Welcome to another week of financial learning. I believe we are all well and staying safe under these “abnormal” Covid-19 times!

Ardent readers of my savings epistle will recall my thoughts on investment.

Investing your income from my perspective comes with four main indicators that need to be considered thoroughly.

For the benefit of first-time readers, I will want to go over the pointers again.

The four key indicators that we need to critically assess before any investing decision are safety, return, time horizon, and convertibility.

The first component most of us focus our minds on when we want to make an investment decision is the return on investment and rightly so.

Return on your investment simply means how much extra income you earn on any money you invest in simple terms.

The second factor after returns is the safety of the investment. Return and safety are twin brothers of the same mother. The higher the return on an investment, the higher the risk associated with the investment. The reverse is also true.

So risk-free investments such as Central bank bonds and bills have a comparative lower return as compared with high earning assets like stocks, forex, and corporate bonds which have a higher risk margin.

I always advise first-time investors to keep a chunk of their investment portfolio in risk-free vehicles for the start and build courage over time.

I used the word portfolio for a purpose.

Wikipedia defines “portfolio” as a combination of financial assets such as stocks, bonds, and cash. Portfolios can be held by individual investors or managed by financial professionals, hedge funds, banks, and other financial institutions.

The Corporate Finance Institute also explains the investment portfolio as a group of financial assets (bonds, stocks, cash, and cash equivalents, currencies, and commodities) owned by an investor.

They go further to explain that it is a generally accepted principle that a portfolio is designed according to the investor’s risk tolerance, time frame, and investment objectives.

The monetary value of each asset may influence the risk/reward ratio of the portfolio.

Portfolios come in components and forms according to the Corporate Finance Institute, the world’s leading global provider of online financial modeling and valuation courses.

Some of the components of a portfolio as already mentioned are stocks, bonds (short and long term), and alternative investments whose value can grow and multiply, such as gold, oil, and real estate.

The forms relate to your investment strategies. Some of the forms as explained by CFI in their published article are;

Growth portfolio

From the name itself, a growth portfolio’s aim is to promote growth by taking greater risks, including investing in growing industries.

Portfolios focused on growth investments typically offer both higher potential rewards and concurrent higher potential risk.

Growth investing often involves investments in younger companies that have more potential for growth as compared to larger, well-established firms.

Income portfolio

Generally speaking, an income portfolio is more focused on securing regular income from investments as opposed to focusing on potential capital gains.

An example is buying stocks based on the stock’s dividends rather than on a history of share price appreciation.

Value portfolio

For value portfolios, an investor takes advantage of buying cheap assets by valuation.

They are especially useful during difficult economic times when many businesses and investments struggle to survive and stay afloat.

Investors, then, search for companies with profit potential but that are currently priced below what analysis deems their fair market value to be. In short, value investing focuses on finding bargains in the market.

I will go further to add insurance and pension sign-ups as part of one’s investment portfolio as explained in my earlier articles.

All that the above definitions are trying to put across is that investors need to spread their risk and assets.

An investor should be clear as to the investment strategy they want to pursue at every stage of their career.

Some investment analysts suggest keeping 50% of one’s investment in risk-free i.e Central Bank bonds and securities, 30% in Commodities and stocks, and the remaining 20% in currencies.

The old rule of thumb in the United States of America was that you should subtract your age from 100 – and that’s the percentage of your portfolio that you should keep in stocks.

For example, if you’re 30, you should keep 70% of your portfolio in stocks. If you’re 70, you should keep 30% of your portfolio in stocks.

The age rule has worked in developed countries due to the structure of their stock markets.

In my humble view anyway, 70% of one’s income should be channeled into the money market and buy bonds, bills, insurance, pensions to mention a few, and share the remaining 30% in the commodities and currency markets.

If one decides to also do real business, then 70% should be channeled into the establishment and control of a business venture and the remaining 30% in a stable and risk-free investment like treasury bills and bonds.

That is my personal trade-off percentages as of now.

Investment perspectives change with differing market conditions I must admit.

The spread of investments brings me to today’s discussion on Gold.

I was privileged to have a news briefing with TV3 a couple of weeks ago when we were discussing the impact of Covid-19 on the stock market and why some investors have moved from stocks to Gold.

From the investment portfolio explained above, one can trade in Gold as a commodity or currency. Don’t get confused yet. I will explain the difference in the course of this article.

The discussion on Gold will tie in the other indicators such as the time horizon and convertibility of one’s investment.

As at 7:44 am on September 7, 2020, the price of a Gold per gram was $62.12, ounce for $1,932.21, and kilo at $62,122.

The price of a Gold ounce as of March 31, 2020, was $1.611.09.

Without doing financial gymnastics and extrapolations, one can clearly see a jump of about 20% in the price over the period.

It is not surprising that investors are now moving away from shares to Gold in the Bank of Ghana (BoG) 1st Quarter report.

According to the Central Bank report, Gold Export accrued a total amount of US$1.47 billion for the period March 2020, representing a percentage increase of 2.5% from the previous year which stood at US$1.43 billion.

The mining sector, specifically Gold, seems to be doing well despite the coronavirus outbreak.

There has been an increase in the price of gold, which is translating into higher earnings for producers and exporters.

Prices of shares of many companies have declined or stable over the period due to the harsh realities of Covid-19 on most businesses.

As coronavirus uncertainty continues to push the precious metal higher, some experts are suggesting gold could hit record highs.

According to Karen Gilchrist, a trading expert with CNBC, Gold which has been up for about 20% so far this year is seen as a “safe haven” asset in times of uncertainty because it is less volatile than other investments, like stocks.

Even as Covid-19 cases have risen and economic data worsened, equity markets have continued to rally.

Cameron Alexander, Director of Metals demand at market data company Refinitiv, said that has caused gold to enter the new trading territory.

“Gold is being pulled in two directions: One is the uncertainty,” said Alexander, referring to the still-escalating pandemic. “But equities are still doing really well,” fueled by central bank stimulus, he noted.

With the price of Gold not showing any signs of reducing, Albert Cheng, CEO of Singapore Bullion Market Association, said the question should be rephrased from “when” to “how much?”


While gold is one of the world’s earliest forms of currency, there are now multiple ways to hold precious metals for investment purposes.

“Investors should first decide why they want to own gold,” said BlackRock’s Taw. “Is it for return potential or portfolio diversification?”

Then you should familiarize yourself with the various options and the risks involved, he said.


Physical gold bars and coins are the most traditional way to own gold.

“It is very liquid and easy to buy in one place and sell in another,” said Alexander.

Physical gold assets can now be purchased at dedicated and licensed dealers.

Investors should ensure such companies have the required mandate from the Minerals Commission and the Precious Mineral Marketing Company Limited.

Investors who want to quickly go into the purchase of Gold should be aware of additional costs such as insurance and storage in most cases.

There is a minimum ounce or kilo one can buy but whichever quantity you want to purchase remember to trade with the right company not forgetting my rule of committing between 15-30% of your investment portfolio to commodities like Gold.



I stated earlier on how the stocks of some companies have been affected negatively by the Coronavirus.

With the surge in Gold prices, share prices of companies that trade in Gold and its relative activities have also reaped higher returns.

Companies directly linked to gold, such as gold miners or gold producers, are another way to hold gold, as they tend to mirror its performance.

However, they are also susceptible to stock market swings. “In a bull rally they do very well, but they are susceptible to pullbacks,” said Alexander.



Another alternative to the purchase of Gold bars and related stocks is gold-backed cryptocurrencies or foreign exchange trades.

They offer another way to buy into gold, though these are typically for more experienced investors. As WWE usually says, “Don’t Try This At Home.

This last level is for high-risk takers.

I hope my article has opened a new investment portfolio in your life.

Make hay while the sun shines!

I wish everyone an enjoyable and memorable week!



NB: Article Image from TheWeek.






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Patrick Baah is a chartered banker with over 5 years experience in main stream banking having worked in various capacities. He is currently at the Branch Manager Position of his institution. He has been a qualified member of the Chartered Institute of Bankers, Ghana with a good membership standing since the year 2013. He also holds EMBA and BA from Kwame Nkrumah University of Science, Technology, and the University of Ghana respectively. Patrick is the originator of the daily epistle dubbed “Savings Tip of the Day” which has been running for over a year on WhatsApp and Facebook. Patrick has also been teaching on the Topics Savings, Investment and Financial Independence for over 2 years and a research fellow for ILAPI Ghana. He runs a financial channel on Youtube by name “Patrick TV Gh” and has appeared a couple of times on the business segment of TV3 News 360. Patrick is into youth facilitation and counselling. I can be contacted via baasco2006@gmail.com and or 0243984492.


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