Kweku (not his real name) is a middle-income earner who works as a teacher in one of the basic schools in Ghana. He usually goes out on Friday nights with a few friends at a regular spot, where they discuss life events over a few bottles of drinks. This outing is referred as “Sitting” by Kweku and his friends. At one of these sittings, the topic of investment was raised. One of Kweku’s friends, Kwame who usually sponsored the Friday nights’ siting explained that he knows an investment opportunity that yields high returns with very little risk. Kwame added that this investment yielded a return of 10% per month on every amount invested. According to Kwame, he Invested GHS 50, 000.00 in the investment opportunity and has been getting GHS 5,000.00 as interest every month. He further added that this investment has become his main source of income and needed not to work anymore. Kweku was intrigued, he had never heard of an investment opportunity that promised such high returns with such little risk.

Kweku later went for a loan of GHS 20,000.00 from a bank and invested the sum in the newfound investment scheme, and for the first few months, he received his promised returns. He was excited to see his money growing so quickly, and he started telling his friends and family about the investment opportunity.

But soon, things started to unravel. The promised returns stopped coming in. Kweku started to panic, and he tried to get his money back. But it was too late. The investment scheme had collapsed, and Kweku had lost all of his money.

Kweku was devastated, he had been lured into the Ponzi scheme by the promise of easy money, and now he had nothing to show for it. His relationship with his friend Kwame deteriorated after his ordeal. He learned a valuable lesson about the dangers of get-rich-quick schemes. In the end, Kweku was able to rebuild his finances through hard work and smart investments. But he never forgot the lesson he learned about the dangers of Ponzi schemes, and he made sure to warn others about the risks of falling for such schemes.

A Ponzi scheme is a fraudulent investment scheme in which returns are paid to earlier investors using the capital contributed by newer investors rather than legitimate investment returns. These schemes rely on the constant recruitment of new investors to generate funds for the promised returns to existing investors. Eventually, the scheme collapses when it becomes impossible to recruit enough new investors to pay off the earlier investors, resulting in significant financial losses for everyone involved. Unfortunately, Ponzi schemes are a global problem, and Ghana is not immune to them. There have been several Ponzi schemes in Ghana in recent years that have defrauded people of their hard-earned money.

Here are some red flags associated with Ponzi schemes:

I. High returns with little to no risk: One of the key features of a Ponzi scheme is the promise of high returns with little to no risk. This is an unrealistic promise and should be a warning sign. The return from such investment sound too good to be true.

II. Overly consistent returns: Ponzi schemes often provide consistent returns, no matter what market conditions are like. This is because the returns are not actually generated by legitimate investment activities, but rather are paid out of the funds contributed by new investors.

III. Unregistered investments: Ponzi schemes are often unregistered with regulatory authorities, which means they operate outside the bounds of legal investment vehicles. If an investment opportunity is not registered, it may be a sign of a Ponzi scheme.

IV. Lack of transparency: Ponzi schemes often lack transparency in terms of the investment strategy and how the returns are generated. If the investment opportunity is unclear or the operator is reluctant to provide detailed information, this could be a red flag.

V. Pressure to invest quickly: Ponzi scheme operators often pressure investors to invest quickly to take advantage of a limited-time opportunity. This is done to prevent investors from conducting due diligence and discovering that the investment opportunity is a scam.

VI. Complicated or secretive strategies: Ponzi schemes often use complicated or secretive strategies to explain how returns are generated. These strategies are often impossible for investors to understand or verify.

It is important to note that the presence of one or more of these red flags does not necessarily mean that an investment opportunity is a Ponzi scheme. However, if several of these red flags are present, it is important to exercise caution and conduct thorough due diligence before investing any money.

Here are some tips for avoiding being lured into a Ponzi scheme:

A. Do your research: Before investing in any opportunity, be sure to do your research. Look up information about the investment, the company, and the individuals running it. Check if the investment is registered with regulatory authorities.

B. Be skeptical of high returns with little risk: Be wary of any investment that promises high returns with little to no risk. Remember that there is no such thing as a free lunch. Investments that offer high returns generally come with higher risk.

C. Verify the investment strategy: Ask for detailed information about the investment strategy and how the returns are generated. If the explanation is vague or overly complex, this could be a red flag. Verify the information with an independent third party.

D. Avoid investments with pressure to invest quickly: Be cautious of any investment opportunity that pressures you to invest quickly, especially if the pressure is accompanied by promises of high returns. Take your time to evaluate the investment opportunity and do your own research.

E. Be careful with unregulated investments: Be cautious of unregistered investments. Regulatory authorities require investment opportunities to register and provide detailed information to the public. Unregistered investments may be operating outside the law.

F. Be wary of complex investment structures: Be wary of investment structures that are overly complicated or difficult to understand. Ponzi schemes often use complex investment structures to confuse investors and make it difficult to uncover the fraud.

G. Get independent advice: Seek advice from a qualified financial advisor or investment professional before investing. An independent professional can help you evaluate the investment opportunity and uncover any red flags.

By following these tips, you can help protect yourself from Ponzi schemes and other investment frauds. Remember that if an investment opportunity sounds too good to be true, it probably is. Be cautious and take your time to evaluate the investment opportunity carefully.

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Axis Pension Trust partners workers throughout their retirement planning journey to ensure they are on track to achieve a dignified retirement. For more information on our services or general enquiries, send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. or call 030 273 8555.

Ghana is facing what some economists term the worst-ever economic crisis since the 1980s. The country is engulfed with high inflation, cedi depreciation, high public debt rising to 95% of GDP, and on top of it all debt distress. What has even made greater waves and has been a major topic for discussion is the government domestic debt exchange program, which has been referred popularly as 'haircut'.

These issues have not only caused hardships for Ghanaians but have also affected investment and growth in the country. Despite these challenges, there are several important lessons that we can learn from Ghana's economic situation. In this article, we will explore key takeaways from the current economic situation in the country and how they can help us in making financial/investment decisions.

I. There is no Risk-Free Investment.

Most of us were taught in school that investing in government securities like bonds and treasury bills came with no risk. Almost every piece of literature on finance equates government securities to a risk-free investment. We were made to believe that government is the safest borrower. You will sometimes hear finance professionals saying that "when a current government borrows and is not able to pay another government will come and pay". The current economic crisis has "lifted the veil" on this assumption and highlighted the fact that every investment comes with a certain level of risk. That is why you receive returns on your investment as compensation for postponing your consumption. The government's Domestic Debt Exchange program means that investors will not be able to realize all the returns on their government bonds. What you should have in mind as an investor is that every investment vehicle carries a form of risk, no matter how juicy the returns may be.

II. Know your Risk Appetite

When it comes to taking risk to earn returns, different people have different attitudes. Investments giving lower returns normally come with lower risk. On the other hand, investment with higher returns involves taking higher risk. How did you react as an investor when you first heard about the government's debt exchange program or you saw a drop in your investment returns? This is the best time to understand your risk appetite and the kind of investment suitable for you. Every investor will either be a risk lover, risk averse or neutral to risk. A good understanding this will help you to choose a suitable investment portfolio that will give you financial peace of mind even in a period of economic turmoil. Speak to a trusted financial advisor to understand your risk appetite.

III. You MAY NOT always have Positive Returns.

Investing money can be both rewarding and risky. It can bring financial security and freedom, as well as a sense of accomplishment. Unfortunately, when it comes to investing, there are not always positive returns. Understand that the investment market can be unpredictable and the potential for losses is real. Even the most experienced investor can find themselves in a difficult situation if the market takes a sudden turn. It’s important to understand that there are no guarantees when it comes to investing and that it’s important to be prepared for a range of outcomes. Due to the country’s economic problems, a lot of investment schemes are making losses which are really expected in a period like this. However, it does not call for making panic withdrawals by liquidating your investment. Once the economy returns to normal and there is growth, your investment will start having appreciable returns. Knowing your objectives, the risks involved and having a strategy in place can help to minimize losses and maximize returns. Armed with this knowledge, you can make smart investment decisions that will help you stay on track to reach your financial goals.

IV. Diversify your Investment

The main objective for investing your hard-earned money is to create a financial cushion and build wealth over time. Ghana's economic woes have widened the need for proper diversification of your investment. You might have heard the popular saying "do not put all your eggs in one basket". You may have been a victim of the current economic situation if you had all your funds in one investment instrument. It is very important to diversify your investments to ensure that your money is well spread across different financial securities to minimize market volatility and potential. Diversifying can be one of the most important steps in successful investing, as it allows you to spread your money across different asset classes, industries, and even countries. With careful planning and research, a diversified portfolio can help you to reach your financial goals.

V. The need for Liquidity in financial planning.

Liquidity is an essential factor in investing, especially during challenging economic times. It helps investors to maintain flexibility and manage risk, ensuring that they are better equipped to navigate market uncertainties and make informed investment decisions. Liquidity simply refers to the ease with which an asset or financial instrument can be bought or sold for cash without affecting its market price. As the investment environment continues to evolve, the need for liquidity has become increasingly important for investors, businesses, and financial institutions. Whether it is for managing risks, meeting cash flow needs, or making investment decisions, the availability of liquid assets can play a crucial role in financial success. In uncertain times, the availability of liquid assets can help investors to meet their short-term cash needs, such as paying bills or covering unexpected expenses, without having to sell investments at a loss. One surest way to ensure you have liquidity in uncertain times is to have an emergency fund that is easily accessible.

The country is going through economic challenges which has caused a lot of uncertainties especially in the investment space. These key lessons will help shape your financial and investment decisions. It is very important that you speak to a financial advisor to assist you make a well informed decision in this period of economic uncertainty.

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Axis Pension Trust partners workers throughout their retirement planning journey to ensure they are on track to achieve a dignified retirement. For more information on our services or general enquiries, send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. or call 030 273 8555.

Bonds are fixed income investments which allow an investor (the holder) to lend money to a government (issuer) or another entity (issuer) for a set period of time. Bonds are described as fixed income because investment in bonds earns fixed payments over the life of the bond. Bonds are often issued by governments and corporate entities. Corporate entities issue bonds to fund existing operations, brand-new initiatives, or acquisitions. Governments sell bonds to raise money and complement their tax revenue. By purchasing a bond, you become a debtor of the organization issuing the bond.

In a bond contract, the issuer owes the holder a debt and is required, depending on the terms, to pay the bond's creditor cash flow (also known as principal) at the bond's maturity date as well as interest (also known as the coupon) over a certain period of time. Depending on the economic value that is stressed, the period and amount of cash flow given changes, giving rise to various types of bonds. The interest is typically due at predetermined intervals, such semiannually, annually, and less frequently at various times.

I. Bond Features

• Maturity Date: The date on which the bond issuer returns the money lent to them by bond investors. Bonds have short, medium or long maturities.
• Face Value: Principal or face amount is the amount on which the issuer pays interest, and which, most commonly, has to be repaid at the end of the term. Some structured bonds can have a redemption amount which is different from the face amount and can be linked to the performance of particular assets.
• Coupon: The coupon is the interest rate that the issuer pays to the holder. Coupon rates can be fixed or flexible. For fixed rate bonds, the coupon is fixed throughout the life of the bond. For floating rate notes, the coupon varies throughout the life of the bond. Interest can be paid at different frequencies; generally semi-annual (every 6 months) or annual.
• Yield: The yield is the rate of return on the bond investment. Yields refer to a bond’s coupon divided by its market price. While coupon is fixed, yield is variable and depends on a bond’s price in the secondary market and other factors.
• Price: Bond price is the present discounted value of future cash stream generated by a bond. It refers to the sum of the present values of all likely cash inflows from the bond. Bonds have two prices in the fixed income market; the bid and the ask. The maximum price a buyer will offer for a bond is called the bid price, whereas the lowest price a seller will accept is called the ask price.

II. Risks Associated With Bonds

Bonds are frequently regarded as a secure investment, especially when compared to equities, and can be a fantastic way to create income. However, holders of corporate and government bonds should be aware of any potential risks. The following are some risks associated with bonds:

• Default Risk: The possibility that the issuer of a bond security will not be able to pay interest and/or principal on time and adhere to the terms of a bond indenture is known as credit/default risk. The likelihood of a credit or default risk depends on the issuer's creditworthiness and capacity to pay its debts. Credit rating and yield have a negative relationship. Higher yields are offered by issuers with lower credit ratings in order to offset higher credit risk, and vice versa. The value of the issuer's outstanding fixed-income instruments is impacted by changes in credit ratings.
• Interest Rate Risk: Interest rate risk is the possibility of investment losses caused by an increase in the going rates for brand-new debt instruments. The inverse link between interest rates and bond prices is the first concept a bond buyer needs to comprehend. Bond prices increase as interest rates decrease. Bond prices, on the other hand, often decline as interest rates rise. This occurs because investors strive to lock in or capture the highest rates possible for as long as they can when interest rates are declining. To achieve this, they will purchase current bonds that offer interest rates above the going market rate. Bond prices rise as a result of this increase in demand. The link between yield and interest rate is, nonetheless, favorable.
• ReInvesment Rate Risk: Reinvestment risk, or the risk of having to reinvest proceeds at a lesser rate than what the funds were previously earning, is another threat bond investors face. One of the main ways this risk presents itself is when interest rates fall over time and callable bonds are exercised by the issuer.
• Price Risk: Price risk occurs when an investor does not receive the expected price when selling a bond or other debt security in the secondary market because of a negative fluctuation in prices. Since they must rely on the security's current market price, which may be greater or lower than the price they initially paid for it, investors who want to access the security's principal amount before its maturity date should pay particular attention to this.

III. How Are Bonds Valued?

Bond valuation is a method for determining a bond's potential fair value or price. Bond valuation entails determining the face value or par value of the bond as well as the present value of the bond's future interest payments, sometimes referred to as its cash flows.vA bond's market price is determined by discounting its yield to maturity by the present value of all anticipated future interest and principal payments (i.e. rate of return).

The bond's redemption yield is determined by this relationship, and since there would otherwise be chances for arbitrage, it is expected to be close to the current market interest rate for other bonds with comparable features. Bond prices fall when market interest rates rise and vice versa because the yield and price of a bond have an inverse relationship. This approach of valuing bonds is known as mark-to-market (MTM). A portfolio that is marking-to-market could experience volatility based on market conditions.

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Axis Pension Trust partners workers throughout their retirement planning journey to ensure they are on track to achieve a dignified retirement. For more information on our services or general enquiries, send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. or call 030 273 8555