FINANCIAL LITERACY FOR ALL

Financial Literacy is the ability to read numbers and interpret them for profitable use. Organizations show their financial positions, financial performance and cash generation in the form of financial statements.

Financial literacy affords the opportunity to learn to understand these financial statements even when one is not finance professional.

Financial Literacy accords us the opportunity to know all the rules about money, how to make money, how to keep money, how to spend money, what to spend money on, how to make money work for you and many more. Everybody, on this earth uses money, but we are not taught any good deal about money at all at even at the tertiary and professional institutions. We are not being taught Financial Literacy at schools. We are taught literacy but not financial literacy.  It is then left with us to take action now to acquaint ourselves with good knowledge of financial literacy. Since every day, we spend money, we make some money and we lose some money sometimes, we need to have very good education on money, that is how to generate money, what to spend the money on, how to sustain it and how to increase it or its worth.

Whoever says, he or she does like money is not only telling a palpable lie but is exhibiting a total denial

No human being in this present world can live without money. We therefore need better education on money whether we are finance professionals or any other person. Remember, everybody needs money to survive this life.

Financial literacy teaches about the types of expenses, types of income, types of loans, types of funding or sources of finance, types of investments, types of financial intermediaries, and many more.

Financial literacy teaches that there different types of income such earned income, if one is an employee , portfolio income from commercial papers such  as shares, mutual funds, unit trusts, bonds, options and so on. There is passive income from real estate. What is the source of your income?

Why don’t you consider other genuine means of getting other incomes? Financial literacy would teach you all these and what to do. What is the source of your income and what do spend your income on?

Financial literacy teaches on risks taking and how to manage the risks taken. You should learn to take risks but manage them.  Life is full of risks but they should be managed.

In financial literacy, you learn that the rich use what they call the OPT (Other people’s time) and OPM (Other’s people money). In the end they, the rich people have the time to attend to their family and personal problems and they also have the money. They are just smarter to get everything.

In financial literacy, you learn that you need other professionals such as accountants, bankers, brokers, lawyers, estate agents, surveyors, etc to succeed in your quest to achieving your goals and dreams.

Financial literacy is not meant for only highly educated people in society but for everybody, because everybody uses money.

In financial literacy, you learn that there are many ways to retire, such as retire secured, comfortable or free. Which of these do you wish for and what are you doing to get the one you choose?

Financial literacy is not meant for only finance professionals and but for all human

© 2010, Godwin-Xavier Ayeebo

Email: gayeebo@gmail.com

Blog: www.g-xavierayeebo.blogspot.com

FINANCIAL LITERACY FOR ALL-KINDS OF MONEY

“Money is kind of a base subject. Like water, food, air and housing, it affects everything yet for some reason the world of academics thinks it's a subject below their social standing.”

I have been privileged for it to have been revealed to me that I travelled all the long distance from Bawku to Accra, where I currently reside all because of money. I need money through legal means to survive this life and in my quest to get this money I find myself currently living in Accra, where there is so much filth, there is so much man-made traffic jam on the roads, where there is no water for residents of the national capital to use, where I see my colleague human beings live in the opening whilst it’s raining, they are soaked and have no where to seek for shelter, where  school children have to wake up as early as 4 am and prepare to go to school, where nobody really cares about anybody, in a capital city where gardeners use very dirty water from very dirty gutters to water vegetables and sell these vegetables to Ghanaians to consume,(disaster) then I can only conclude that everything that man has caused to happen or is causing to happen is as result of seeking for some money.

Anybody, whether in Ghana, America, Australia, Libya, Zimbabwe, in England and all other parts of the world live there primarily because of money. You can move to where life would be comfortable for you, but life being comfortable means, you have money to buy food, for healthcare, for shelter, for clothing and for luxury, else, whoever, you are, you will move to another destination hoping for better life or else you move on till you find some.

People kill others for money. People rob others for money. People rob their employers of money and some employers also rob their employees of their due pay.

Drivers fleece passengers for more money. Students cheat to get good grades to get good jobs with the aim of getting good money. People are living illegally in other people’s countries all because they want money.

How many pastors and priests would stand for Jesus if they were denied of their daily bread?

Organizations are trying to kill their competitors so they alone could survive and take all the money. Books are written, songs are sung, plays are acted, schools are opened, organizations are established, and children are sent to school sometimes very away from home. Why? Money!

Nations have unnecessarily fought other nations just with a common latent aim of taking some of their enemy’s money or some resource. Political leaders vie for mighty power all because of one paramount reason – money. How many politicians in this world just want fame and power for their own sakes if they, the political figures were denied the luxuries of living in the presidential palaces, where money has been used to build beautifully? How many would be politicians if they were denied of the motorcade, denied of the good healthcare, the uninterruptible power and water, internet, telephone supply? More importantly, how many would offer themselves to serve their various countries if they were denied of salaries and given no penny for their contributions towards national development? Money is the number one underling factor in almost decisions taken or not taken on earth.

Once we all cannot say we don’t need money, we have ended up competing for money as if is the chief reason we were created.  

In my quest to learn Financial Literacy, which teaches everything about money, I learnt that there are three kinds of money:

·        Competitive Money

This is money that is being competed for by individuals and organizations.  This is the survival of the fittest. No mercy for the “cripple” (cripple here does not mean somebody who is naturally challenged in any form). Competition starts the very day you are sent to school and goes on till we leave this life. Many people and or organizations have gotten their money through this way, by competing and eliminating others to get what they want, money. Winner takes all is the prize of the game.

·        Co-operative Money

This is money that is gotten through the collaboration by many people and or organizations. The results have been achieved because of the effort of many, who have shared their energies, time, ideas, and other things to get the money. Everybody takes part in the prize of the game, because the money has been gotten through the concerted efforts of everybody.   

More than necessary money for Africa could be gotten through this means if all African countries were united and supported one another.  More than zillion an amount of money could have been gotten if the world was united and genuinely depended on one another.

·        Spiritual Money

“Inside of every problem lies an opportunity”

 This is money that is gotten by doing God’s work. This is does not mean being pastor, no, that is not what I mean. Let’s see with appropriate examples in a country like Ghana.  There are so many unacceptable road accidents in Ghana and the rate does not seem to be reducing. Anybody or any organization, that wants spiritual money could just begin doing what it would take to reduce road accidents in Ghana to a very low level and much as that person or organization might think that they just doing God’s work, they wouldn’t know how they will end up being rich, solving this problem and for that matter doing God’s work of saving the lives of their colleague human beings.

There are many issues concerning women and children in Ghana and in the world that need bold people to arrest them. Infant mortality. Breast Cancer and all other cancers. Spiritual money exists here greatly. Those, who would take up this to save lives, will get spiritual money. Health Literacy is another area that could bring spiritual money home.

Waste management in Ghana is a great concern and a very big problem. There is spiritual money here too.

Conflict resolutions, eradication of poverty, water and energy crises are all real and alive and kicking in Africa and many parts of the world.  Organizations and individuals who take them up and tries to reduce the want for them by helping provide what is needed will be working tediously  and very hard but will eventually get the spiritual money hidden  in there.

The aged need care and love but day after day they are denied these and for many of the aged think life is no more worth living it. Anybody who tries to put some great happiness and smiles in the faces of the aged could be on his or her way to getting real spiritual money.

Whatever means you use to get your money, do well to devote a small portion to doing God’s work that is what God would love to see you do. Help keep the environment clean. Help maintain peace. Help the aged enjoy some more life on earth. Help the little children enjoy education, healthcare, Help the women give birth safely. Help the poor in society get some relief and support. Help exterminate road accidents and other forms of accidents that claim lives and drain countries of their greatest assets and resources, that is the human being. 

“Money is better than poverty, if only for financial reasons.”

© 2011, Godwin-Xavier Ayeebo

Email: gayeebo@gamil.com

Blog: www. g-xavierayeebo.blogspot.com

BANKS IN GHANA

The banking industry in Ghana today is becoming competitively keener and keener. It is interesting to see the staff of banks move from office to office soliciting for accounts to be opened with their respective banks. The Ghanaian banks are now prepared to give information about their services and products to potential clients than previously. It is refreshing to have many of these banks opening up new branches and improving upon their customer services. The heralding of some foreign banks has actually taught the old Ghanaian banks great lessons. Banks that closed down the accounts of their clients because they couldn’t meet the minimum balances are now chasing these same people to have accounts opened with zero balances. What a funny world?

It is civilizing that, Banks in Ghana now value their clients but there is more to be done. Some of the Banks still have a big problem taking adequate care of their clients. They would go heaven and earth to get an account opened, and after this, they abandon those clients somehow forever. Some banks really know that customer care is an everlasting service as far as the bank continues to exist.

Many banks in Ghana have really taken their clients for granted for far too long. There are still unnecessary long queues in some banks; some banks still make deductions without explaining to their customers the meaning of these deductions. Banks in Ghana still increase charges without detailing or informing their clients or customers.

Almost all banks in Ghana complain that there are so many Ghanaians, who do not use the banks or do not have bank accounts, but they normally do not take into consideration the kind of treatment and care that they mete out to the already existing clientele that they have. Ghanaians do not have time for long queues; they need to use their time judiciously for other things that could earn them some money.

Therefore, there is no other time left to be wasted in queues at banking halls. There have been artificial queues in many branches of Barclays bank, especially in Accra here. Ghanaians do not care about the number of customers a bank has. What, they care about is the service a bank provides them with. I know that some banks like Guaranty Trust Bank, Fidelity Bank are doing well in this direction; they do not have queues. It’s not about customer base, it’s about priority.

Ghana Commercial Bank (GCB) does one particular thing that beats my mind, my elder brother has an account with GCB in Bawku, any time I deposit money into that account and he goes to take it, some “commission” or some illegal deductions are made on the money. This does not happen with other banks. Once a bank is networked, then I believe we are dealing with the bank but not the branch, so why this wrongful deductions, GCB? It’s not a transfer, is it?

Many Ghanaians would wish to have bank accounts, especially savings accounts, (though it’s not good to save when the inflation rates are high) but the banks in Ghana would give very little interest rates that do not attract many people to save with them. Ghanaians know that if they use the money somewhere else, they would get more than they would get from savings accounts. It is true that some banks have high interest rates for fixed deposits, etc, but these rates are not made known by the banks to the public and these rates also require some minimum amounts, instead of any amount. Where, it is known, one has to negotiate for a good rate. Negotiating for a rate, for me is discriminatory, because, two people with the same amount for fixed deposits could get different rates. Is this not discriminatory? I believe that services to clients should be the same for the same category of clients.

International motivational speaker and writer, Anthony Robbins wrote in his book ‘Awaken the Giant Within’ ‘it all began with savings and loan challenges that came up in the late seventies and early eighties. Banking and S&I institutions had built their business primarily on the corporate and consumer market. For a bank to profit, it has to make loans, and those loans have to be at an interest rate that’s above what it pays out to depositors. In the first stages of the problem, the banks faced difficulties several fronts. First, they were hit hard when corporations entered what had previously been the sole domain of banks: lending. Large companies found that by lending to one another, they saved significantly on interest, developing what’s now known as the “commercial paper market.” This was so successful that it virtually destroyed the profit centers of many banks.

Meanwhile, there were new developments on the American consumer front as well.

Traditionally, consumers did not look forward to meeting with a loan officer at a bank, meekly asking for loans to purchase a car or large appliance. I think we can fairly say that this was a painful experience for most as they subjected themselves to financial scrutiny. They didn’t usually feel like a “valued customer” at many banks. Car companies were smart enough to recognize this and began offering loans to their customers, creating a new source of profit for themselves. They saw that they could make as much money on the financing as they did on the car they sold, and they could give the customer a great deal of convenience and lower interest rates. Their attitude was, of course, quite different from the bankers’ – they had a vested interest in seeing the customer get his loan. Soon, the customers came to prefer the in-house financing over the traditional method, appreciating the convenience, flexibility, and low financing fees. Everything was handled in one place by a courteous person who wanted their business. Consequently, General Motors Acceptance Corporation (GMAC) quickly became one of the largest car-financing companies in the country.

One of the last bastions for bank loans was the real estate market, but interest rates and inflation had soared in one year as high as 18 percent. As a result, no one could afford the monthly payments that servicing loans at this interest rate required. As you can imagine, real estate loans dropped off the map.

By this time, the banks had lost their corporate customers en masse, they had lost the market for a great deal of their car loans, and they had begun to lose the home loans as well. The final slap to the banks was that the depositors, in response to inflation, needed a higher rate of return while the banks were still carrying loans that would yield significantly lower interest rates. Every day, the banks were losing money; they saw their survival at stake and decided to do two things. First, they lowered their standards for qualifying customers for loans. Why? Because they believed that if they didn’t lower their standards, there would be no one to loan money to. And if they didn’t loan money, they couldn’t profit, and they’d clearly have pain. If, however, they were able to loan money to someone who paid them back, they’d have pleasure. Plus, there was very little risk. If they loaned money and the lendee didn’t meet the obligation, then the taxpayers, namely you and I, would bail them out anyway. So in the final analysis, there was very little fear of pain and tremendous incentive to “risk” their (our?) capital.

These banks and S&Ls also pressured Congress to help keep them from going under, and foreign series of changes occurred. Large banks realized that they could loan money to foreign nations that were desperately hungry for capital. The lenders realized that over breakfast they could commit more than $ 50 million to a country. They didn’t have to work with millions of consumers to lend the same amount, and the profits on these larger loans were sizable. The bank managers and loan officers were also often given bonuses in relation to the size and number of loans they could produce. The banks were no longer focusing on the quality of a loan. Their focus was not on whether a country like Brazil could pay the loan back or not, and frankly, many weren’t terribly concerned. Why? They did exactly what we taught them: we encourage them to be gamblers with the Feral Deposit Insurance, promising that if they won, they won big, and if they failed, we would pick up the tab. There was simply too little pain in this scenario for the banker’.

Banks in Ghana could do more than they are offering now and if not a time will come that the scenario above will be the story here too. Banks in Ghana should reach out to society generously. They should not just seek to maximize profits for shareholders and forgetting the interests of all other stakeholders, who also have their own different needs.

The Banks have created an environment for themselves in which the ordinary Ghanaian sees them as a place for only affluent people. Many ordinary Ghanaians think that the Banks are meant for the rich in society.

The life styles of some bankers might have generated this perception. An ordinary worker in a bank in Ghana lives a better life than a University professor if I am not mistaking. The ordinary Ghanaian would ask ‘why, should I give my money to the bankers to enrich themselves?’ There is a perception out here that all bankers are rich. If it is true that all bankers are rich, then, it means the banks uses the account holders’ money to get more money and use that to pay their workers heavily or grant them fat loans without interest or with very low interests.

The account holders, who really deserve to get the lion’s share of the profits that these banks make, are denied of them.

Many ordinary Ghanaians, would say, ‘I would not put my money in a bank for the bank to use it to enrich its staff and if I need a small loan they would not give it to me and when it is given to me, it is with very high interest.’ The cut-throat interests charge on loans granted to customers need a second look. Even if Bank of Ghana reduces its policy rate many Ghanaian banks don’t reduce theirs, when they are asked, they come out inexcusable explanations. Do they really care about their clients and for business and national growth?


Banks in Ghana need to:
• Offer free financial advice to clients, by organizing seminars, etc and visiting offices to offer free lectures.
• Put up structures and facilities in parts of the country with their inscriptions on them. I mean notable, indelible corporate social responsibility. They should use some of their profits to build hospitals, clinics; construct bore-holes, etc for society. Society would in turn recognize their good deeds and open and maintain bank accounts with them, they therefore continue to exist profitably.
• Give discounts (trade or cash discounts) to borrowers to encourage them to pay promptly and with ease and convenience. (Manufacturing companies, do this, why not the banks do it too. Don’t they have their money to operate by now?)
• Eliminate queues
• Reduce interest rates charged on loan to customers. The interest rates are incredible. The bank of Ghana policy rate has always been a determinant, but what the commercial banks add has been frightening.
• Have easy ways of depositing and withdrawing cash for those customers who cannot read and write.
• Increase interest rates on savings accounts.
• Always explain deductions made on accounts. (I know a number of people, who have shown me their bank statements, asking for the meaning of deductions made by their banks.)
• Embark on more education to instill the culture and habit of saving in the youth especially.
• The banks should have preferential treatment for the under listed; in terms of interest rates and charges, care and should even service them at their offices and or residences.
• Medical Doctors and other health workers
• Professional accountants, ACCA, ICA, CIMA, CPA, FA etc.
• Professional footballers
• Miners
• Exporters and Importers
• Bishops and pastors
• National best farmers
• Lawyers (The Bar)
• Judges
• Retired chief justices
• Members of the National House of Chiefs and Regional House of Chiefs
• Lectures / Teachers
• Other professional organized groups.

Ghanaians would love to use the banking system efficiently but the banks do not get endeared to the public and do not make themselves easily accessible.

© 2010, Godwin-Xavier Ayeebo
Email: gayeebo@gmail.com
Blog: www. G-xavierayeebo.blogspot.com

Educational training for development

Check the link to buy a copy of my book and you will thank me later.

https://selar.com/9p1107?currency=USD

We have come so far after independence as a nation and yet our educational systems are not anything desirable.

Whilst, we are in the 21st century, the educational institutions that are supposed to be up-to-the-minute and to provide what is needed in this century; they are still 'living' in the nineteen-century.

Things that are mostly taught at these institutions are things that were designed and developed in the nineteenth or twentieth -century, tailored for those centuries.

If we want to be able to move greatly as a nation then, the educational systems must change and the educational institutions should totally change from living in the past and get abreast with current trends needed in the 21st century so that the right training could be given out to their products who would in turn use their acquired skills to help develop mother Ghana.

Much as some educational institutions, especially the private ones are doing pretty well, they are still miles away from providing the requisite training needed for self-empowerment and for employers.
The truth is that employers need employees who can give them the value for their money but not employees who possess papers as certificates but cannot perform equitably.

Educational institutions especially universities, polytechnics etc should not be too theoretical without giving regard to the practical training, which is rather needed more.

They should move away from the type of training that they provide, which does not help improve national and personal development. A better training that is really required by employers and also for the benefits of the products' personal development.

Why can't most university or polytechnic graduates be trained like medical students, nurses, teachers etc? I mean they should be taught Practicals!

Many unusual, unexpected things happen at various offices to people who claim to have gone through a number of years for training at higher institutions of learning.

Absolutely, there should be proper, in-depth training in information systems and information technology right from senior secondary school level upwards.
Is it totally unacceptable in the 21st century for a newly employed graduate in Accountancy, for instance, not able to use Microsoft excel or spread sheet to provide some useful basic data for his or her employer just because he or she was not taught thoroughly on these important soft wares at the tertiary level.

Some programmes offered at the tertiary institutions should have tailored IT soft wares for the students so that when they graduate, they would be in a better position to work for themselves or for their prospective employers without much support.

Many of the normal lecturers would not have these expertise because, they might lecturing only without necessary working in the offices; therefore, it would be proper to contract experts, resource persons for specific periods of time to give the students the needed training to prepare them for real life situations instead of learning only theories which are not supported with the practical training needed at the offices.

Take an example of a driving school, one is taught very well both the theory of the importance of road signs and one is practically taken to the field, i.e. on the road to learn how to drive before a genuine license is issued to one.
Some employers have begun vigorously doing both theoretical and practical interviews before they pick the right applicants as employees.

This is a very good step in the direction of compelling the educational institutions to give their products the necessary training needed in the 21st century for self-empowerment and for working for others if one so desires.

There are other important subjects that need to be taught at the tertiary institutions. These include Emotional Intelligence, Financial Literacy, Stress Management, Motivation, Entrepreneurship, Accountancy; (including Auditing & Taxation), Purchasing and Supply, Health Literacy, Marketing, Media Communication, and most importantly Information Systems.

These, if learnt properly would provide goals congruence for both employers and employees.

Students should be taught subjects that would provide them with very good grounding to become entrepreneurs, investors, self-employed, or employees.

All students should be trained very well in at least in entrepreneurship, intensive training. No child's play here!
As my former ACCA lecturer said, 'we are being taught right away from class one on how to apply for a job, but not how to create a job.

The nation needs to move to a pedestal of paradigm shift of teaching students how to create jobs right away from the junior secondary schools. Our educational systems have been designed in such a way that students are mostly ill-equipped, independently, and they have been conditioned in a particular pattern so that whoever tries to shift them from these abnormal conditions are scorned or sometimes labeled as mad. 

Interestingly, the 'mad' people among us whether living or dead have been some of the greatest people the world has ever known. They are 'immune to fear and failure.' They break barriers.
There is so much in abundance in this country, that there is every opportunity available right here.

Absolutely, nothing is impossible in this world. It is only our own flimsy excuses, fear, procrastination, ignorance and unnecessary alibis that prevent us from harnessing the great potentials in us.

Admittedly, the teachers at these schools teach the students what they were taught based on the laid down syllabuses. Therefore, if we want better things then the right things must be put in place and get all the teachers the necessary training to equip them to be able impart the needed knowledge unto the students.

The way we have been conditioned right down the years is very bad and we need what in business information management, they call Business Processes Re-engineering. (BPR).

A' revolutionary fundamental rethinking and rational redesign of the business processes to achieve dramatic improvement in cost, quality, service and speed.' This is what is needed in this country today; because, the way we are being brought up educationally needs a second look.
What are we talking about, the cost? If we weigh the benefits against the costs then, we can stop crying wolf and get the right structures done now with less costs or leave them for our great-grandchildren to come with visions to fix them. We must then admit that we had no vision and failed as earlier occupants of this country, full stop!
How can you get returns from an investment, if you or someone never financed that investment? There is nothing for something in this world.
If one buys a coconut seedling from the roadside to plant at home, I believe one would water it daily and guide it well till it is fully matured. When the coconut tree matures, it begins to produce fruits without needing one's support whatsoever.

Likewise, schoolchildren should be nurtured to become freely independent forever.

One of my greatest writers; Napoleon Hill said: 'Knowledge is potential power. It becomes power only when, and if it is organized into definite plans of action and directed to a definite end.'
© 2009, Godwin-Xavier Ayeebo

Email: gayeebo@gmail.com
Blog: www. G-xavierayeebo.blogspot.com

FINANCIAL LITERACY FOR ALL-COMPOUND INTEREST

Check the link to buy a copy of my book and you will thank me later.

https://selar.com/9p1107?currency=USD

It is reported that when Albert Einstein was asked what was the most powerful thing in the world? He said it was compound interest.

 “Because compound interest is a really marvellous invention, Albert Einstein called it the 8th Wonder - It can work for you, or against you. When you invest it works for you. When you borrow it works against you!”

“Albert Einstein called compound interest "the greatest mathematical discovery of all time”

It is great and more acceptable when a great mathematician and prodigy like, Albert acknowledges compounding as the most powerful thing in the world.

Investment is ventured into with the aim of getting returns. Most invest returns come in the form of compounding gains. Take for instance, when a farmer sows a seed of groundnut or peanut or maize and many more, he always reaps multiples of what was sown. This is pure compounding.

It’s mostly exactly with many investment products and schemes. When one takes an investment policy, one has to wait patiently like the farmer. The farmer would wait for days, months and years by weeding, applying fertilizers, watering, and incurring labour and other costs to get the returns in multiples. Farmers are arguably the greatest investors and again arguably the most emotionally intelligent investors. Investors in all the other areas mostly lack the spirit of the farmer, who would sow or plant, do everything necessary and wait for the results, good or bad. Like the farmer, the investor has to constantly monitor his investments to see if he is making gains or losses and take the necessarily action required as it is done in farming where the farmer prunes his plants and does other farming activities to keep his sown seeds or plants in check, so he could get good harvest.

Compound interests is counting not by the normal order of 1,2,3,4,5,etc, but counting say, 1, 3, 5,7,15, 200, 3,000, 90,000,etc. Investments grow by compounding when the interest earned is added to the principal amount and re-invested. It would therefore be out of place to think that investments do not grow faster and for that is a waste of time and money to take an investment action.

The power of compound interest enriches you surprisingly with a matter of time. You become rich once you have an investment plan and follow it and compound interest would compound your money for you.

The power of compound encourages you to invest even when you do not have enough on you. You do not need to be a millionaire before you start investing. In fact, investing is not meant for those, who are already rich, though they are the ones who really invest. No wonder, they continue getting richer.

It is better to have an investment plan and follow it consistently with little amounts and compound interest would multiple them for you than have no plan and put in a big amount once, stops and starts waiting to get plenty in multitude.

Mathematicians and investment experts have made the understanding of compound interest easier with what they call the rule of 72. They say to know how much your money will multiply in years, just divide the interest rate by 72. For instance, if a 91 day Treasury bill rate is say 12%, then 72/ 12 = 6 years to double.

 If a mutual fund, like the Gold Fund, or the Fortune Fund, or the Horizon Fund, or the Equity Fund, or the Campus Fund, or the iFund, or the First Fund, or the Heritage Fund, or the Bfund, or the Ark Fund, or the EPACK, etc (All these funds and many others operate in Ghana) is say 41%, then 72/41= 1.76 years to double.  

This simple calculation informs and advises you, where to invest and get more returns quickly. The pay-back-period (the time or period of getting back your investment with benefits) is easily determined by applying the 72 rule in investing.

Your investment would be doubled every six (6) years in the case of the Treasury Bill and approximately every two (2) years in the case of a mutual fund, provided the interest rates remain the same, though it is not practicable. The higher the interest rates, the higher the returns, the shorter the pay-back-period. The opposite is also true.  

Readers should take note that I’m not suggesting that mutual funds or unit trusts perform better than Treasury Bills or vice versa, they are used for the purposes of illustrations.  It’s also worth saying that last year, 2010, the mutual funds in Ghana performed far better than Treasury bills in Ghana.

Invest with the mind of utilizing the power of compound interest to multiply your investment for you.

©, 2011, Godwin-Xavier Ayeebo

Email: gayeebo@gmail.com

Blog: www.g-xavierayeebo.blogspot.com

BUSINESS LITERACY FOR ALL-BUYING A BUSINESS

It is very difficult to establish and run a business due to the frustrations one has to go through in the registration process and the hard time to come by start-up capital. These factors cause most ideas to forever remain ideas that never materialize into a viable business. There is however a way out in owning that dream business you are yearning to own. The option is buying an existing business since it already has the structure, the employees and existing customers in place to kick-start your business. I must be quick to add that you should not decide to buy an existing business instead of establishing one because you want to avoid the hustle and bustle of setting up your own. You must investigate the industry very well to know the players in there, the market share your new company owns and how profitable it would be if you should buy it. Decide whether or not you are convinced to buy the business and you are ready to make a commitment to that effect. If you are convinced to buy the business, then start talking to the owners of the business and explicitly stating your decision to buy their company. Negotiate with the management of the company you are seeking to buy and seek legal advice throughout the negotiation period. If you are someone interested in buying already established businesses, then talk to business opportunity brokers, read classified newspapers and go for business opportunity trade shows.

Take a very close look at whether environmental and other laws in the industry or country where the business is and whether the business has always adhered to these laws. It is equally essential to check the track record of the management of the company you wish to buy. The management of the business you want to buy should be studied and known, though it’s difficult to assess, it is still crucial to the future well-being of the business. Assess the expertise needed to keep the business going, if present management leaves and you have to hire your own new team.

Technology, if the business is an industry, where it demands IT for it to make high profits, it should be considered whether it can sustain the ever-fast-changing industry and still remain in business for the foreseeable future.

In your decision to buy a business, you would be dealing more with experts like accountants, attorneys, bankers, equipment suppliers and vendors amongst other experts but always remember it is your decision to buy that business. Don’t allow any expert to decide for you. But what would be helpful is that you ask them relevant and specific questions that would guide them in their recommendation to you.

Furthermore, your decision to buy a business should be dependent on facts and figures, industry analysis and objectively evaluation the future prospects of the business considering both macro and micro economic indicators. Most of the above information can be gotten from regulatory agencies of the company you are buying. 

There are source document that you can get from the accounts department of the company you are buying. Certain documents like the balance sheet, cash flow statement and income statements should be checked. Do not forget to always ask for an audited financial statement. Ask for verification documents for their receivables, payables and other lines items in their financial statements. Ask for the seller's personal and business tax returns. In some businesses, you can determine the income by analyzing utility bills or supplier's records. You should be quick to find out if the company has a pending case in court and analyze objectively their chances of winning or losing that case. Also verify to see if there are some outstanding financial obligations the business owes to other companies and find out if they are retrievable or recoverable. This affects the value of the firm as this would help you arrive at the cost of buying the business.

Reasons why you buy an existing business

• An existing business may be the only way to enter the industry.
• Location is an important factor. In some communities, certain types of business can no longer be built and an existing business will be the only way to enter the industry. Proximity to your home will also be a factor. 

Benefits to purchasing an existing business:

• The business has a track record of income and expenses
• Operating costs are often lower than in a new business
• The business will already have trained employees
• There may be true goodwill already built in
• The business may already dominate the market in the trade area

Now, you have an excellent idea of how to buy an existing business.  Direct all questions, comments and additions to: skteye@gmail.com 

©2011, Sophia Kafui Teye

Email: skteye@gmail.com