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INVESTMENT: PROSPECTS & CHALLENGES Dr. Yaw Perbi Cert. (GSE), B.Sc. (Med. sci), M.B., Ch.B. CHAMPIONS CONFERENCE 2007 University of Cape Coast 13 th April,

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Presentation on theme: "INVESTMENT: PROSPECTS & CHALLENGES Dr. Yaw Perbi Cert. (GSE), B.Sc. (Med. sci), M.B., Ch.B. CHAMPIONS CONFERENCE 2007 University of Cape Coast 13 th April,"— Presentation transcript:

1 INVESTMENT: PROSPECTS & CHALLENGES Dr. Yaw Perbi Cert. (GSE), B.Sc. (Med. sci), M.B., Ch.B. CHAMPIONS CONFERENCE 2007 University of Cape Coast 13 th April, 2007

2 BRAIN TEASER!! Interest Rate Time in Years $1 One Time Time in Years $1 Everyday 5%284100 10%14556 15%9940 20%7532 ? HOW LONG WILL IT TAKE $1 TO BECOME $1 MILLION AT 0% INTEREST? Adapted from Robert Allens book Multiple Streams of Income

3 BRAIN TEASER!! It is a wise man who bites into a bone when you give him an egg (Ghanaian Proverb) It is a wise man who bites into a bone when you give him an egg (Ghanaian Proverb) What does this mean? What does this mean?

4 OVERVIEW… PARABLE ON PARLANCE: WHAT IS INVESTMENT? PARABLE ON PARLANCE: WHAT IS INVESTMENT? PLACEMENT: WHERE DOES INVESTMENT FIT IN MY LIFE? PLACEMENT: WHERE DOES INVESTMENT FIT IN MY LIFE? PROBLEMS: WHAT ARE THE CHALLENGES? PROBLEMS: WHAT ARE THE CHALLENGES? PROSPECTS: WHAT ARE THE CHANCES OF FUTURE SUCCESS? PROSPECTS: WHAT ARE THE CHANCES OF FUTURE SUCCESS? PATHWAY: HOW DO I GO ABOUT INVESTING TODAY? PATHWAY: HOW DO I GO ABOUT INVESTING TODAY? PARABLE ON PARADISE: WHAT IS THE ULTIMATE INVESTMENT? PARABLE ON PARADISE: WHAT IS THE ULTIMATE INVESTMENT?

5 PARLANCE & PARABLE: WHAT IS INVESTMENT…whats not? Parable of the Ten Minas (Luke 19) Parable of the Ten Minas (Luke 19) –Investment: Put this money to work. –Making your money work for you –And money works HARDER and LONGER than you ever can! –Savings and Investment are NOT the same? –Savings is putting your money to sleep…Investment is is giving your money shoes to go out there and work for you! –Savings is only a PRECURSOR to investment The LEAST you could do is SAVE; the BEST you should do is INVEST! The LEAST you could do is SAVE; the BEST you should do is INVEST!

6 PLACEMENT: WHERE DOES INVESTMENT FIT IN MY LIFE? E MPLOYEE B USINESS OWNER S ELF-EMPLOYED I NVESTOR Adapted from Robert Kiyosakis Cashflow Quadrant

7 BRAIN TEASER!! WHAT COMMON WORD DO YOU FIND IN EACH OF THESE FOUR CATEGORIES? WHAT COMMON WORD DO YOU FIND IN EACH OF THESE FOUR CATEGORIES? I have invested large sums of money in many different businesses and industries, but I earned this money in the business which represented my definite major purpose, the oil business. I have invested large sums of money in many different businesses and industries, but I earned this money in the business which represented my definite major purpose, the oil business. No part of my attention has been given to any of the other industries in which I have investments. My capital works for me in those industries, but my personal attention has remained always in my original business i.e. the oil business (John D. Rockefeller) No part of my attention has been given to any of the other industries in which I have investments. My capital works for me in those industries, but my personal attention has remained always in my original business i.e. the oil business (John D. Rockefeller)

8 PLACEMENT: WHERE DOES INVESTMENT FIT IN MY LIFE? Adapted from Robert Allens Multiple Streams of Income

9 PROBLEMS: WHAT ARE THE CHALLENGES? POVERTY POVERTY –POCKET (MONEY) –PARADIGMS (MINDSET) PURPOSE PURPOSE PRINCIPLES PRINCIPLES PERSONALITY PERSONALITY PLAYING FIELD PLAYING FIELD

10 PROBLEM I: POVERTY CHALLENGE POCKET (MONEY) POCKET (MONEY) –In 1990s 50% were poor i.e. lived on less than ¢900,000/year (GLSS) –Current per capita income: $500 vrs. South Korea $14,000 (US=$39,000; Norway=$54,000) (US=$39,000; Norway=$54,000) –I dont have enough to chop; how much more to invest! // Ill invest left-over (surplus) PARADIGMS (MINDSET) PARADIGMS (MINDSET) –HIPC Mentality (Poverty alleviation vrs. Wealth Creation) –Money matters are for the experts –Going to school is a guarantee youll be rich –The poorer the purer –Valuables are assets –Im from a poor family // Its the government

11 PROBLEM II: PURPOSE CHALLENGE NO STRONG WHY NO STRONG WHY NO S-M-A-R-T FINANCIAL GOALS NO S-M-A-R-T FINANCIAL GOALS 5 NEEDS OF LIFE: Link (up with God), Live, Learn, Love, Leave a good legacy 5 NEEDS OF LIFE: Link (up with God), Live, Learn, Love, Leave a good legacy NOT ENOUGH!: HIGHER, GOD-GIVEN PURPOSE! NOT ENOUGH!: HIGHER, GOD-GIVEN PURPOSE!

12 PROBLEM III: PRINCIPLES CHALLENGE FINANCIAL ILLITERACY: Many important things in life are not taught in school FINANCIAL ILLITERACY: Many important things in life are not taught in school –Practical money management, savings and investment is not taught at school, suggesting that you can be even be a professor and not have a grip over money management and investment (Hon. Kwadwo Baah Wiredu, Min. of Education) NAIC PRINCIPLES NAIC PRINCIPLES –Invest regularly, regardless of market outlook Cedi Cost Averaging –Reinvest all earnings Law of Compounding (Rule of 72) –Invest in growth companies –Diversify to reduce risk

13 PROBLEM IV: PERSONALITY CHALLENGE? PATIENCE vrs. Quick Money Syndrome PATIENCE vrs. Quick Money Syndrome –Law of Process (Warren Buffet) MATERIALISM vrs. Secret of the Rich MATERIALISM vrs. Secret of the Rich CHARACTER CHARACTER –Fortune does not change men; it unmasks them. (Suzanne Necker) –Character is the container… HOLISTIC HOLISTIC –Health or wealth? –Best thing you can do for the poor…the worst you can do to yourself.

14 PROBLEM V: PLAYING FIELD CHALLENGE Retail/Consumer Banking > Investment Retail/Consumer Banking > Investment FEW LDMs in Regions FEW LDMs in Regions Inadequate variety of investment products Inadequate variety of investment products –M-Fund OR E-pack/Horizon/Fortune/Gold Fund Immature Bond Market Immature Bond Market Tiny Capital Market Tiny Capital Market –30 compared with Club 100 or S&P500 –Always over subscribed

15 PROSPECTS: WHAT ARE THE CHANCES OF FUTURE SUCCESS? PURCHASING POWER EATER PURCHASING POWER EATER PEANUTS PEANUTS POVERTY-BREAKER POVERTY-BREAKER PROSPERITY PROSPERITY PENSION PENSION POSTERITY POSTERITY PAN AFRICAN INDEPENDENCE PAN AFRICAN INDEPENDENCE

16 PROSPECT I: PURCHASING POWER An animal that is a Purchasing Power Eater: INFLATION An animal that is a Purchasing Power Eater: INFLATION ¢100,000 in 1990 ¢7,000 in 2000 ¢100,000 in 1990 ¢7,000 in 2000INVESTMENT RETURNS (%) Shares42.51 Treasury Bills 35.00 US Dollar 34.57 1 Year Bonds 30.15 Inflation Rate 27.37INVESTMENT RETURNS (%) Stock10.5 Treasury Bills 3.7 Long term Bonds 5.2 Inflation Rate 3.1 History of average annual returns in Ghana (1991-2001) and USA (1926-1995) Courtesy: Databank Courtesy: 70-year Ibboston Study

17 PROSPECTS II, III, IV: PEANUTS…POVERTY-BREAKER..PROSPERITY PEANUTS ~ Until such time that salaries will be worth more than peanuts…INVESTMENT PEANUTS ~ Until such time that salaries will be worth more than peanuts…INVESTMENT POVERTY-BREAKER ~ The ONLY way to WEALTH is on the right side of the Quadrant POVERTY-BREAKER ~ The ONLY way to WEALTH is on the right side of the Quadrant PROSPERITY ~ Having MORE THAN enough PROSPERITY ~ Having MORE THAN enough

18 PROSPECTS II, III, IV: PEANUTS…POVERTY-BREAKER…PROSPERITY THE DANIEL OFORI EXAMPLE (2006) THE DANIEL OFORI EXAMPLE (2006)COMPANY NO. OF SHARES DIVIDEND PER SHARE INCOMEGCB (3rd largest with 6.26%) 10,333,972 ¢550 ¢ 5,683,684,600 UNIL (3rd largest with 5.51%) 3,445,637 ¢1,050 ¢ 3,617,918,850 CAL (16th largest with 0.37%) 591,200 ¢75 ¢ 44,340,000

19 PROSPECT V: PENSION Financial independence is the most over-looked achievement in everyones life. (Venita Vancaspel) Financial independence is the most over-looked achievement in everyones life. (Venita Vancaspel) In US: For every 100 persons at 65 years In US: For every 100 persons at 65 years –Only 2 are financially independent –23 MUST continue working –75 DEPEND on friends, charity etc. BLAY MACKIN: BLAY MACKIN: –State Sword & Maze Bearer –Retired in April 2003 after 44 years as civil servant –PENSION: 1.2 million; Monthly ¢106,000 for family of 7 (Joy Headline News, 15 th May 2003)

20 PROSPECTS VI: POSTERITY A good man leaves an inheritance for his childrens children A good man leaves an inheritance for his childrens children Ford Foundation since 1936 >$100 million yearly to needy causes Ford Foundation since 1936 >$100 million yearly to needy causesFOUNDATIONASSETS Bill & Melinda Gates > $ 24 billion The Ford Foundation > $ 9 billion David & Lucile Packard > $ 6 billion W.K. Kellogg > $ 5.5 billion

21 PROSPECT VII: PAN AFRICAN ECONOMIC INDEPENDENCE EGYPT EGYPT –Hidden domestic savings ($241 billion) = 55x FDI in 20 years (Hernando de Soto) WORLD AID & THE POOR WORLD AID & THE POOR –The value of savings among the poor is, in fact, immense: forty times all the foreign aid received throughout the world since 1945 –In Haiti, the poorest nation in Latin America, the total assets of the poor are more than 150 times greater than all the foreign investment received since the countrys independence from France in 1804 –If the United States were to hike its foreign-aid budget to the level recommended by the United Nations0.7 per cent of national incomeit would take the richest country on earth [i.e. America] more than 150 years to transfer to the worlds poor resources equal to those that they already possess. (Hernando de Soto) ACRES OF DIAMONDS ACRES OF DIAMONDS

22 PATHWAY: HOW DO I GO ABOUT INVESTING TODAY? Resolve not to be poor! Value every cedi! Resolve not to be poor! Value every cedi! Start 10/10/80 TODAY! Start 10/10/80 TODAY! Be consistent; think LONG term! Be consistent; think LONG term! Invest in investment knowledge Invest in investment knowledge Start an Investment Club Start an Investment Club –Build an investment culture~regular habit –Learn-by-doing investment –Learn-and-earn over time while having fun! Go to Databank on Monday Go to Databank on Monday SDC Campus Mutual Fund is here! SDC Campus Mutual Fund is here!

23 PARABLE ON PARADISE: WHAT IS THE ULTIMATE INVESTMENT? The young, ambitious graduate & the old man The young, ambitious graduate & the old man –…AND THEN WHAT? …Ill say to myself, You have plenty of good things laid up for many years. Take life easy: eat, drink and be merry. …Ill say to myself, You have plenty of good things laid up for many years. Take life easy: eat, drink and be merry. But God said to him, You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself? But God said to him, You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself? This is how it will be with anyone who stores up things for himself but is not rich toward God. (Luke 12:19-21) This is how it will be with anyone who stores up things for himself but is not rich toward God. (Luke 12:19-21)

24 CONCLUSION: SEE YOU ON THE GOLF COURSE ON MONDAY MORNING! SEE YOU IN YOUR GRAND MANSION ON THE OTHER SIDE OF THE JORDAN! THANK YOU!!


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