Executive Summary

Currently sudden movements, acquisitions and mergers have caused citizens to be quite concerned about investing in the country due to the current unstable financial sector uncertainties. These factors affect local investments, foreign investments, and the Ghanaian financial performance.

Despite all these recent happenings and even some wrong misconceptions, this blog is to help provide a clearer picture of when is actually the best time to either save, investment, or deal in foreign trade.


In the lay man’s terms, saving is money that aside after spending some. This ideology was proven by Warren Buffet (the oracle of Omaha). He is of the view that when you receive money what you should do first is to save, before spending the remaining. “Do not save what is left after spending, instead spend what is left after saving”.

Reasons for Saving

  • Some reasons for saving money is for furthering education, saving for emergency, saving for contingencies (unexpected bad times), saving for kids education, saving for traveling, holidays with family, etc. Stress Free Retirement
  • Better or Further Education
  • Emergency Cushion
  • Future Plans (Renting or building a house, buying a car, etc.)
  • Avoid impulsive spending habits (buying whatever you see because you
  • don’t budget)

Other importance of savings:

  • Develop consistent saving habits which lead to wealth creation
  • To live a good life (debt free) (Improve living conditions)
  • For future investment projects
  • For higher interest rates on savings (the more you save the more interest you get)
  • Saving for passive income
  • In case of career halt (redundancy or resignation) (company cutting costs)


Investing is the longer form of saving. While saving is done with monies that will be used within a short period, investing is one of the key strategies to build long-term wealth and financial literacy. Simply put investment is getting your money to make you more money.

Reasons for Investing

Unlike saving, investing considers the time value of money. For saving, when you save 100gh for 5 years you will earn back the exact 500gh, which is definitely not the same value, because what you could have bought with 500gh then cannot be bought with the same 500gh for the same item.

This is why investing is very important, because investing considers the time value of money. Meaning inflation and other economic variables are all considered. As a result investing 500gh in something as low risk as a treasury bill will earn about 650gh depending on the exchange rate.

There are so many types of investments: these include government bonds, treasury bills, options, swaps, futures, and exchange traded funds (ETF).

Government bonds and treasury bills are forms of loans government receives from citizens to finance the government and certain activities. Options, futures, and swaps are a form of investing where person A agrees with person B a particular product(S) at a set price, example a bag of corn for 700gh in the month of October, and during the month of October the same bag costs 1000gh. If this happens the buyer gets to sell the products as a result of an increase of 300gh. Also on the other hand if by October the price per bag is reduced to 400gh, the buyer loses by 100gh and the seller earns an extra 100gh on the sale.

Mutual funds on the other hand are a collection of funds managed by a fund manager for the purpose of profiting the investors.

Risk Appetite

The most important factor when it comes to investing is knowing your risk appetite. Risk appetite refers to how much an investor can entertain risk with relation to short, medium, and long term investments.

Some people have high risk appetite, meaning they can afford and be willing to either risk it all or gain it all. Examples of high risk investments are shares, real estates, options, swaps, and futures.

People with moderate risk appetite prefer to go in for a blend of long and short term investments, while risk adverse people prefer no risk at all, and therefore prefer short term investments which are less risky. Examples of medium term investments are certificates of deposits, fixed deposits, etc., and examples of short term investments are treasury bills and low income savings..with treasury bills having almost low or no risk at all.

Self Quiz???:

  • What is your risk appetite?
  • Mention similarities between saving and investing
  • Lay out differences between saving and investing
  • Based on your risk appetite which option would you go for (investing or saving)?
  • Saving and Investing: what’s your choice, and why?

By Jill Boafo