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Konnected Minds Podcast
Konnected Minds: Success, Wealth & Mindset. This show helps ambitious people crush limiting beliefs and build unstoppable confidence.
Created and Hosted by Derrick Abaitey
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Konnected Minds Podcast
Financial Planning: Building Wealth Through Discipline Not Motivation
That first paycheck feels amazing until you realize it barely covers your expenses. What if you could break free from the paycheck-to-paycheck cycle that keeps generations trapped in financial struggle?
Financial analyst Patrick Bankwa reveals why most people mishandle their finances and offers practical solutions anyone can implement. Rather than treating savings as leftovers after spending, Patrick demonstrates how intentional budgeting with clear financial goals transforms your relationship with money. "You don't need to keep your savings sitting in your account," he explains, showing how proper investment protects your money from both inflation and your impulses.
The conversation challenges conventional wisdom about job security. Many cling to unfulfilling jobs with modest salaries, fearing entrepreneurship's uncertainty. Yet Patrick brilliantly illustrates how a simple side hustle selling sachet water can generate substantial returns with minimal investment. "The 1,500 job can go just like wind," he warns, dismantling the illusion that employment offers greater security than entrepreneurship.
Whether you're just starting your career or planning for retirement, this episode provides a masterclass in understanding investment options across the risk spectrum. From treasury bills and mutual funds to stocks and cryptocurrencies, Patrick breaks down complex financial instruments into accessible concepts for every risk tolerance and life stage.
Most powerfully, Patrick frames financial planning as a generational responsibility. "Don't put your children in a valley by not taking steps today," he urges, showing how smart investments now can position your children to begin adulthood from a position of advantage rather than disadvantage.
Ready to transform your financial future? Subscribe, share this episode with someone who needs financial guidance, and join us at Konnected Minds Live on August 29th at the British Council.
Watch the video episode of this on YouTube - https://linktr.ee/konnectedminds
If you don't break that cycle of hand to mouth with your family, you will keep on running that cycle. You'll be out, your children will come and continue and there will not be any break. It's always difficult to start. A thousand five job can go just like a wind. The owner can decide to sack you, so the risk around a thousand five is equally as high as if you are starting your own job. The fear is in your mind. If you are investing or saving, you should have a clear goal for that investment or saving. The goal you have will determine the actions that you take. You don't need to keep your savings sitting in your account. You push it into an investment so that you won't even be tempted to go and see the money in your account and withdraw it.
Speaker 2:Now you're speaking about other streams of income. What can they do to increase your cash flow?
Speaker 1:of income. What can they do to increase their cash flow? Okay, so the business can even be performing very well in a crowd business, once it goes down, you lose everything.
Speaker 2:Financial instruments that people can invest their money in. What would you recommend?
Speaker 1:when you talk about financial instruments. There are multiple. I ran through a number of them, so the first thing is that you need to understand.
Speaker 2:Welcome to Connected Minds Podcast. My name is Derek Abayite. Thank you so much for tuning in and being part of the family. So today I've got Mr Patrick Ba-Bankwa here and he's a financial analyst and an advisor and a planner. He has a business that helps people to step into their wealth creation properly. What can you invest your money in? What does the market look like for you? What rates are currently available? As a matter of fact, if you're not entrepreneurial, but you're rather somebody that want to put your money somewhere that can grow over time and have a lovely pension, this conversation is for you, wherever you are on the continent. Today's conversation is packed with knowledge, experience and expertise that will shift the way you understand money, investment and financial instruments. And again, you're welcome to my studio, thank you.
Speaker 1:Thank you.
Speaker 2:I've watched a lot of your stuff, especially on Facebook. Sure, you post a lot yeah, I do. Sometimes you write down some rates I don't know whether it's banking rates but the engagement is pretty good. I think that people really like what you're doing for them. Thank you. My first question to you is why do you do what you do?
Speaker 1:Okay. So I think that I developed this particular passion when I went into the banking space.
Speaker 1:So in 2013, I joined a bank and in the banking space, I met a number of people young, old and what I realized was that a number of them had little or no knowledge about what they need to do with their money, and in the banking space, you get to learn some of these things on the job, and at the time I was entering into the banking space, I was already a chartered banker, so I had the qualification in banking, but I was to practice and now get experience.
Speaker 1:So as I met these people, I realized there was a big gap between what people actually should do and what they are not doing. So then I saw an opportunity to take a step, walk people through the journey of life when it comes to their finances, and so I started somewhere in 2015, 16, by beginning to share this kind of post and later graduated to do videos, and that's where I am at the moment. So there was a big gap, and I don't think that we are still there yet. There are a number of people some are even bankers who don't even have the basic requisites when it comes to financial planning. We shrugged, but we engaged them, so that, for me, is the drive towards what I do.
Speaker 2:Amazing. And what is financial?
Speaker 1:planning. Financial planning is basically having a plan around where you are now financially and where you want to get to tomorrow, no matter your age, no matter your background. It goes into investment, it goes into your career, it goes into your retirement. All of these things come into what we call financial planning. And if you don't have that, you will be working, earning some money, but at the end of the day you wouldn't be able to account for what exactly you used your money for, because now it becomes, as it were I earn the money I spend. There's no plan, there's no goal that you are pursuing with your income.
Speaker 2:So that's what having a financial plan is all about so I have a day job and I earn 5,000, sure, every month. Take me through a plan that will help me secure my, to have a better, you know, pension um time.
Speaker 1:So the first thing you need to do is that if you have 5 000 as your income, you need to draw up a budget, a budget of how you intend to spend that 5,000. So basically, a budget. As you all know, you have the income side, which is, in this case, 5,000. You don't have any other side hustle. You stick to the 5,000. And now you go into the breakdown. How do I intend to spend this 5,000 every month?
Speaker 1:So consider what we call the essentials and non-essentials. Essentials. So consider what we call the essentials and non-essentials. Essentials are basically your food, water, transportation and your rent. These are essentials.
Speaker 1:Sometimes, essentials can be non-essentials. Okay, in the sense that a rent of, let's say, 2 000 will give you a place to lay your head. The same being a rent of thousand can also give you a place to lay your head, depending on your level of income. If you choose a $2,000 as a way of classifying as essential, it may not be an essential for you, because if you take $2,000 from your $5,000, what it means is that you are just left with $3,000 that you are going to break down to every other expenses. Trust me, it will not be enough. So that means that you will have enough to spend on some investment that will help you to build the future that you want for yourself. So you classify the essentials well, make sure the figures you are putting by them are realistic At the same time things that will help you to meet your future goal.
Speaker 1:Then you come to the non-essentials Things that's maybe additional shoe, additional bag, you've seen something that is not what you to buy. You keep them and then you have a portion for investment, and investment here is not only financial instrument. It can be buying and selling of things. These days we do a lot of drop shipping. We can get some item that you want to buy or, if you want to go into a pension plan, you can channel that investment component into a pension plan and build it over time.
Speaker 1:Once you you do this, this becomes the base of whatever plan you want to build. So when I meet Ipo and we are able to do this patrol budget, by the time we are done with the budget, all other questions have been answered, because your insurance will be covered in your budget. Your pension will be covered in your budget. If you have a business idea that you want to put some money aside, you cover it in the budget and then you now go into the mood of now putting it into practice. Having a budget is one thing, but putting the budget into practice by way of signing up to the product that you want, by way of starting the business that you want, is the second part of it, and that's where most people struggle, because you help them to build a budget. But in terms of implementation, then the excuses will come in.
Speaker 2:What are some of the things that you can say to help us to be able to implement?
Speaker 1:it. So the first thing is that if we drop a budget, let's ensure that we stick to products that are matched to, especially issues relating to investment. So I don't like people trying to do the investment themselves. If you can automate, try and sign up a product that will automate and deduct from your source, that's if you are in a formal sector, so that your money comes on a particular day of the month you are deducted into that investment plan. It's insurance you want to do. It's done in that way.
Speaker 1:If it's about your food and rent, nowadays you can just do a quota. If it's about planning for the food for the month, if it's buying in bulk, you buy it in bulk and now you go ahead of it. If it's about transportation, you know that in a month it's 500 CDs. You do your own breakdown that in a week you are supposed to spend less than 100 CDs. How do you break the 100 CDs down? You need to take public transport Monday to Friday Each day. Public transport Monday to Friday each day is 20 CDs.
Speaker 1:When you do it this way, you are breaking everything down and makes implementation very easy. If it's about rent, and you know that currently, as we speak, you are renting about 1,500. And you know the 1,500 is not sustainable because you don't have any extra income, then, whilst you are winding down the rent, think of a place that is lower in terms of the cost, at the same time, a nice place that you can afford. These are the implementations that you need to put in place. I wouldn't say it's an easy task at all. It's not easy. But if you are not able to create additional stream of income to support the 5,000, then taking steps within the 5,000 may not be very pleasant, but it's necessary.
Speaker 2:Do you still think it is possible for somebody that earns 5,000 cities to still have a good financial plan?
Speaker 1:Positive Even 2,000.
Speaker 2:But from the way you described it, it sounds so difficult and it sounds almost unable to achieve.
Speaker 1:I wouldn't say it's difficult in the sense of difficult. It's just that it needs a bit of discipline to do it. A number of people are not disciplined. Most of us are not disciplined, including myself. So we set out to say we are doing this with this amount. We end up going overboard. Especially when you have pressure from society, peer pressure, family pressure, you end up going beyond it. Even you have pressure from society, peer pressure, family pressure, you end up going beyond it, even when you are not aware of it. So it's a discipline that makes it difficult and, as you know, in this life, if you are not disciplined in anything that you do, you'll struggle.
Speaker 1:So once you are disciplined and sometimes for those who are married, you need to have one partner who is an accountable partner, as we always say in planning. You can't all be the same in terms of your mindset. You can't all be spenders. Someone should be a spender, someone should be a saver, so that the person will always put the other person on track. So that's what you can do. If you can afford a financial advisor, that person also puts you on your toes. Monthly. You engage. Okay, how far far? Where are we? You said you're going to do this. Have we done it? What was the challenge? That also puts a bit of control on yourself. If the person can be your church member, someone that knows about finance, make sure you engage the person and that will help you to stay disciplined.
Speaker 2:I set out to save or invest 3,000 cities out of my 5,000 every month. Sure, but what happened was that you know I went to the shop and you know I saw some things I like. I bought it. So that month, when you guys came to my bank to take the direct debit, it didn't work out. The following month mom was sick, so I had to pay out the following month. You know I was struggling so much that I had to take some more money out. What does that look like in the long-term planning of the person's finances?
Speaker 1:So what I always say is that if you are investing or saving, if you have a clear goal for that investment or saving, the goal you have will determine the actions that you take. So let's take an example. I have a plan to, let's say, buy a land by the end of the year and the land is, let's say, going for 10,000. And in that plan I need to save or invest, let's say, about 1,000 CDs every month.
Speaker 1:The moment I miss out on 1,000, what happens? It means that my target of 10,000, I won't be able to meet. So when I have the urge to go into the 1,000, because I have a particular goal of 10,000 by the end of the year to buy a land, I restrain myself or I look for other options to get the thing sorted out. So if you don't have a goal that you are passionate about, that is where some of these assets will happen. Of course, because we are humans, once in a while this will happen. You can go into your savings or investment or you may not invest they are normal but it should not be a periodic month or month, unless maybe your goal that you have for yourself you're not passionate about it.
Speaker 2:Well, I mean, you know what happens with habits, right? Yeah, I mean you know, what happens with habits? Right, yeah, so when you form a new habit and you break that habit twice. It will cost you so much to get back on track, back on the new habit. So usually what you should do is that you should not default twice, Exactly Because if you default twice, you're back to default setting Exactly.
Speaker 1:So, as much as possible, try and stick with it, even if it happens for whatever reason, just go back to it again. That's my advice, because if you allow it to transcend and it goes on for a very long time, that's where the challenge comes in. You realize that at the end of the year your target will not be met and that means that it even discourages you. So a lot of people they save, they go for the savings. Then they think that okay, now savings is not even important because I saved this month and I went for it next month. The question is what was the purpose? What was the goal for that? Savings? Is it just? And do you know what we do with savings In this part of the world? We classify savings as a leftover. So we do our expenses At the end of the month. If I'm left with 200 CDs in my account, I call that savings. That's not savings. A savings should have a purpose and should channel the savings into an investment.
Speaker 1:So I have told people so many times that you don't need to keep your savings sitting in your account when you can invest that savings into something else. So you have your budget, you have your living expenses. That's what you keep in your account, day-to-day living expenses. You keep that in your account. Any other thing you call savings, that you are saving for the future. You push it into an investment so that you won't even be tempted to go and see the money in your account and withdraw it. You see people who are not quote-unquote very disciplined with money. They have empty how do you call it ATM card. They have signed up to all apps that can easily move money from their account. It will not work because when you are tempted, the first thing you think of okay, I have the card, let me go and withdraw. If you are someone who cannot stay disciplined, you don't sign up to a number of these things.
Speaker 2:Okay, some of the ones we shouldn't sign up to Don't like.
Speaker 1:ATM card. Don't be using the ATM card. Don't link your bank account to your wallet.
Speaker 1:It can easily tempt you, Right? So, for example, I don't work no matter what. Unless I know I'm going to take some money from the bank or some other transactions or online, I don't work with it. I have limited the linkage of my bank account to my wallet so that I won't even be tempted. Because if you want to go and do something and I'm thinking of it, okay, what are the steps? I need to take a car to this place? Do I go and do this? Go and do this? It's a lot of work. Okay, I won't do it. I see this nice, I want to buy it. Okay, I don't have money on me. I don't have my account linked between my wallet and this thing. I have to go to the bank. Okay, I won't go. I won't buy it again. But if you have linked up everything, trust me, you'll be tempted. You just have to fail with income from other sources and there are some people that also do window shopping.
Speaker 2:Right, yeah, so they just go and walk around the mall. Um, and if you're walking around the mall and you have your bank card and you have, money, you'll be tempted so when the boys call you that, charlie, let's meet at a grandmaramall and, just you know, go and walk around. Yeah, if you know you have a budget you are saving towards something. Yeah, defer that Exactly. Why are you going? Because when you go you will spend that money, yeah, okay.
Speaker 2:So the young man is now saying that that 5,000 cities. You've shown me how I can do my budgeting, financial planning, but the truth is it is not enough money.
Speaker 1:Now you're speaking about other streams of income, what can they do to increase their cash flow? Okay, so, when it comes to streams of income, other sources or side assets, as we say, you always have to understand who you are, what you can do and what you cannot do. How much time do you have to earn extra income? And then, when you are able to answer these questions, they now begin to narrow down to exactly what will work for you. So you can either go into buying of products and selling. You can go into what I call dropshipping, as you all know. I mean marketing of products online. People express interest, you take them and you get them the item. That's also one of it. About two months ago, I did a video on the same side hustle and I used an example of sachet water. If you want to go into sachet water Currently sachet water. If you want to go into sachet water Currently sachet water one is going for about I think, if I'm not mistaken, about 50 pesos.
Speaker 1:Okay 50 pesos. One is going for 50 pesos. Okay, if you buy the bag, we have 30 pieces in it. All right, 30 pieces in there, 50 pesos. So that's 15 CDs, yes, but in the bag you are getting what? 15 CDs? Yes, and we are selling one for what? 50 pesos? Yes. So 50 pesos times 30, how much are you getting 50?
Speaker 1:pesos times 30 is 15. 15 CDs, yes, yes, but the bag is 10 CDs, right. So you make five CDs, five CDs from each bag that you sell. Okay, so assuming that in the day you are not selling much but you get somebody to sell it for you, that the marketplace and the person is selling, say 10 to 15 cds, 10 bucks or 15 bucks, let's multiply and see all right. So that means 50 cds a day from 10 bags, 10 bucks, 50 cds a day. Let's ask the person does that for, let's say, maybe 20 days in the week in the month, okay, times 20. So that's a thousand cities, thousands, usually such people. You are paying them around maybe 400, 500 okay, so you take 400 cities out of it.
Speaker 2:That means that they brought you 600.
Speaker 1:let's assume that for the fridge that is making the world the water code. Let's assume you spend about 100 cities, 200 cities out of that. Okay, let's take 200 cities out of that. How much are you left with 400 cities left? 100 cities, the end of the month 400 CDs. So in a month you are making an additional 400.
Speaker 1:CDs 400 CDs from just 10 bags 10 bags, 10 bags that you bought at 10 CDs. So 10 CDs times 10 is 100 CDs. You have invested 100 CDs by doing this and you are getting what? 400 CDs out of that. It's very simple, but you need to commit your time to it. You need to get the right person to manage it for you, because perhaps you don't have time. And I did this video and I told people that if you want to, for example, buy a land, build a house, you can be earning 2,000 and you'll be able to do that with this. People couldn't believe it. How, how Because now. How Because Now, unless we have used just about, let's say, 10 bags to make 400 series.
Speaker 1:Yes, let's use about 20 bags, okay, so if we do, we basically 800.
Speaker 2:800.
Speaker 1:Yep 800 times 12 is how much?
Speaker 2:Times 12, that's 9,600.
Speaker 1:9,600. You can get a very good place to buy a land in, let's say in Samoan and other places outside. I'm scared of Accra.
Speaker 2:Within a year you can buy a land. Okay, you see, patrick, you know, sometimes some of the problem is right. I'm saving 500, 100,000 cities to buy a land in Dodowa. Yes, it's going to take me a year and a half to save that money.
Speaker 1:Yeah, by the time, a year and a half to save that money by the time, a year and a half, is over, that land has gone up Sure. How do you?
Speaker 2:mitigate those issues.
Speaker 1:So I just give an example. That person has just invested about 200 cities to get to the 9,000. If I were you and I have space I would do more Right To compensate for the difference.
Speaker 1:So, as I do more, let's say we get about 20,000. End of the year you can get a land somewhere to start the process. There are some lands that you can even do down payment of the 20,000 or 19,000, 15,000. And you can buy the land and now you can start the process. It's all about determining in your mind that this is what I want to do, because for some of us you don't have any support anywhere. If you don't break that cycle of hand to mouth in your family, you will keep on running that cycle. You'll be out, someone will come and continue or your children will come and continue and there will not be any break. It takes discipline to break that cycle by some of these initiatives, so this is just one of them. There are a number of ladies that go and buy ladies' bags, their rings, and they also sell it. That's also another way of doing this. I know colleagues who have that at the back of their car. They come to the office, they close, they move from shop to shop. They go to offices, they open it up and people have to buy. They commit to buy some of these things. These are all things you can do to earn extra income.
Speaker 1:Once you see a problem, then you solve it. How do you solve it? You solve it by providing solutions to the problem. And once you provide solutions to the problem that's business that you have created Over time you realize that you'll be getting so much to do that at some point you feel like, okay, let me leave my day-to-day job, which is giving me, let's say, about two thousand, three thousand, five thousand. I did a post some time ago. People were telling me they are earning around eight hundred cities, thousand cities in ghana, eight hundred thousand cities in ghana, and you go there morning to evening. If you quit that job and you decide to do this water, at least you get something over time and that can make you stabilize than going to someone's shop from morning 8, to about 7, 9 pm.
Speaker 2:Let me stop you here for a minute. If you've been watching this show, I want you to subscribe and become part of the family. We are on a journey of changing the lives of people on this channel and we appreciate you for being here. But if you haven't become part of the family, connect with us. Hit the subscribe button Now. Let's carry on the conversation. You understand the feeling job security gives people right. Yes, you understand that feeling. I understand it can be like a prison, it can be a trap, but that feeling is also very safe for some people.
Speaker 2:Yes, so some people would rather take 1,500 every single month without any stress, no pressure, than to go out and start off making 400 CDs a month. Then, in about five years, they start making 20,000 CDs a month. You see the way it works, right For me. I would rather earn 100 CDs now, knowing that I can make 20,000 CDs a month tomorrow, yes, but most people would rather take 1,500 today for the next 10 years, because of the feeling that security gives them.
Speaker 1:It's a mindset, so we have been conditioned to be afraid to take risks, naturally. So we are a bit risk-averse. We don't want to take rakes. Or if you take rakes and something, what if something happens? The first thing you need to keep in your mind is that the 1,005 job can go just like a wind. The owner can decide to sack you, so the rakes around the 1,005 is equally as high as if you are starting your own job. But the mindset is such that we don't see it that way. So it demands that, as people continue to hear some of these things, then eventually they'll begin to see that, oh, I have better options out there.
Speaker 1:It's always difficult to start. So if you make up your mind that, okay, I'm going to start this, I give myself three to six months. That would be the difficult aspect, the sacrifice aspect. Beyond that, I expect that things will get better. That will be a better option and, as I said, it's a mindset. The fear is in your mind. The fear of going to start something and it will fail is in your mind. But if you start and you fail, what next? What happens? You're not the only person to have started something and failed.
Speaker 2:How about the fact that also sometimes you're making that 1,500 and family are even looking up to you that 1,500. So you quitting that job would mean that maybe mom's medication at the end of the month will be a struggle. And now you're going to start your own business and nobody knows what a hook would happen if you start. How about all those feelings? How do we overcome that?
Speaker 1:So that's why it's always good not to just jump into the business. You start by managing it little by little to see and test the market. So this water business I'm talking about, you can get someone to do just 10 bucks. 10 bucks means that you would have started with 100 CDs to start with. So the person is doing it alongside your business, so you're just monitoring and managing it. So with time, as you begin to see the cycle of that business, you can now progress and say, okay, I've gotten to the point where I think I need to put my maximum effort into this. By that time you have already gained some experience. But what some people do is that they just see of a business. They think it's a very good business. People are talking about it. They've not tried it, no testing, they just jump into it. Next moment they quit their job. And why? I'm going to start this business? You are going to start Meaning you have not already started.
Speaker 2:You've not even engaged that business. It's the conversation that happens on the street. A lot, yeah, and I'm going to do that for you to hear you call them the bomb and steal the phone. So, patrick, there's this business that I've heard of. There's so much money in it. The moment you start seeing somebody speaking like that, you know that they are not coming from a place of experience yes, speculative yes. And then the other person on the other side are you sure it's going to make a lot of money? Okay, okay, I'm going to do it that person creates their job, and then they find themselves wanting.
Speaker 1:Different world altogether. Yes, so you need to always test, because business does not mean that you succeed. A number of people have done so many businesses they failed. There are even good businessmen today that still have businesses that are failing, of course, yes, and even you yourself.
Speaker 2:Yes, you had two businesses that failed and you spoke about it on your Facebook. Yes, two businesses. They all On your Facebook.
Speaker 1:Yes, two businesses, they're all filled. So now when I'm going to another business, I have a bit of experience to know. Okay, this has the potential to fail again because of the signs that I'm seeing. It maybe doesn't match up with my mindset, it doesn't match up with my personality, so it may not help me. So let me try this, because this matches with my personality. If you don't do that kind of introspection, you end up going into a business that everything will go bad. And don't forget, when a business goes bad, it's not like maybe I've gone to give my money to, let's say, a bank Bank is no more. But bank of Ghana says they will pay. Even if it takes, let's say, five years, they will pay Business. Once it goes down, you lose everything. So it's not an addition that you take lightly by just going with here. See, I've heard this, I've heard that this one has done it. The business can even be performing very well in Accra. If you don't take care and you lift the idea to, let's say, kumasi, it will fail Okay.
Speaker 2:So I was having a conversation with my wife yesterday and then she was asking me why telehealth services not doing great in many parts of Africa? And I said because the market is not ready. We can't just pick it up from the UK, the US, canada and then bring it here. Sure, the market is not ready. Recently, recently, there was news that came out that Akon's project of 1 billion USD has been abandoned in Senegal. It was going to do some futuristic Wakanda stuff. I was telling my wife yesterday that look, it's a brilliant idea, but Senegal is not ready. And then she goes oh, how about Rwanda? Maybe Rwanda could work? And I said no, the magnitude of project that this guy is going to do, even Rwanda does not have the numbers in terms of population to even be able to patronize those services.
Speaker 2:So sometimes, as business people, we need to understand that market readiness is very good, because that is what timing, business timing means. Yes, when the timing meets, the business will do well. Yeah, there's been businesses that we've come to Ghana here to do. It didn't work out. Yeah, purely because the market is not ripe enough. Look, there are businesses that have closed down in Ghana, maybe because they came in too early. Yeah, if they maybe come back in the next 10 to 15 years, it might work. It might work. Yeah, because market is simply not ready. Yes, for it.
Speaker 1:We can't?
Speaker 2:A lot of the tech businesses in Ghana that are making so much money. I am seeing them in the fintech business. Yeah, they make so much money. I am seeing them in the fintech business. They make so much money.
Speaker 1:Why?
Speaker 2:Because we're doing a lot of transactions, exactly, yes, it's always an activity, but you see other people that are doing other businesses within the tech business, but it's not working out. They're not getting the numbers because we are simply not ready for certain ideas. Yes, somebody says, oh, you ready? No, it's difficult to push the market to be ready Again. It's like you flow with the tide of the ocean rather than against it. So the timing has to be a year in, year out, perfect.
Speaker 1:Right there, we've had several businesses I mean, you've seen them Several businesses have left the country.
Speaker 2:Probably due to, maybe economic reasons, people not patronizing the business. Apparently both never made profit. Yes, both food never made profit. I mean, this is a big company, yes, you know global had to leave. Yes, even game so I really think that, as young people, yes, you want to do business, but be very careful with the copy and paste model that this thing works in Accra, it may not work in Kumasi.
Speaker 1:Exactly, exactly, and that's my story of the first business that collapsed. All right, talk to me. So when I qualified as a chartered banker, I wanted to set up a tuition center around Kaswa. That was somewhere 2012 thereabouts. So I got some lecturers who were colleagues, friends in accounting, banking, to set up a school for professional education in Kaswa. At the time there wasn't any in Kaswa, so that was an opportunity. So obviously you don't have markets as in competitors here. You are starting to think that you have a market over there. So we went ahead. We did our flyers, banners. I printed letters to churches, schools to market it Then on social media. That was when Facebook was beginning to pick up in Ghana, so I marketed it.
Speaker 1:The first day I got five or four people showing interest coming for lectures and I had two lecturers to take them through. Especially that was in accounting ICA. The next week, two people came, two didn't come. The third week, nobody came. I lost everything. I lost my flyers, I lost the location, lost everything. I lost my flyers, I lost the location. I had to now get money to pay the lecturers for doing three weeks of lecture because those who came in only one person paid. I think about half Everything went down.
Speaker 1:Why? Because at the time, professional tuition was happening in Accra, lagoon and other places and people felt that that is where, when they go, they'll pass. They are not ready to come and do try an error with a news center, because for them they are paying money for the tuition. They expect to get value out of that, no matter who you bring, because the area is cast by its very nature. They thought that okay, they are not good schools here, so let's go to accra. The same lecturers will come to teach them at Accra, but they will prefer that than to stay at Kaswa. As we speak today, about 10, 15 years time now, there are schools in Kaswa that people are attending for the same professional education. Because, as we said, the time is right now.
Speaker 2:You are too early.
Speaker 1:Exactly, exactly.
Speaker 2:And this happens day in, day out, every day. And this happens day in, day out, every day. And sometimes, as a young entrepreneur, the thought of owning a business can be more exciting than the time you need to take to research into your market, exactly. So you want to tell everybody oh, I own a business, I have myself a business, but it's not even making you any profit, it's not even paying you well enough, exactly. But simply by telling people I own the business makes you feel good about yourself. But I tell you something, young lad, very soon you're gonna start telling yourself the truth not sustainable at all?
Speaker 2:yeah, at all and, by the way, on the 29th of august, at the British Council, we have the first Connected Minds Live. It is happening and we've invested so much time, so much resources into that event that is going to happen. It's packed with speakers, packed with knowledge, and I can't begin to tell you some of the things you're going to experience should you show up at that event. So reserve yourself a ticket. I'm going to leave it in the description right now. Or you can go to wwwconnectedmindslivecom and just reserve a ticket. I'm excited about that day because the entire community are coming together. We're going to have a network session an hour before the program and it's going to last maximum three hours and every speaker is going to speak on what they are passionate about not storytelling, but a teaching session. My brother, let's carry on. Thank you. Now, financial instruments that people can invest their money in. What would you?
Speaker 1:recommend? Okay. So, um, when you talk about financial instruments, there are multiple. I'll run through a number of them. So the first thing is that you need to understand what your risk appetite is as a person. When you say risk appetite, you mean that how much risk are you willing to take? There are people that when they have their money, even with an institution, and they hear that there's fire over there, just the fact that there's fire outbreak a branch will make them not feel comfortable. That's the level of risk of such people. So if you are a low risk person, you need to know the kind of risk instrument. You need to sell it. If you are someone who has a heart to, I mean, carry on a number of freaks, then there's a lyrics, an instrument for you. So let's start with the low risk. So the low risk investment. Of course, in ghana there are limited options. So we have the fixed deposits, we have the treasure bills. That's the low, low low.
Speaker 2:Why is it low risk? Let me stop it here for a minute. If you've been watching this show, I want you to subscribe and become part of the family. We are on a journey of changing the lives of people on this channel and we appreciate you for being here. But if you haven't become part of the family, connect with us, hit the subscribe button and let's carry on the conversation.
Speaker 1:Low risk because the possibility of you losing your money is very low. It's not, the possibility is very low. Not that it can't happen, but so far in Ghana we have not seen it happen. So we call those two low rates.
Speaker 2:Okay, before you move up the ladder, if I put my money in any of these two instruments at a certain fixed rate, is it locked in? It's locked, Even if there's fluctuations in the rate. It's locked.
Speaker 1:For the period that you are doing the investment. It's locked, all right, cool. So fix the positive treasury bills and then we have the medium or moderate rates. Moderate rates here we are talking of mutual funds. In the past, mutual funds used to be part of low rates in Ghana, but now mutual funds are classified as moderate rates. Why? Because mutual funds are invested in some instrument that has the potential to be affected by any economic condition. So, for example, mutual funds can be invested in bonds, either corporate bonds or government bonds. Government bonds here means that the institution is going to give the money to government and government will pay you back your coupons, which is the interest and the principal. You back your coupons, which is the interest and the principal. We all remember. In 2022, when government went into IMF agreement, there was this domestic debt exchange program that affected bonds. So all the funds which were in mutual funds that were invested in bonds were affected. So that's why we classified that investment as now moderate rates, meaning it's in between. It's not too high, it's not too low, because the possibility of that ddp happening again anytime soon is very low. However, because it has happened before, we don't want to say it is a low risk investment. So we can invest mutual funds and the mutual funds.
Speaker 1:They invest in bonds, as I said, some of them to invest in shares. So because they are professionals, they know exactly which shares are performing well and they can invest your money in shares for you. So that's a mutual fund. Then you can do the shares yourself. So you can go into stocks. You can buy local stocks. You can buy foreign stocks Nowadays. So far year to date, the stock market has done around 30% or so in terms of appreciation of value. So it means that if you had invested in any of the performing stocks between january and now, your investments would have grown by about 30 percent. So that's also another area that you can consider. However, it is not low risk because the price of stock or the value fluctuates, so you may have a stock performing very high. The next moment is going up because of um industry challenges, news around the, the company buying and selling. People are selling their shares. That will drop their price down, so that's also another option that you can consider. Or you can do foreign stocks and nowadays a number of these foreign companies. They have platforms that you can use, even in ghana, to buy shares in some of these companies as an option.
Speaker 1:But then again, as you go into, you need to understand the market. Don't go and invest in shares with the mindset of a fixed income Treasury bill. Fixed deposits are fixed income. It means that if it's 10%, you are short of the 10%. It will not fluctuate. Shares is based on the market condition. If it's performing today, it doesn't mean that tomorrow it will perform. A company can even make profits, but the company can decide not to give shareholders dividends. They will reinvest into their business. So keep that at the back of your mind as you go into that.
Speaker 1:Then, if you are going to the high risk, then we are talking of issues relating to gold investments. Nowadays, bank of Ghana has introduced what they call the Ghana Gold Coin. Basically, you are investing in gold, so the price of gold going up and down will impact on your investment. Last year when it started, the gold coin was around 45,000 for one ounce. It went high to this year, april 54,000. As we speak, it's around, I think, 38,000, 54,000. As we speak, it's around, I think, 38,000, 35,000. It's dropped. It's dropped For two reasons.
Speaker 1:One is that gold price has not gone down much. It's still around 3,400 per ounce. However, it is pegged to the Ghana CD to a dollar. So at the time we are talking of 54,000, the Ghana CD was around 14 CDs to a dollar. Now, as we speak, the interbank rate is around 10.3. So if you multiply 10.3 by 3,400, that's cause the investment to drop. If the investment or the exchange rate was still 14, you would have seen some appreciation on your investment. So if you are going to Ghana Gold Coin or buy gold investment which is converted to Ghana CDs, you need to keep at the back of your mind that exchange rates can affect your investment. So those who bought it at the beginning of the year at 54,000, 51,000, today they can sell Because if you sell it, you are losing a big loss.
Speaker 1:So that's why we say it's a high-risk investment volatile loss. So that's why we say it's what high risk investment, volatile. However, it also has the potential to increase your wealth faster than treasure bills. Fix the person. Give you, from beginning of, let's say, 2010 to now, if I'm not mistaken, 2010, a good one. Good, I think. One ounce was around, I'm not mistaken, I think seven700. That's 2010. $700, one ounce. As we speak, one ounce is $3,400. Check the jump.
Speaker 1:And it has the potential to grow further, because gold is a commodity that every country is in need of. So if you want to go into it, keep at the back of your mind that there can be a fluctuation. However, it's a long-term investment. So if you want to do long-term investment, you go into that. Then now the usual foreign and digital assets, the cryptos. It's also a financial instrument that you can consider if you want to be playing around the market and has the potential to grow. Again, there's a risk there. You need to make sure you understand the market before you go into it. So all what I'm saying there are financial products available to you. The one you want to take and the stage of your life will determine the option you choose. If you are, let's say, getting to 60 years, getting to your retirement, you try as much as possible to stay within low-risk investments. Why? Because, if something happens, you don't have years to recover.
Speaker 2:I'll tell you something funny. You don't have years to recover. I'll tell you something funny before you come on. They say that a man at age 60 is more scared of losing their money than losing their life. Exactly.
Speaker 1:So they have to be careful.
Speaker 2:Yes.
Speaker 1:People like 20, 25,. You can take high risk Because you want to grow your wealth over a period of time. You know that even if there's a loss this year, next year I can make a profit. So you have some time. But as you get closer to your retirement you limit your high and moderate risk to now low risk. So they nearly go for the pension fund. You go to buy some pension.
Speaker 1:Nowadays there's even what you call annuity. Annuity basically means that I go on pension. Snet gives me my tier two, or the fund manager gives me my tier two, which is the lump sum. I can give the lump sum to a pension company or an insurance company and tell them that out of this lump sum because I'm on retirement, I want you to give me, let's say, 10,000 CDIs every month from it. They will do the calculation and tell you that if they give you that 10,000, your investment can last for, let's say, 15 years Before it goes down. So if someone says, okay, I want to do that Because on top of that it is already paying them their monthly, so they just want that as a supplement, so that investment is also there. Or you can give the same money to the pension company and tell them that I or you can give the same money to the pension company and tell them that I want you to do your calculation. Tell me how much money you can be paying me from now till I'm no more and they will do the calculation and tell you and that will be added to your money.
Speaker 1:So there are options out there for people. Depending on how aggressive you want to grow your wealth, you go for the option that works for you. This year, the option that people are going for because treasury bills have dropped, are equities or shares. People are investing into shares. However, the share market, as I said, it, fluctuates. Sometimes you can even go to a broker, fill a form that you want to buy shares of a company A, company B. It can take like two months. The share is not available because nobody's selling, because everybody has seen the potential in the market and they are keeping their investment. So that is an option that people are doing now. But if you can't go into that and you still want to do something that is moderate, then you can now go into mutual funds, which are also doing quite well on the market.
Speaker 2:I think you really need to break it down your top three options. For somebody who has a hundred thousand right now to invest. Where would you advise him to put it?
Speaker 1:If the person wants to take moderate and low risk, first option would be a mutual fund. Okay, mutual fund. Invest in mutual funds. How much of that money would you put in mutual funds? If the money is mine, I would do 50,000.
Speaker 1:Mutual funds Okay, direct mutual funds, money is mine, I will do 50 000 mutual funds okay, direct mutual funds and how they get their payback. So the mutual fund is is an investment that you cash out on your own, at your own time. Okay, it's not like um, fix the post where it is for three months, six months. It's like a fund for you and the fund grows with time. They are investing the money and it's always growing right. So as and when I want it, I cash out. So currently we have some institutions that are doing mutual funds beginning of the year to now, around 23. So that's what you calculate on your fund. So 50 000 times 23, that will give you how much your fund would have grown as we speak today. So mutual fund will be my first option because I'm getting about 23% out of that. Then I'll keep 20,000 CDs in buying shares myself. And let me go back to the mutual fund. The mutual fund. There are about three types of mutual funds. We have what you call the money market mutual fund. Here they invest the money in treasury bills and fixed deposits for you. But because they are investing in volumes for the fixed deposit, they're able to get higher rates than if you had gone to the bank to invest. Perhaps you go to the bank 100, 000, you are getting less, about 15, 12. They are doing it in millions so they can go and negotiate for, let's say, 20, 19 for the fund and they spread to everybody within the fund. So that's what you call money markets. And because they are invested in the treasure, so that's what we call money markets. And because they are invested in the treasury books and fixed deposits, the risk is, as I said, low risk.
Speaker 1:Then you have what you call balanced mutual fund. Balanced mutual funds, as the name suggests, they invest some in fixed deposits, treasury books, and some in stocks. So it's a portfolio of investment that manages by itself. Risk here, low rates here. At the end of the day you get some value out of that. Then we have what you call equities as a mutual fund. Here they invest purely in stocks. So they invest purely in stocks and that gives you some return. So by 50,000, we go into mutual funds. If I'm someone who wants to take moderate and low rates, then 20,000, as I said, will go into shares. Then the remaining 30,000, I'll put them into treasury bills.
Speaker 2:How long will it take you for that money to turn into a?
Speaker 1:million. It depends. If I get in about 30% on the mutual fund, it shouldn't take me more than five years. I'll be able to grow it to that point. Okay, yes.
Speaker 2:Do you think? All right? You see, for me I always say that when you're trying to grow your money, investments are great. It's just one Avenue, yeah, which you've. You know, you've laid it out beautifully there is business as well.
Speaker 2:Yeah, and then even business. You can do several businesses to bring in more cash, exactly. Then you invest. Yeah, of course you know it could be real estate, it could be whatever. Yeah, you must have several avenues to grow your money. Sure, not just. Okay, I've got a million and I want to invest that money in mutual funds. Yeah, just in mutual funds. Yeah, just as you've laid out. Yeah, it needs to go into several things.
Speaker 1:Exactly.
Speaker 2:But if you certainly don't have an appetite for businesses, then this is a great option. Perfect.
Speaker 1:For you Perfect.
Speaker 2:Because there are some businesses that will give you much, much better cash flow than putting the money at the bank. Yes, I agree, right, I agree Much, I agree, right, I agree, much, much better. I mean, I know people making loads of cash every month. Yes, that's what I asked you. How is it going to turn into a million? Yes, because some of these people I mean a million is like what the hell. And this one is just it's taking a bit longer, but it's safer, it's long term. You know, the issue we have here is a lot of young people will listen to this conversation and think, oh yeah, okay, right, crypto is going to make me money, forex is going to make me money, so I'm going to go in very quickly to turn the money around. What do you have to say to them?
Speaker 1:So again it comes back to what is the goal of the investment. How much risk are you willing to take? How much risk are you willing to take? If I want to take high risk because I see a potential, then I'll keep less about 20, 30% of my investment in cryptos because I see a potential for it to grow there and I have age on my side.
Speaker 2:Did you see the video of this man that lost, I think, 400,000 cities, that he said he wanted to kill himself?
Speaker 1:Yes, I saw it. I saw it. So sometimes it's the way guys who are into crypto also present some of these things. They make it sound like it's all well and good, straightforward, cash out season investment. It's always like that.
Speaker 1:I have done crypto before. When it started, I went into it. At the time, the market was still developing. At some point in time, I lost interest in it. I know people who have gone into it. Just about two weeks ago, I had an interview with one crypto expert and he told me how much he made and how much he lost. So if you want to go into that space, yes, but give yourself time. Don't be in a rush to try to turn things around quickly. I always say that if you want to turn things around quickly by getting so much money, go into business. Go into business, because all these instruments I'm talking about are instruments that will build over time and once you have age on your side, you build over time, provided you can have the patience to be able to do that. This is your crypto matter I just made.
Speaker 2:I just remembered something I've invested so much myself, with my business partner, we've invested so much money, so much money, into crypto. We started doing that, I think about what seven years ago. Okay, we still haven't seen anything. You know, I keep asking him because he's, he's, he's quite, you know, involved. I keep asking him, ed, are we going to be billionaires? Is it ever going to happen? Because we keep waiting, yeah, and it's not happening, exactly because it's. You know, we're doing it for the long term, but when when it's been seven years, you know.
Speaker 2:but recently somebody contacted me. Somebody I know One of my Ugandan mates. I've done some work with him in the past and he kept bothering me I need an account, I need an account. And then I gave him a trading account A thousand pounds Within three days. The guy a trading account a thousand pounds Within three days. The guy blew the account Wow, three days so. But then I posted it on Twitter and then see this will happen where young people will say oh no, I can turn it around.
Speaker 2:I can Money comes so fast, money goes so fast? Exactly, it's a very's it's, it's a very in-out kind of concept. You know, long-term it's, it's. It's always good, it's always going to favor people.
Speaker 1:Yes, Very true we. We shouldn't see wealth creation as a a sprint, where you just go 100 meters, dash you. Where you just go 100 meters, that's, you are done, you are. Well you know, if you go that route you won't have the muscles to manage it, even if it comes. Most people who have made that kind of wealth in a very short time, most of them, were not able to manage it. So it's always good to build it up. Of course, if you get an opportunity to speed it up a bit, do that.
Speaker 1:But young people, some of them let me use some we have this mindset that the world is running so if I don't do mine and cash out now, I'll be left behind. And that is not to say that I mean if you see an opportunity, you don't take it. It's good to take it, but that mindset will eventually push you into areas that you'll be struggling to come out. And that's what is leading some people into even fraud, crime, because we see people 40, 50 years driving certain cars. You have 25 years and you want to drive the same car. You don't know how many years it took the person to buy that car. You even start with a car that you can afford. They want to drive the same car.
Speaker 1:So, any opportunity, whether it is bad or good, they want to jump onto it. And by the time you realize, they will tell you I'm doing this and that's what is giving me that, but in reality they're doing something else, something else, and eventually life will catch up with them and that's where you begin to see oh, this is what we're actually doing. So don't just be watching people posting here and there and they are telling you their story and you are just jumping onto it. I did this, I did that and you are also going to try it. You go into it. It's not like that.
Speaker 2:Then now you have to do what they did to get to where they are just, basically, you are just covering up, yes, Trying to do something else to make it look like that is what is giving you the money Exactly, but that is not it. No, wow, sine, is there anything we can, we could have? Is there any question? I could have asked you for us to discuss that. I haven't.
Speaker 1:I think that, by and large, we've touched on almost everything within the financial planning space. We just need to. As a matter of fact, if you're a young person, aside all the investments I've mentioned, one investment that you should consider doing is the personal investment plan. It's more like a retirement plan. It works with compound interest and I believe you understand that you must have compound interest, and I believe you understand that you must have compound interest. Compound interest basically means that you build interest upon interest, and it works perfectly with age. So the longer period you have ahead of you, the looks the better it grows.
Speaker 2:I mean, it just grows with time.
Speaker 1:It grows with you. Yes, so it doesn't matter whether you're in Ghana, you're outside Ghana, whatever country you find yourself, they are compound interest investment. In Ghana we call it the personal investment plan, for most of the pension companies, or some banks even do that. If you're a young person you're around 25 years start something. You can decide to even do 50 CDs every month. What I always tell people is that, because we know of inflation, this kind of investment has what you call inflation protector. So it means that every year or every time, you can decide to increase the amount you are contributing by looking at inflation and as you do that, you see that the fund will also be growing over a period of time.
Speaker 1:So if you're a young person, you just started your first job. I mean, buying a car is nice, building a house is nice, but when you buy the car, you build a house and that is not generating any revenue for you. When you go on retirement, you struggle. You gotta forget. Research shows that when you are even paying snits and go on retirement, whatever snit is giving you is just covering about 67 percent of your living expenses, my God. So they're remaining about, let's say, 30. 5%, 5%. Who covers for that. And don't forget, when you go on retirement. That's where you go to the hospital very frequently and you need to chill. No stream of income is coming beyond your snitch. So that's why they've created this additional one, so that you can contribute into it and you don't need much to go into that beyond your other investment that you are doing.
Speaker 1:So for me, that's one of the things I would advise people to do and consider. I have multiples of that because I think that, however upbringing that I came from by way of my family, I expect my children to have a better one. So if they should have a better one, they start with me. I have to take their step today. I don't have to wait for them to come and blame me tomorrow, not to say I'm blaming my dad, but at the time, if that option was there, I'm sure we'd have done it, and today, by the time I would have finished university, I would, and 500,000 cities waiting for me to start life with.
Speaker 1:Assuming you have that for your child to start life, the child is starting life with something that they can comfortably use to build and create better wealth. Wow, but we start or put our children by starting life from most of us from a valley. So your child is standing in a valley and he's competing with someone who is standing on the mountain. By the time the child gets to the mountain, the guy is already 60 years. He's going on retirement, wow.
Speaker 2:I hope you get the point. Yeah, that was a good analogy.
Speaker 1:Yes. So put the child on the mountain at the time they are ready to start work. Let them progress from there. Don't put them in a valley by not taking the steps today.
Speaker 2:I love that. Thank you man. I love that. Thank you man. I received that. What's the best advice you've ever received?
Speaker 1:don't let people see that you are in need of money. That's the best advice someone told me. Don't let people see that you need money from them. When people see that you need money from them. When people see that you need money from them, they take advantage of you. They don't respect you, so don't create that opportunity and avenue for them where they see you, as in quotes, a beggar requesting or needing some money from them. That's the best advice.
Speaker 1:So, whatever you you do, every financial decision you take, ask yourself will this decision help me to stand on my own and not to be seen as needing someone for money? That's the best advice. So that means that if you are working for someone, you don't eventually rely on your salary. The moment you have to wait for your salary to hit your account before you spend or you get something to spend in the month, you're not there yet. Get to a point where, even if your salary delays for two months, three months, you are comfortable. In that way, people respect you. Otherwise, nobody respects you, no matter who you are. Once you get to the point where you need people to support you with money or you need to fall on people for money, there's no respect, you lose respect. It's gone.
Speaker 2:And you can't recover. Wow, yes, motivation or discipline. Discipline Senior. I'd like you to recommend a book on self-improvement money finance business.
Speaker 1:I think it's a book that most people have talked about so many times.
Speaker 2:Richard R Porter, I knew you were going to say that I knew you were going to say that for me it's a classic when you talk of books, just like we have for movies.
Speaker 1:For me, Rachel Dalport, that is a classic. It changes your mindset. You get to see life from developing and creating assets, liabilities. Once your mindset is always how can I create an asset? How can I create an asset to generate income for me? You don't take certain decisions. So that's the book that I recommend. Once you get that book sorted out, I'm sure others can just be an addition to it.
Speaker 2:You heard it here. Thank you so much for your time, my pleasure. The circumstances on which we had this conversation today the viewers will never get to know, but it was divine. Thank you so much. My name is Derek Abayite and you've just heard everything you need to know about financial planning and budgeting, and I hope you put this into practice Because, as he also said, discipline is more important than motivation, and that is what is going to allow you to stay ahead of the game. Don't forget that. If you made it to the end, I really want to know in the comments. Thank you so much for your time and share this for somebody else to also get to see you. My name is Derek Abaiti. Stay connected, I'm out.