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Negative Investment Culture: Reasons Ghanaians Don't Invest As They Should

Calif King Aug 13, 2024 ยท 5 min read
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Many Ghanaians are not so much into investments as a way of building wealth. Understandably, they may have their reasons. What I bring to you today are some of the concrete reasons why investments are far away from the minds of many Ghanaians today.

Before that, let us take a look at some pros and cons of investments in general.

PROS

  • Potential for wealth growth and financial security.
  • Opportunity to generate passive income.
  • Diversifies financial portfolio, reducing risk.
  • Helps to combat inflation by increasing asset value over time.

  • CONS

    • Risk of losing the initial capital.
    • Returns can be uncertain and take time.
    • Requires knowledge and research to make informed decisions.
    • Investments may be subject to market volatility and economic downturns.


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      Okay so let's dive in. The question is "Why don't Ghanaians invest as they should?". The reasons are as follows:

      1. Limited Financial Literacy

      A lack of understanding around investments and finance can lead to under-participation in the sector. Many Ghanaians are unfamiliar with stock markets, mutual funds, or even the benefits of entrepreneurship and this has left a gap (one InvestGHub seeks to fill) in local investment by citizens.

      2. Economic Volatility (Uncertainty)

      Economic volatility here in simple terms means how uncertain the price of a good or a financial product is. Ghana as a developing country faces economic fluctuations due to cedis depreciation, inflation, and unpredictable commodity prices. Local investors are know and observe these activities, which can diminish returns and increase the unpredictability of investments.

      3. Changes in Policies By Different Governments

      Uncertainty surrounding political changes and governance often discourages investors. Concerns about shifting policies, corruption, and weak institutions make long-term investments feel riskier in comparison to more stable economies. For instance, a well-known local investor got many of his assets frozen and locked up by a government who did not side with the investors political affiliations.


      NOTABLE MENTION

      Fear of Fraudulent Operations

      Many Ghanaians do not invest as they should due to once being defrauded by an investment scheme, or may have witnessed how family, friends and the general public were defrauded in investments. A typical example is the Menzgold and DKM investment saga.



      All said and done...

      So you now see why. I earlier told you Ghanaians had their reasons. Nevertheless, my advice to you reading this piece is that, investment is good (check the PROS) above. All you need to do is invest wisely and diligently. Follow honest and experienced platforms like ours to make sure that you make positive returns from your investments.
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