such opportunities of a life time to get real value for their hard earned monies. However, all that glitters is not gold per the famous quote. When the entire economy of a nation suffocates, high rates or returns on investments may count for nothing and one must rather diversify portfolio with the intention of at least maintaining the principal for investment. The current economic situation in the world look gloomy to say the least, and that of Ghana is a total departure from the wishes of every Ghanaian – perhaps amongst the worst since independence.

Seeing inflation skyrocketing to almost 38% and cost of living penetrating the roofs of citizens, people must make crucial decision with the little monies they have in anticipation for better days ahead. Although the BOG`s hiked monetary policy rate of 24.5% has had ripple effects on Treasury Bills (30/31%), the rates have virtually no impact on investment as inflation is simply unstoppable at the moment and there eroding any possible gains on the road. Until a certain level of reprieve necessitated by the “gong gong” beating of the IMF(hopefully) takes place, we can consider the following to help us with our monies:

  1. Invest in “necessity business”: As we carefully tighten our belts at least until end of the year in anticipation of IMF bailout, goods and services of “necessity” will keep us afloat and therefore worth investing in. This can help with steady and secure source of income and therefore keep one afloat for the period.
  2. Invest in Treasury Bills: This has been known to be one of the less riskier and preferred form of investment. Irrespective of the historically low interest rates, investors are attracted to it because it is always “safer” with at least your principal. Rates are normally higher than inflation also in that regard. However, currently interest rates look pegged below inflation and therefore may return negative yields. The reality is that, if you keep your money without investing in Treasury Bills, inflation will still affect it (full effect of depreciation – 37/38%). Investing in it may only erode about 6 to 7%. The latter is certainly better.
  3. Invest in an Asset: Prices of goods and services keep soaring by the hour, day and week with no end in sight. Experts advice that people convert liquid assets to fixed assets to have values appreciating with time. when the economy finally stabilises as anticipated, one can sell off and make money back with a higher value.
  4. Buy a foreign currency: Increasing demand of foreign currency is a key factor for constant depreciation of the local currency. However, you can decide to be a little “selfish” to buy some pound sterling, dollars or Euros to retain the value of your money.
  5. Keep a portion of your money in hand: Experts advice that one keeps portion of monies in hand instead of lodging all in the bank. This way, if banks decide to enforce a withdrawal cup as a result of the country’s economic misfortunes persisting, one can be in a “relaxed” situation.
  6. Stock up (groceries, food, clothes, dresses, drugs, etc.): Until stabilisation occurs, food prices may continue its surging as has been in the past months with “more than double” figures. If one has monies, it is advisable to shop now and store especially essentials to mitigate effect of surging prices until stability visits our corridors.

Credit: GhanaWeb, World Bank, IMF & Ghana Stats

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