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

? HOW LONG WILL IT TAKE $1 TO BECOME $1 MILLION AT 0% INTEREST? BRAIN TEASER!! Interest Rate Time in Years $1 One Time $1 Everyday 5% 284 100 10% 145 56 15% 99 40 20% 75 32 Adapted from Robert Allen’s book Multiple Streams of Income ? HOW LONG WILL IT TAKE $1 TO BECOME $1 MILLION AT 0% INTEREST?

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

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

PARLANCE & PARABLE: WHAT IS INVESTMENT…what’s not? 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!

PLACEMENT: WHERE DOES INVESTMENT FIT IN MY LIFE? EMPLOYEE BUSINESS OWNER SELF-EMPLOYED INVESTOR Adapted from Robert Kiyosaki’s Cashflow Quadrant

BRAIN TEASER!! 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. “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)

PLACEMENT: WHERE DOES INVESTMENT FIT IN MY LIFE? Adapted from Robert Allen’s Multiple Streams of Income

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

PROBLEM I: POVERTY CHALLENGE 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) “I don’t have enough to ‘chop;’ how much more to invest!” // I’ll invest left-over (surplus) PARADIGMS (MINDSET) ‘HIPC’ Mentality (Poverty alleviation vrs. Wealth Creation) “Money matters are for the ‘experts’” Going to school is a guarantee you’ll be rich ‘The poorer the purer’ “Valuables” are assets “I’m from a poor family” ”// “It’s the government”

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

PROBLEM III: PRINCIPLES CHALLENGE 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 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

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

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

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

PROSPECT I: PURCHASING POWER An ‘animal’ that is a Purchasing Power Eater: INFLATION ¢100,000 in 1990  ¢7,000 in 2000 History of average annual returns in Ghana (1991-2001) and USA (1926-1995) INVESTMENT RETURNS (%) Shares 42.51 Treasury Bills 35.00 US Dollar 34.57 1 Year Bonds 30.15 Inflation Rate 27.37 INVESTMENT RETURNS (%) Stock 10.5 Treasury Bills 3.7 Long term Bonds 5.2 Inflation Rate 3.1 Courtesy: 70-year Ibboston Study Courtesy: Databank

PROSPECTS II, III, IV: PEANUTS…POVERTY-BREAKER..PROSPERITY 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 PROSPERITY ~ Having MORE THAN enough

PROSPECTS II, III, IV: PEANUTS…POVERTY-BREAKER…PROSPERITY THE DANIEL OFORI EXAMPLE (2006) COMPANY NO. OF SHARES DIVIDEND PER SHARE INCOME GCB (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

PROSPECT V: PENSION “Financial independence is the most over-looked achievement in everyone’s life.” (Venita Vancaspel) 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: 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, 15th May 2003)

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

PROSPECT VII: PAN AFRICAN ECONOMIC INDEPENDENCE EGYPT Hidden domestic savings ($241 billion) = 55x FDI in 20 years (Hernando de Soto) 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 country’s independence from France in 1804” “If the United States were to hike its foreign-aid budget to the level recommended by the United Nations—0.7 per cent of national income—it would take the richest country on earth [i.e. America] more than 150 years to transfer to the world’s poor resources equal to those that they already possess.” (Hernando de Soto) ACRES OF DIAMONDS

PATHWAY: HOW DO I GO ABOUT INVESTING TODAY? Resolve not to be poor! Value every cedi! Start 10/10/80 TODAY! Be consistent; think LONG term! Invest in investment knowledge 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 SDC Campus Mutual Fund is here!

PARABLE ON PARADISE: WHAT IS THE ULTIMATE INVESTMENT? The young, ambitious graduate & the old man …AND THEN WHAT? …I’ll 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?” “This is how it will be with anyone who stores up things for himself but is not rich toward God.” (Luke 12:19-21)

CONCLUSION: “SEE YOU ON THE GOLF COURSE ON MONDAY MORNING 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!!