A senior lecturer at the University of Ghana Business School, Dr Elikplimi Komla Agloyor has warned Ghanaian investors to resist investing in portfolios that offer extreme returns.

According to him, extreme returns come with extreme risks which lure investors into schemes where they risk losing their entire investment.

He explained that as Treasury bills currently offer 20% interest yearly, any debt instrument that offers more than 50% return on investment has very high risks which investors must avoid.

Similarly, he said, any money market product promising more than 30% return on investment annually should not be patronized by investors.

He sounded the warning at a webinar organized by Tesah Capital on the topic 'Investing after the financial sector clean-up'.

 Dr Agloyor, therefore, said that investment products offering 10% monthly returns, which translates into over 100% annual returns, are not sustainable and investors must shun such companies.

“Don’t chase abnormal returns. What returns will we classify abnormal? For example 10% a month. I think it’s abnormal, but currently if you buy Treasury bill instruments, they’re going for between 12 and 13%…that’s understandable; that’s not like 120% a year.

“Or if you’re doing the equity market, the average return you could get is probably 20% a year.

"These are returns that also compensating you for inflation. Beyond that, I think you should be careful,” he added.

Dr Agloyor advised the investing public to practice risk reduction by diversifying their investments across sectors, take risk mitigation measures such as emergency funds, choose low-risk investments, transfer risk to third parties, and take up life insurance, among others.

For diligence, he asked investors to verify the license of companies, check if the company has issues with the regulator, pay attention to qualification of directors, board members and management staff, and investment performance, among others, before investing with a firm.

Eugenia Basheer, Managing Director of Tesah Capital, said the company believes that the more money knowledge people gain, the more empowered they become to take the right decisions with their investments.

She added that at Tesah, good corporate governance is core to its dealings, successes and future, promising a partnership with clients to growing generational wealth.

According to her, though the financial sector clean-up may have achieved its objectives, like any battle, there have been casualties, losses and consequently fear.

As a result, she said, many people understandably are apprehensive about investing, describing it as a natural human response to what happened in the market.

However, she explained that not investing could result in missing many positive benefits to improve one's standard of living and create generational wealth.

Basheer said investing is the only proven way in which investors sit and watch their money grow for them, saying investing has not lost its benefits

She said the Tesah zero account, which allows for opening investment account with no initial deposit, was introduced to gently initiate investors into the habit of investing.

This account gives investors access to research information and investment advisors, and when the investor is ready to fund the account, the investment advisors will assist clients to choose the right investment vehicles to grow the wealth.

 Tesah Capital

Tesah Capital Limited (formerly NDK Capital Limited) was incorporated in 2010 under the laws of Ghana to provide fund management services to pension trustees, financial and non-financial institutions, corporates and individuals.

It is licensed by the SEC as an investment advisor and fund manager and registered by the National Pensions and Regulatory Authority (NPRA) as a Pension Fund Manager.

The company is the investment gateway to Africa as it has grown its capabilities to meet the needs of clients over time and offer alternative ways to achieve investment growth and capital preservation.