YOU NEED A PRIVATE PORTFOLIO MANAGER

Managing your own investment is complex, time consuming and too technical to leave to chance. When you invest over a period of time, you create so much wealth to yourself that you possibly cannot track it. If they are shares, you have to track to see if dividends are paid to you or whether there are capital gains or losses.

Bonds may also mature and must be redeemed or the interest payments on the bond may be available. These are different classes of financial assets you can own that have different returns on investment patterns and there is a need to keep an up-to-date track of what is happening to your investment.

Portfolio is a collection of investments held by an individual or organization. Your collection of investment could be bank accounts, shares, bonds, collective investment schemes; treasury bills, real estates, derivatives and so on. Private Portfolio manager or an investment advisor can be a professional of a Licensed Dealing Member of the Ghana Stock Exchange (GSE).

It could be a particular staff in the Asset Management Department of a brokerage firm. This private portfolio manager will assume the responsibility of coordinating transactions involving all your investments.

Why you need a private portfolio manager

You may be too busy: in this time of increased unemployment, people have to keep more than one job to survive (those in the medical field call it locum), those in the business or finance professionals are also chasing after professional classes such as CIM, ICM, CIMA, ICA, CFA and ACCA. Workers become so exhausted after a tiring day and all they think of is to have supper, wash down and prepare for work the next day. Businessmen are often found chasing after contracts; family men and women also often get entangled with family and other social activities.

You may not understand the market: The capital market is a market where listed long term securities are traded. There are so many factors that affect the prices of stocks in the capital market. The value of your investment is the closing price of the stock multiplied by your shareholding. It is often easy to say the market is influenced by demand and supply forces but there are more to that.

You need a seasoned investment advisor who understands the capital market and can analyze trends and both financial and non-financial information that can affect your investment.

Identify your investment objective: Most often, people invest without carefully analyzing why they are investing. Your investment objective is the reason for you investing. It can be for capital accumulation, unforeseen contingencies, to buy an asset or money to execute project. Your investment advisor through the asking of probing questions can help you know your investment objective.

Rebalancing of portfolio: Depending on your investment objective, some classes of assets must be taken out and new ones added to meet your new objective or needs. Your investment objective must change when you are nearing retirement or when you have a family or when one objective is achieved.

For instance, if an investor is nearing retirement, there is the need to sell out risky stocks and stocks that do not bring the investor regular dividends or capital gains. The portfolio manager can add Treasury bills or cash and cash equivalent so that the investor does not lose a chunk of his/her investment to market fluctuations or risks. All these are aimed at the investor having a regular stream of income.

Help reduce portfolio risk: There are different classes of investments that also come with different risk profiles. Your investment advisor or portfolio manager would help you develop a portfolio that would be less risky based on your needs and investment time horizon. Certain classes of investment such as shares are risky.

The portfolio manager understands the market and performs regular analysis that can help detect risk and prevent losses.
The portfolio managers have the systems in place: The portfolio manager works for a Licensed Dealing Member of the Ghana Stock Exchange. These LDM’s are required by SEC and GSE to have systems in place to monitor the investments of their clients.

What should you consider when choosing one?

Is the company licensed?

The company must be licensed by the Securities and Exchange Commission and it should also be a Licensed Dealing Member of the Ghana Stock Exchange.

Pay management fees: It costs the LDM some money to manage your investment to ensure you maximize returns. They use the internet at a cost, stationery etc. Besides, they have to make some profit in order to stay in business. For this reason, they must charge management fees. Adam Smith said “it is not for the benevolence of the brewer or the baker that we have dinner but for their own selfish interest.”

You have to consider how much return they are likely to make and how much is reasonable to pay them. Most of the Asset management firms have fixed charges; say 10% of the value of your investment and this can be reviewed annually. Try to personally investigate first before choosing one. The caution here is, don’t go for a private portfolio manager because they may charge you less, consider how much returns they make and other factors listed below.

Seasoned analysts: Investigate to know how good their analysts are and their ability to make good returns for their clients. You can also find out how abreast they are with world news, local news and business related news by giving them a “morning call” anytime you hear price sensitive news that might affect your investment.

If they are not aware of the obvious, then feel free to move your investment to another firm to manage for you. This is because price sensitive information is crucial to the return you make on your investment. You can further investigate to know how many of their staff are industry professional, how many of their analysts are licensed by SEC and go further to know if they are Authorised Dealing Officers of the GSE.

Their team should be made up of lawyers, financial analysts, insurance experts, business experts and with the requisite certification. With that you can be assured that your investment is safe and it is in good hands.

Good customer service: Find out if they contact their clients through telephone calls, SMS, email on how their investment is doing.

Are they responsive enough to client needs? Are their staffs dedicated to the satisfaction of their clients? How professional are they? It is always good to choose an asset management firm that has a good research department. Having a good research department is not enough; go further to find out how often they furnish their clients with information regarding the economy and their investment.
Author: Sophia Kafui Teye
Blog: www.skafuiteye.blogspot.com
skafuiteye@gmail.com

FINANCIAL LITERACY EDUCATION: LAVATORIES BADLY NEEDED

FINANCIAL LITERACY EDUCATION: LAVATORIES BADLY NEEDED

LAVATORIES BADLY NEEDED

Life is not complete for any human being till that being is able to have a feeling of living a dignified life. A healthy human being would eat and would need to expel out the waste in the system. In modern day life, human beings have devised very neat and clean ways of easing themselves and it is very nice and dignified that sometimes, one would even forget that human beings just life animals do expel excreta.

However, it is not every part of this world that every body enjoys use of the basic facilities that make life really dignified as modern human beings should.  In other parts of the world and in Northern Ghana, people living in rural communities hardly enjoy the use of these basic facilities. People in rural northern Ghana still practice the very old, outmoded, unacceptable, pure and raw of easing themselves, because they cannot afford the basic necessities of life and they have not been provided for them to even refuse to use.

All over, rural northern Ghanaian, one can easily see people, mature and young, men and women, boys and girls easing themselves in the opening, all because they have no better choice. They   have been subjecting themselves to crude and unacceptable ways of expelling the waste in exposed ways that something needs to be done to help solve these undignified practices.

As people do “own things” any where, the consequences are evident for all to see, feel and smell.

It is so disturbing during the dry season, when there are no shrubs, weeds and other plants to serve as covers or shield and it is so plain to see people even from faraway away distance easing themselves in the openings.

The indiscriminate ways of expelling human excreta among northern Ghanaian rural dwellers bring diseases that make people sick and some even die prematurely, yet solutions have been provided.

It is high time philanthropist, non-governmental organizations, (NGOs), the government came to the aid of these communities and the private companies should take up these as part of their corporate social responsibilities. It is greatly worth, more than could be imagined.

WHY ARE THE LAVATORIES NEEDED

·         Help make people lives dignified.

·         Help prevent and eradicate and reduce certain diseases and illnesses

·         People get a place to ease themselves

·         Men and women would have separate places for privacy

·         Constructing basic toilet facilities in rural northern Ghana is very cheap.

·         Cheap labour is available because of communal labour, once the natives know it is for them, they would volunteer.

·         Free land, the chiefs and elders of the communities would always donate land for good use.

·         It would be a great and a memorable contribution to that community’s development and improvement in the lives of the dwellers.

·         Society at large benefits and the impact is immeasurable

There are some particular villages in the Upper Eastern Region, near Bawku that really lack these facilities and need the support of individuals and organizations to help provide them with basic toilet facilities. These are Zaago Number 1 and Number 2, Gumyoko and Aporizua. These villages are about 15 minutes drive from Bawku, but the people go through hell and unacceptable ways of easing themselves, which needs to be stopped.

I entreat individuals, organizations to go to their aid. Directions could be given to whoever wants to help. I can direct them to see some chiefs and elders of these villages for further discussions.

© 2011, Godwin-Xavier Ayeebo

Email: gayeebo@gmail.com

Blog: www.g-xavierayeebo.blogspot.com

FINANCIAL LITERACY FOR ALL-PUBLIC PARTICIPATION

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

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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

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

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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