Money Mentor: Investment options for short-term investors in Ghana
Due to financial market volatility and uncertainties, many individuals find solace in short-term investments. Short-term investments allow people to seize fleeting opportunities and navigate financial fluctuations. Even though short-term investment opportunities are many across the world, here are the options available to investors in Ghana.
- Money Market Funds:
Money Market Funds are a popular choice for short-term investors in Ghana and Africa. These funds, managed by investment professionals, invest in assets like fixed deposits, treasury bills and commercial papers, providing relatively better returns than regular savings accounts. The minimal contributions required and easy access to invested funds allow quick withdrawals, making it convenient for many investors.
- Treasury bills:
Treasury bills (T-Bills) are short-dated investment securities issued by the government. Their duration is usually three months or six months. In Ghana, T-Bills are usually purchased through banks. The interest rates for T-bills are quoted per annum. Since governments back treasury bills, it is usually a proxy for risk-free instruments and offers low interest in most economies.
- Fixed Deposits:
Banks and non-bank financial institutions offer fixed Deposit investments. These accounts lock in funds for a fixed period, typically one month to a year, with higher interest rates than savings. While withdrawals come with penalties during the agreed period, it ensures stability and reasonable returns for risk-averse short-term investors.
Remember, it’s essential to do your homework, assess your risk tolerance, and seek advice from a financial advisor before making investment decisions. Additionally, it’s important to note that the performance and availability of these investment options may vary, so it’s always a good idea to stay updated with Ghana’s current market conditions to make an informed decision.
The writer is the head of Client Coverage at Stanbic Investment Management Services (SIMS). He is an investment professional, a multiple paper prize award-winning chartered accountant with the ACCA (UK) and a Chartered Institute for Securities and Investment (UK) member. As a financial literacy advocate, Desmond is passionate about spreading financial literacy, especially among the youth. He heads the client coverage team at Stanbic Investment Management Services.