When most Ghanaians think of investing, their minds often go to Bonds. Bonds offer individual investors the opportunity to build long-term, passive income which, when reinvested, can lead to long term wealth creation. While they don’t promise the adrenaline rush of sudden stock gains, they offer predictable, reliable income.

What is a Bond?

At its core, a bond is a loan. When you buy a bond, you’re lending money to the issuer (the entity receiving the loan). In exchange, the issuer (government, municipality, or a company) promises to pay you interest at regular intervals (usually bi-annual) and return your initial investment at the end of a fixed period called the maturity date. This simple structure is what makes bonds such a reliable tool for passive income/wealth building with lower risk compared to other asset classes.

Predictable Income

One of the main reasons investors turn to bonds is their predictability. Unlike stocks, which periodically pay dividends based on the company’s performance, bonds pay a fixed interest rate which is pre-determined in a contract note. Both stocks and bonds fluctuate in the secondary market. However, stock prices are generally more volatile due to earnings sensitivity and market sentiment, whereas bond prices, primarily driven by interest rates and credit risk, tend to exhibit comparatively lower and more stable price movements, particularly for high-quality issuers. For someone building passive wealth, this means you have a reliable stream of income that works for you automatically, whether you reinvest it or use it to cover expenses.

While no investment is entirely risk-free, bonds are generally considered safer than stocks. Government bonds are backed by the full faith of the issuing government, making default extremely rare. Bonds issued by companies (corporate bonds) tend to carry lower risk compared to equities, but this is usually dependent on their credit rating. Investment grade bonds tend to carry less risk, whereas junk bonds can be even more risky than equities. This stability makes bonds the ideal foundation of a passive wealth strategy. They protect your capital while still generating income, giving you peace of mind as your portfolio grows.

Are Bonds Entirely Risk-Free?

The short answer is no. Although bonds are generally considered lower-risk instruments relative to equities, they are entirely not risk-free.

Every investor seeks to generate attractive returns that align with a specific financial objective. However, the approach used to achieve those returns can vary significantly. Two of the most widely adopted investment styles—growth investing and value investing—are designed to serve different objectives and often reflect an investor’s underlying beliefs about individual securities and the broader market.

This raises a fundamental question: which investment strategy best aligns with your goals?

Growth Investing

This approach focuses on investing in shares of companies that are expected to achieve high growth rates in the future. Such stocks are typically characterized by strong revenue and earnings growth, even when their prices trade at a premium relative to their current earnings.

The underlying rationale is that these companies have the potential to generate significant capital appreciation over time and thus investors are willing to pay a premium to own them, often leading to high price-to-earnings (P/E) ratios.

Growth investing offers several advantages, including:

1. Above-Average Return Potential: These  companies  typically reinvest earnings to scale operations, develop products, or enter new markets. If successful, they can outperform the market, providing their investors with significant gains.

2. Exposure to Innovative and Expanding Sectors: Investors can benefit from identifying and investing in innovative companies within emerging, high-growth industries such as technology or renewable energy, which can outperform the broader market during expansionary periods.

3. Capital Appreciation: Market participants become increasingly optimistic about their growth potential, often leading to capital gains for investors who hold these stocks over the long term.

Some cons associated with growth investing include:

1. Higher volatility: Valuations are heavily dependent on future growth expectations, making prices more sensitive to earnings surprises and shifts in investor sentiment.

2. Execution Risk: Expected returns are heavily dependent on the ability of the management team to successfully deliver on their growth strategies which may not always produce the desired effect.

3. Market Cycle Sensitivity: Growth stocks tend to underperform during economic slowdowns or periods of rising interest rates, when investors favor more defensive assets.

Investment decisions are often shaped by familiar macroeconomic factors such as global trade tensions, exchange-rate movements, and inflation, as well as microeconomic drivers like rising production costs and higher financing expenses. However, one equally powerful influence is often overlooked: the role of psychology in shaping how investors interpret information and make decisions.

Psychological factors play a critical role in shaping investment behavior, affecting how individuals assess risk and evaluate opportunities. Even when fundamentals point clearly in one direction, biases and emotions can lead investors to act irrationally or prematurely. Biases such as loss aversion and overconfidence, along with emotional influences like stress or social pressures, can push investors away from objective analysis, affecting performance over time.

What are Behavioral Biases?

Behavioral biases are systematic patterns of deviation from rational judgment that influence how individuals make investment decisions. They often lead to suboptimal choices relative to an investor’s stated objectives, ultimately affecting financial performance.

Behavioral biases generally fall into two categories: cognitive biases and emotional biases. Both can influence even the most experienced investors, as they are rooted in ingrained beliefs, perceptions, and emotional responses.

Cognitive Biases

Cognitive Biases arise from flawed reasoning, often due to statistical misunderstandings, limitations in processing information, or memory distortions. These errors are generally easier to correct through improved information, education, or professional guidance. Common cognitive biases include:

1. Confirmation Bias

Confirmation bias occurs when investors seek out or place greater weight on information that supports their existing beliefs about an asset or strategy, while disregarding evidence that contradicts them. This often reinforces overconfidence, as investors become increasingly certain of their positions without objectively assessing all relevant data. It helps explain why bullish investors tend to remain bullish and bearish investors remain bearish, even in the face of market movements that should challenge their assumptions.

In recent times, the Financial Independence, Retire Early (FIRE) movement has gained significant global traction. Popularized in the 1990s by Joe Dominguez, a former Wall Street analyst who retired at 31 and co-author Vicki Robin through their book, “Your Money or Your Life”,  FIRE encourages individuals to live frugally, save aggressively, and invest wisely to retire decades earlier than usual.

At its core, the movement the redefines money as a tool to reclaim time and enjoy the freedom that comes with early retirement. Most often the current benchmark amount for retiring is 25 times your annual income, however, this may differ based on individual preferences. While this idea of early retirement seems incredible, one must be mindful of the economic and cultural context of their country in order to ensure effective implementation. Ghana for example poses unique threats and opportunities that may affect one’s aim of pursuing FIRE and understanding these nuances is critical for a smooth implementation of FIRE.

 BARRIERS TO FIRE IN GHANA ?

Economic Instability – Ghana’s macroeconomic landscape is often unpredictable. Fluctuating interest rates, unexpected sharp currency depreciation and appreciation, inflation rates and the high cost of living (especially food, rent and fuel prices) can pose a challenge to your ability to save and even undermine the returns of your current investment. Again, during the Domestic Debt Exchange Programme (DDEP) in 2023, many Ghanaians lost expected interest or faced extended maturity periods on their government bonds which affected plans for early retirement. Despite these challenges, the opportunity presents itself to hedge against these through having a diversified portfolio to prevent major losses when one avenue falls short.

Black Tax –  In Ghana, just as in many African cultures, there is a strong sense of communal responsibility. This often results in what is informally known as “black tax”, where professionals and higher earners are expected to financially support their extended family. While giving is commendable and culturally significant, when left unchecked, giving can nullify wealth accumulation efforts. Setting boundaries, such as a fixed monthly support budget, and involving family in financial planning discussions, can reduce strain and preserve long-term goals.

STRATEGIES FOR IMPLEMENTING FIRE

Despite the obstacles, implementing the strategies below with intentionality and discipline can enable you to achieve your desired retirement goals.

PRIVATE EQUITY & VENTURE CAPITAL: ALTERNATIVE AVENUES FOR WEALTH CREATION

In today’s dynamic investment landscape, diversification remains key to achieving sustainable wealth. While traditional options such as real estate, treasury bills, and mutual funds are widely used, alternative investments like Private Equity (PE) and Venture Capital (VC) are becoming increasingly attractive. These asset classes offer investors the opportunity to participate in the growth and transformation of private businesses — often with the potential for higher long-term returns.

Private Equity

Private Equity (PE) involves investing in established companies that are not listed on a public exchange. PE firms typically acquire significant or controlling stakes in these businesses with the aim of improving operations, driving profitability, and eventually exiting at a higher valuation through a sale or public offering.

Venture Capital

Venture Capital (VC) is a branch of PE that focuses on startups and early-stage companies with strong growth potential but limited track records. VC investors provide funding and guidance to help these businesses scale, often in exchange for equity ownership. Although risk levels are high, successful investments can yield exceptional returns.

Cryptocurrency (Crypto) is a form of digital currency that uses cryptographic techniques to secure the transmission and storage of data and to control the creation of new units. Unlike physical cash, cryptocurrencies exist solely in digital form.

Owning Crypto means holding a private key that allows you to transfer units from one party to another across a decentralized network – one that does not rely on a central authority or intermediary and is maintained by a distributed community. Every transaction is recorded and updated on a blockchain, ensuring accuracy and bolstering trust among participants.

Since the launch of Bitcoin (the first and most widely used cryptocurrency) in 2009, thousands of cryptocurrencies have emerged, each offering different features and use cases. While cryptocurrencies have existed for over a decade, the broader applications of blockchain technology, especially in financial services, are still evolving, with significant innovation and adoption expected in the years ahead.

Benefits of Cryptocurrency

1.High growth potential – Cryptocurrencies have historically offered investors significantly higher returns compared to traditional investments, often over shorter timeframes. For example, Bitcoin rose from US$0.90 in 2010 to around US$105,816 by mid-June 2025.

2.Decentralization and Financial Independence – Unlike traditional financial systems, cryptocurrencies are not controlled by any single government or institution. This offers greater autonomy, enabling individuals to manage wealth, conduct transactions, and access services without centralized intermediaries.

3.Enhanced Transparency – Crypto transactions are recorded on a public blockchain ledger, strengthening network security and trust. This transparency gives participants real-time access to accurate information and helps enhance confidence in the system.

Risks Associated With Cryptocurrency

1.Price Volatility – Cryptocurrency prices can fluctuate rapidly and unpredictably due to speculative trading and pump-and-dump schemes. Because returns are driven by demand and supply dynamics, they are often uncertain and cannot be guaranteed.

2.Cyberattacks – Cryptocurrency hackers may steal private keys and gain access to users’ assets, often resulting in permanent and usually irrecoverable losses. High-profile incidents include the 2018 hacks of Coincheck and BitGrail, which led to losses of US$534 million and US$195 million, respectively.

3.Lack of Consumer Protection – Unlike traditional financial systems, cryptocurrencies typically lack regulatory oversight and formal consumer safeguards. If a Crypto trading platform (CTP) or wallet provider fails or goes bankrupt, investors may have no legal recourse to recover their funds.

On March 31, 2025, the Bank of Ghana (BoG) made a surprising move: it increased the Monetary Policy Rate (MPR) from 27% to 28%. This decision was meant to “re-anchor the disinflationary process,” even though inflation had been falling, making most market watchers to expect the central bank to hold or even cut rates. At the most recent 124th Monetary Policy Committee (MPC) meetings held from 21 to 23 May 2025, the Committee, by a unanimous decision, maintained the Monetary Policy Rate (MPR) at 28%, amidst falling inflation as well as falling interest rates on the short-term bill. Another surprising move.

In an increasingly unpredictable world, where trade agreements can shift overnight and global powerhouses clash over tariffs, investors face a challenging question: Should I stay invested offshore, or pull back?

Free Trade vs. Trade Wars

Free trade, at its core, allows nations to exchange goods and services without restrictions. It fuels innovation, job creation, and consumer choice. However, when political mistrust rises, countries often retreat into tariff barriers, triggering trade wars.

The current global trade war, spearheaded by the U.S. under President Trump, has significantly disrupted global markets; there are tariffs of 10% or more imposed on imports from over 50 countries, U.S.–China tensions have resurfaced, despite temporary tariff cuts, supply chains are being rerouted, with Chinese goods diverted through third countries like Vietnam and Mexico.

Consumer backlash is growing — more than 50% of EU consumers are ready to boycott U.S. products.

The result? Higher costs for businesses, lower investor confidence, and increased volatility in global financial markets.

What This Means for Your Exchange Traded Funds (ETFs)

If you’re holding U.S.-listed ETFs, here’s how the trade war may affect your portfolio:

1. Volatility Is the New Normal

Sectors exposed to China (especially tech and industrials) are bearing the brunt of the ongoing tariff wars. ETFs tracking the S&P 500 or specific sectors may experience sharp swings.

2. Currency Risk Cuts Both Ways

The cedi-dollar relationship matters. If the cedi weakens, your USD-denominated ETF gains may look better in local currency. If the dollar drops under global pressure, returns may diminish.

3. Dividends Could Dip

With corporate profits under pressure, dividend-paying ETFs could see reduced payouts. This affects income-focused investors.

4. A Broader Economic Slowdown

If global economic growth slows down, even companies not directly involved in trade may feel the pinch. That means slower earnings growth — and a slower recovery for markets.

What Should Investors in Ghana Do?

Adopt a calm and disciplined approach as stated below;

Stay Invested, Think Long-Term

Trade wars are temporary. Quality ETFs with diversified holdings are built to withstand such shocks. Also, staying invested helps investors to benefit from the long-term growth of global markets.

Don’t Miss Dividends

Many ETFs pay regular income – dividends. Selling off now could mean missing out on dividend income — especially when ETF prices are lower and reinvestment opportunities are ripe.

Use Volatility to Your Advantage

Times like these offer entry points for long-term investors. If you have a solid strategy, use the dips to accumulate assets gradually. Selling now locks in losses — staying put allows your investments to recover. That is, investors can buy quality assets at discounted prices and benefit from future rebounds.

Embrace Dollar-Cost Averaging

Dollar-cost averaging is a simple tool that an investor can use to build savings and wealth over the long term. It involves investing the same amount of money in a target security at regular intervals over a certain period of time, regardless of price. By using dollar-cost averaging, investors may lower their average cost per share and reduce the impact of volatility on the their portfolios.

In simple terms, don’t let short-term headlines derail your long-term goals. The ETFs that have been chosen by Bora Capital for clients offer quality, diversification, and resilience. Each of these has weathered events like the Great Recession, COVID-19, and now the Trump Tariffs — and still delivered recovery and growth. Thus, continue your strategy, rebalance if needed, and use dollar-cost averaging to take advantage of market downturns.

As Warren Buffet puts it: “Be fearful when others are greedy and greedy when others are fearful”.

As the world grapples with climate change, resource depletion, and social inequality, the concept of sustainable investing has emerged as a driving force in shaping future economies. This growing trend isn’t just beneficial for the environment or society—it is also essential for the sustained economic growth of both developed and emerging economies and Ghana’s economy is no exception.

What is Sustainable Investing?

Sustainable Investing, also known as Socially responsible investing (SRI), refers to the integration of environmental, social, and governance (ESG) factors into financial decisions, moving beyond the sole focus of profit maximization to also prioritize long-term societal impact. This investment approach aligns with the growing demand for responsible corporate behaviour, and economic activities that mitigate environmental harm, promote social good and enforce strong governance practices all while being profitable.

Ghana’s economy, like many other emerging markets, faces challenges such as climate change and infrastructure gaps. However, these challenges also create opportunities for sustainable, impactful investments. With a growing population and rising demand for energy, food, and infrastructure, the country remains an attractive destination for investors seeking both returns and development impact.

How does sustainable investment drive economic growth?

1.Creating New Markets and Industries – Sustainable investment supports the growth of green sectors like renewable energy, sustainable agriculture, and eco-friendly infrastructure, helping economies diversify and reduce carbon dependence. In Ghana, it can enhance food security, boost efficiency, and combat climate change through technologies like precision farming and organic inputs, driving both productivity and long-term gains.

2.Driving Innovation and Efficiency – ESG-focused investments hold firms accountable for their environmental and social practices, encouraging innovation, efficiency, and sustainable supply chain. The push for sustainability encourages the adoption of technologies that cut waste, improve energy use, and build sustainable supply chains, lowering operational costs and supporting long-term growth. This reduces costs, boosts long-term growth, and makes companies more attractive to investors, creating a cycle of improved productivity, competitiveness, and economic development.

3.Encouraging Inclusivity and Poverty Reduction – Sustainable investment promotes inclusive growth by funding projects that reduce social inequalities—such as housing, healthcare, education, and microfinance—leading to fairer wealth distribution, greater access to resources, and wider economic participation.

4.Attracting Foreign Investment – Countries that adopt ESG principles and climate-friendly policies attract more foreign direct investment, especially from global investors seeking sustainable opportunities. This capital inflow supports economic development by creating jobs, building new industries, and driving long-term growth, particularly in emerging markets investing in renewable energy.

Challenges to Sustainable Investing

While sustainable investing offers enormous potential, there are challenges to be addressed. Some of these challenges include a lack of data availability and transparency on ESG factors, making it difficult for investors to assess the true impact of their investments. Additionally, there can be a lack of consensus on what qualifies as a “sustainable” investment which could lead to greenwashing- where companies claim to be more sustainable than they truly are.

However, with growing awareness, stronger regulatory frameworks, and technological advancements, these challenges are gradually being addressed. Governments, businesses, and investors must continue to work together to establish clear standards and reporting mechanisms to ensure that sustainable investment fulfils its promise of driving economic growth and societal progress.

Sustainable investment is a key driver of economic growth. By funding businesses that prioritize ESG principles, it builds resilient economies ready for global challenges. Harvard research shows companies with strong sustainability practices outperform peers over time, benefiting from better reputations and stronger customer loyalty. As Ghana embraces sustainability, it offers investors attractive opportunities for both returns and positive impact. Integrating ESG into its economy can accelerate growth and create a more equitable future.

What are commodities?

Commodities are raw materials that can be bought and sold, including physical goods, energy resources, agricultural products, and livestock. Unlike stocks and bonds, commodities are tangible assets whose value can be influenced by factors such as the weather, geopolitical events and broader macroeconomic trends.

Why are commodities important as an asset class?

1.Diversification Benefits – Commodities tend to have a low or negative correlation with traditional asset classes. This means that when stocks are underperforming, commodities might perform well. Diversifying across asset classes helps to reduce the overall risk exposure while potentially enhancing returns.

2.Inflation Hedge- Commodities are among the few asset classes that often gain value during periods of rising inflation. For example, gold and oil have historically been considered reliable hedges during times of economic uncertainty or inflation. As inflation rises, the cost of goods and services increases, often making commodities more valuable.

3.Returns During Market Volatility- Commodities can perform well during periods of market volatility or geopolitical instability. For instance, in times of oil supply shocks or geopolitical tensions in major energy-producing regions, the prices of crude oil and natural gas often spike. Investors exposed to commodities during these times can benefit from such price surges.

How to invest in Commodities

1.Physical Ownership – This involves directly purchasing commodities like gold bars or agricultural produce. However, this may pose challenges for most individual investors due to issues related to storage, insurance and liquidity.

2.Futures Contracts – A more common approach is through commodity futures, where investors agree to buy or sell a commodity at a specific price on a future date. Futures markets are highly liquid but can be risky due to the leverage involved.

3.Exchange- Traded Funds (ETFs) – ETFs offer a convenient way to gain exposure to a broad basket of commodities without needing to trade futures directly. For example, an investor could buy into a gold ETF or an energy- focused ETF, depending on their preferences.

4.Commodities Stocks and Funds – Investors can also gain exposure by investing in companies involved in producing or extracting commodities, such as mining firms or oil companies.

Risks Associated With Commodity Investments

1.Price Volatility – Commodity prices can be highly volatile due to factors such as weather conditions, geopolitical events, and global demand-supply imbalances. This volatility poses a challenge for investors, as it can impact profit margins and lead to unpredictable investment outcomes.

2.Leverage Risk in Futures Trading – Futures contracts often involve leverage, allowing investors to control large amounts of a commodity with a relatively small initial investment. While leverage can  amplify gains, it also magnifies losses as investors are tasked with paying interest on the leveraged amount.

3.Geopolitical Risk – Commodities like oil and gas are particularly sensitive to geopolitical tensions. Disruptions in major supply regions can cause sharp price movements. For example, instability in the Middle East has historically resulted in spikes in oil prices, impacting global energy markets.

4.Non-Income-Generating Asset Class – Unlike many other asset classes, commodities do not generate income or yield, such as interest or dividends. Instead, their returns are primarily driven by fluctuations in demand and supply dynamics, making their performance inherently more volatile and dependent on market conditions.

For investors aiming to build resilient and diversified portfolios, commodities can be considered a worthwhile component. Whether through physical holdings, futures contracts, ETFs, or shares of commodity-related companies, exposure to this asset class may offer long-term value and protection against economic uncertainty.

Investing in commodities isn’t just about capitalizing on short-term market trends; it is also about recognizing the long-term value of the raw materials that power economies around the world.