Experts Warn: Key Questions Often Overlooked Before Major Investments
By Kingsley Webora TANKEH
The Chief Executive Officer of Republic Investment, Madeline Nettey, has advised retail investors to stay alert, gather pertinent details, and pose appropriate questions whenever they consider making future investments.
At The Money Summit 2025 organized by the Business and Financial Times in Accra, she argued that expanding pension investment options introduces additional obstacles that must be addressed.
She requested that thorough due diligence be conducted prior to investing to guarantee the security of our funds.
“To decide how to allocate your GH₵500,000 investment, you should pose relevant questions or follow a thorough process to identify what options are suitable and secure for this amount,” she stated.
She voiced concern that "we refrain from asking questions when interested in investing."
The experienced investment manager suggested that we should have an interest in our investments.
"If you don't wish to spend GHS10 or even GHS1,000 on that bottle of water, then focus on understanding where you're putting your money. Check whether the organization is licensed. Find out what products they offer," she emphasized, highlighting key inquiries to consider when exploring fresh investment prospects.
"We've observed in this nation individuals seeking investment opportunities. However, many aren’t aware of the regulatory body or if the financial institutions are licensed. Additionally, they remain oblivious about the specific investment tools being utilized," she emphasized, stressing that such knowledge is crucial for protecting one’s finances.
Up until recently, government securities and bonds were considered to be devoid of risk for investors. But following the notorious Domestic Debt Exchange Programme (DDEP) in 2022, which reverberated through the realm of retail investments, it has become abundantly evident that even the most secure types of investment harbor unforeseen dangers.
The diversification of pension investments in Ghana was highlighted during the recently concluded summit. This approach is seen as a solution to reduce risks linked to excessive investment in government securities and bonds.
“She remarked that being assertive is beneficial, as is venturing into new territories.”
Nevertheless, it is wise to maintain a diversified portfolio that takes into account your risk tolerance, the time frame for your investments, and their intended purpose—not solely focusing on the returns.
She highlighted the importance of custom-tailored investment approaches that cater to the specific requirements of each person.
"Suppose a 35-year-old enters Republic Investments and states 'I wish to invest my funds,' with an average tolerance for risk. In this case, we'd begin with options they feel at ease with and assign roughly 20-30 percent to Government of Ghana (GoG) securities," she proposed when discussing strategies to diversify investment risks within one's portfolio.
It's crucial to begin with the conventional asset classes that you're more acquainted with, allowing for clearer identification of risks prior to incorporating alternative investments into your portfolio.
“She mentioned that once the allocation for conventional asset classes has been used up, some corporate bonds will be added. If available, certain commercial papers might also be included. Additionally, they plan to review exchange-traded funds and leverage listed equities as well."
When suggesting the equity market as an effective tool for spreading out risks and boosting profits, she used the case of Scancom Plc shares after they were initially listed on the Ghana Stock Exchange in 2018.
"MTN Ghana was priced at GH₵0.75 back in 2018. Calculating the total annual return, it has generated approximately 40% solely based on the stock price—this doesn’t include the dividends distributed over the years," she pointed out.
To diversify your investments effectively you need to include in your portfolio asset classes that are not directly correlated in\xa0 terms of risk in order to maximise returns and minimise overall risks.
She likewise suggested the Ghana Gold Coin as an asset class offering higher returns but remains relatively low-risk.
However, there is a risk-reward theory in every asset class.
Mr. Ankit Tandon, the Chief Operating Officer at Regulus Investments & Financial Services Gh. Ltd, stressed that "Increased risk comes with a greater expectation of rewards."
"It doesn’t imply that the rewards themselves are greater; rather, it suggests that the excitement about the potential rewards is more intense," he explained.
He recommended to retail investors "never to place all your eggs in one basket; you should always diversify."
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