FINANCIAL LITERACY FOR ALL-PUBLIC PARTICIPATION

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There are many types of investors such as outside investors, inside investors, sophisticated investors, qualified investors, ultimate investors and others.

These are not the same and the risks and rewards attached to them are not the same.

I believe that every entrepreneur’s aim is to have a very big organization in the long run.

Organizations get bigger when the shareholders and stakeholders increase.

One popular way of getting funds for expansion and growing bigger is to sell the shares of the company to the public on the stock exchange market. This is easy when the company is has a a known brand name and also if it is already listed on the Stock Exchange Market.

The ultimate investor is someone who establishes a company and walks through thick and thin to be able to have the company listed on the Stock Exchange Market. This is where the inventors (entrepreneurs) actually make the money. Those who buy the shares of this company are the outside investors. The original owners are or the inside investors, the founders.

Whether your company is small or big you can raise funds from the public depending on the country in which the company is situated.

I have learnt in my ACCA studies that in the UK, they have the Alternative Investment Market (AIM) for smaller companies that do not meet the requirements to be listed on the main Stock Exchange Market. These smaller companies can then raise funds publicly on this market.

I believe other countries should have or need to have similar markets for their young and upcoming companies.

Ghana needs one for its small and medium companies that are doing well and need funds to expand but do not qualify to raise funds on the main stock market.

As these companies expand and grow then, they can move to the main stock exchange.

Companies incur much more expenses like legal costs, costs on lead brokers, paper work, printing of prospectus and others to raise equity fund when trying to raise funds on the stock market and the demands for returns by equity shareholders are also more expensive than financing projects by internally generated funds and borrowing, but raising funds on stock market also has its own advantages.

At any given time, shares, bonds, debentures could be sold to the public when all stakeholders have been consulted and agreement reached.

I am more concerned with a company being set up and taken through the odds eventually to get listed on the stock exchange. I know that equity is more expensive compared to using internally generated funds and debt funding but ultimately my quest is that there will be wider shareholder base and I believe society at large benefits. New shareholders who have diverse expertise in various fields could come on board during Annual General Meetings, where they may share and or trade their expertise to help spearhead the company to an unexpected growth and expansion if given the chance.

Public offer also gives the original shareholders (founders) the opportunity to sell a percentage of their shareholdings, get money and still remain as shareholders.

Public offer is one of the means that enriches the founders of the company listed.

This might sound unpalatable to some entrepreneurs but the truth is that once you resolve to offload some of your shares to the public; you do not only do so with the sole aim of expanding your company but also to get some money for yourself. The opportunity cost of losing some percentage in your shareholdings does not only put money into the bank account of the company but also ultimately puts money into the bank account of the entrepreneur.

It is not normally simple to have a company listed on the stock exchange

It is tougher in some countries than others.

Around the year 2000, about thirteen big time companies collapsed in the USA; among them were Enron and WorldCom. The financial reports for most of these collapsed companies were ‘cooked’. The end result for the ‘cooked’ financial reports was that the companies that practiced bad accounting collapsed, and some of their ‘big’ men were put before court. Some were even jailed.

Others were sacked and it was not likely they would get new jobs that soon.

Arthur Anderson which was one of the big five audit firms in the world was the main auditor of Enron also collapsed. When all the indemnities protecting an auditor are removed then the auditor has to face legal actions. If the auditor, whom one can say was just an outsider to check the records of Enron collapsed then what about the organization itself that got into those unacceptable practices?

So many issues came up in the financial world after the collapsed of Enron.

The United States of America realized the big loophole was in corporate governance enforcement. The USA therefore got a corporate governance act enacted. It came out with a law on corporate governance. The now famous Sarbanes Oxley ACT or SOX also known as Public Company Accounting Reform and Investor Protection Act (named after the two gentlemen,                (Sarbanes and Oxley) who spearheaded the act. Sox is a ruled based corporate governance law unlike in many countries where they are principles based that is really judgmental and not enforceable.

Sox also lays down the procedures and processes that have to be met before a company can be listed on the stock exchange in the USA.

So in the USA apart from the conditions of the Securities and Exchange Commission which is the governing body of the stock exchange market, the requirements of the Oxley Act must also be met fully before listing on the market is accepted.

Countries replicate laws; it has even become easier as we live in a global village.                                                                        

Who knows, next time it might be your country that wants to adopt corporate governance laws of the USA.

It’s even going to get much tougher in almost every country because of the recent pats CREDIT CRUNCH.

The Graphic Business wrote ‘‘the credit crunch is caused by the impact of sub-prime loans which some financial institutions, that is some banks in some advanced countries put in their statements of financial position (balance sheets) as if they were proper, strong financial assets. These are indeed not good loans but have been packaged as good financial instruments. These instruments do not really have credible book values and could not be turned into cash easily for the banks to use for trading. Eventually these financial instruments were exposed as worthless.’’ Those financial institutions that had these sub-prime loans as assets of their portfolio, then got into financial troubles. This had replicated thereby having multiplier effects on many organizations and affected individuals. Many people lost their jobs because the affected companies could not get the needed funds for smooth operations. Countries like the Iceland, USA were hard hit and that really affected the global market demand and supply in every commodity in almost every country under the sun.

From the underlying, it therefore means that any company seeking to be listed on the stock exchange will be scrutinized more than before. Entrepreneurs should then refrain from addressing their financial reports artificially. Investors depend heavily on the financial reports of organizations to make decisions. If the financial reports are misleading, then that would breach the trust between the preparers of the reports and the users. No proper business transactions can be established again in the future.

When your company (ies) is able to meet these requirements and get listed, the directors and managers need to treat the shareholders and all stakeholders with transparency, honesty, fairness, equitability and objectivity. The company should be directed and managed well so that share price could be appreciated and dividends paid frequently if that is the policy of the company and it’s the choice of shareholders. The interest of managers should match with that of shareholders.

All schemes put in place to reward managers for good performance should be instituted in such a way that management cannot manipulate these schemes to suit their own selfish interest to the detriment of the shareholders.

The Ghanaian Stock Exchange (GSE) is doing well and has been able to attract foreign big companies like Tullow Oil Plc, which is offering an initial public Offer (IPO) in Ghana, right now, the deadline for application for the shares is 4th July 2011. I learn Kosmos Energy will follow suit.

Dear enterprising entrepreneur, have your company (ies) listed on the stock exchange market in future.

©, 2011, Godwin-Xavier Ayeebo

Email: gayeebo@gmail.com

Blog: www.g-xavierayeebo.blogspot.com

FINANCIAL LITERACY EDUCATION: FINANCIAL LITERACY FOR ALL-COMPOUND INTEREST

FINANCIAL LITERACY EDUCATION: FINANCIAL LITERACY FOR ALL-COMPOUND INTEREST

FINANCAIL LITERACY FOR ALL- PROTECTION

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Protection is a generic word used widely in every profession.

Protection is one strategy that seeks to secure one’s property from attack and harm.

When you protect, you keep your assets from harm, injury, damage or loss and from being stolen.

In the real world, property should be protected because there are always thieves in the neighborhood.

They would even try to steal things you have on your mind

If you therefore spend your time and use your brains to create something you need to protect it so that pirates and similar gangs do not get richer at your expense.

Intellectual property is not physical and therefore should be protected legally.

Seek legal protection for your intellectual property; else lazy ‘smarter’ people would beat you to it and start raking in money at your expense.

Whenever an idea crops up in your mind and you want to make commercial use of that idea, never, I mean never discuss that idea with anybody without a CONFIDENTIAL AGREEMENT FORM for them to sign agreeing to keep the discussion confidential.

You can seek the services of an Intellectual Property lawyer to have your ideas: information, data, inventions, industrial designs, products, brands trademarks, trade secret, and trade dress, name of organization, symbols, reputation and goodwill etc protected for you. In that case you stand a better chance of taking legal actions against people who infringe on your property.

Remember, your creative ideas can be turned into riches and blessings for humanity.

They should therefore be protected, because there are always thieves in the neighborhood.

© 2010, Godwin-Xavier Ayeebo

Email: gayeebo@gmail.com

Blog: www. g-xavierayeebo.blogspot.com

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