Business Development Manager (BDM) at Fidelity Securities Limited (FSL) – the asset management arm of Fidelity Bank – Sophia Kafui Teye, has admonished workers in the country, particularly young professionals, to do away with a sense of financial security that is built on highly mutable factors such as current employment; as it could leave them sorely exposed in the face of an adverse shock.
“Many believe that they are financially independent and secure because they are gainfully employed. But in the short term, say six months, would loss of a job lead to inability to afford the basic necessities and live a dignified life? At retirement, will you need to re-enter the rat race of getting to work at 8am and closing at 5pm?
“What is the source of your supposed financial independence? Is it your job? The cash flows from that, what are you doing with it? If it is your business, are you really investing? Have you insured it?” Teye quizzed at a recently held ‘Fidelity Presents…’ webinar jointly organised by Fidelity Bank, FSL and the Ghana Investment Promotion Centre (GIPC).
She however advised that potential investors undertake due diligence and engage the services of trained professionals who can aid them in deciding on a basket of products that is commensurate with their risk profile, investment objective and time-horizon.
“We keep drumming the need for financial independence and the need to invest to achieve it, and sometimes this leads people to invest in questionable market players. An investor should do due diligence by enquiring if the entity is licenced, in good standing, is accountable and practices good corporate governance. We cannot say this enough, but investors must be wary of investment schemes which offer suspicious, super-normal rates of returns,” she added.
Taking his turn, Head-Enterprise Banking, Commercial and SME at Fidelity Bank, James Orraca-Tetteh, stated that while factors such as level of expertise and book-keeping are crucial for obtaining credit facilities, lenders are most concerned with the creditworthiness of the borrowing entity.
He therefore warned operators of SMEs to desist from soiling their creditworthiness, saying: “For example, if as an individual at the start of life I borrow money from my friend and decide not to pay back, it becomes part of me; I grow and take it into the industry. But mind you, the industry is a small community and the country is a small place, and word goes round quickly. Character is important; an SME might be doing well, but a lot rises and falls on how creditworthy it is”.
The Director in charge of Investment Relations at GIPC, Edward Ashong-Lartey, highlighted the Centre’s track record in attracting investments into the country, and reiterated his outfit’s commitment to supporting business.
On his part, the Head of Fidelity Securities Limited, Akwasi Adu-Boahene, cautioned against the use of debt to acquire equity, particularly for individuals and small businesses, saying: “Any time you invest in equity you have underwritten the risk; and the value of equities can go up or down. Now you have taken a loan and obligations are fixed. If investments are low and you are not getting dividends to repay, the lenders will not be happy with you; so it is not advisable to use that strategy”.
At the webinar, which was on the theme ‘Personal Finance and Business Opportunities for Financial Independence’, all the panellists unanimously emphasised the role of financial literacy in attaining financial independence.
Speakers at the webinar