There are seasons which call for spending and there also seasons that call for investment. All of us cannot belong to the same season. Some will have their season today and others will have their season tomorrow. Therefore, we need to find out whether we have invested enough to warrant spending. Some of us also go on expenditure sprees without considering whether we have invested enough to spend.
We also put on record that the year 2019 may be good for some and not too good for others. The reason is that there are seasons in life and we require to learn how to trade-off pleasure today for comfort tomorrow. For us to trade-off comfort today means that we need to make investment a way of life or culture in order to achieve our financial goals and create wealth.
Imagine if individuals, governments, companies begin to see investments as a way of life or culture, so that whatever income they earn – either from employment, business and/or taxes respectively – a certain percentage is set aside for investment purposes to take care of the future. What would the societies and individual families be like when such a situation occurs in every economy?
Culture directs individuals and societies to behave in a certain pattern over a period of time. It is difficult for a person to be changed or influenced by another way of life. It takes a lot of time to change the perceptions or belief of a person overnight. Culture is a way of life, especially the general customs or beliefs of a particular group of people at a particular time. This means one is enjoined to practice or live by a set of principles or customs or beliefs of the group or community in order to be happy or accepted. This calls for conscious efforts by individuals to remain disciplined, respectful and abide by the set of beliefs in the society.
Even though investments have been mentioned several times by government, banks, companies, individual etc., we still lack the discipline, commitment, determination and the willingness make investment a way of life, as we often see among individuals abiding by the rules and regulations governing communities or societies, or even countries in general.
This suggests that for us to see phenomenal improvement in our finances, we must endeavour to make investment a way of life. When this occurs, individuals, businesses and countries would then rationalise or review their expenditure regularly so as not to spend more than the income we earn; and then not have the excuse of not investing a percentage of our income daily, weekly, monthly depending on how much income one receives.
If you visit any of the savings and loans companies, banks and non–bank financial institutions, you will be amazed how companies, individuals and governments constantly borrow to finance one project or another.
This article is not saying we should not borrow, but if you do a critical review of past or current expenses regarding income earned by individuals, companies and governments, you will realise that some of the expenses were not necessary – and if avoided the total amount could have been equal to loans borrowers are requesting from the banks; or in the case of individuals, the amount wasted could have been equal to the loan a person is requesting to pay for rent or buying a car or building a house. In the case of countries, the budget deficit level will then be within a limit that is acceptable and not one that brings about self-inflicted financial crises.
It is only when we make investment a culture that the financial crises we go through regularly will be a thing of the past; even though borrowing to finance a project is not bad, we should borrow at a time when we know we have the capacity to pay back on time.
When we talk of investment, what are we really referring to? What are we looking at? What are the things that we need to do when we talk about investment?
According to the Oxford Dictionary, to invest is to use money, time etc. to earn interest or profit or reward. According to Norton and Reilly (1999) investment is the current commitment of cash for a period of time in order to derive future payments that will compensate the investor for:
- the time the funds are committed
- the expected rate of inflation
- the uncertainty of future payments
Investment cannot be mentioned without talking about time-value of money, which refers to a cedi today being worth more than a cedi tomorrow. For example, whatever you can buy with GH¢1 today can buy less tomorrow due to inflation; and therefore there is a need to invest whatever resources re in one’s possession, so you can do whatever you want in future without having to experience change in prices.
In life, everybody has one dream or another; and as a result people invest for several reasons, some of which include:
- Protection against the effects of inflation
- Financing education
- Financing personal projects
- Financing business/ capital projects
- Giving children a head-start in life
FOLLOW OUR MONTHLY PUBLICATION ON MONDAY 27TH MAY 2019 FOR THE NEXT PUBLICATION. SIGN ON TO OUR INVESTMENT PLAN TO MEET YOUR FINANCIAL GOALS AND AVOID FINANCIAL CRISIS TOMORROW.
Statements and opinions expressed in the article or review herein are those of Glorygate Capital Limited. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Glorygate Capital Limited will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within this article or review.