Ghana’s public debt stood at GH¢341.8 billion as at September 2021, equivalent to 77.8% of GDP. This huge debt stock, and the government’s inability to bring the budget deficit under control, has led to foreign investors fleeing from Ghana’s eurobonds. The international capital markets are essentially shut to Ghana at the moment, and therefore the government is having to resort to local borrowing and increasing domestic revenue mobilization (including through a proposed tax on digital transactions known as the e-levy).

But this post is not to talk about Ghana’s fiscal challenges. It’s about how ordinary people can make appropriate allocations in order not to lose the value of their savings in these critical times. Before I get started, know that you should always consult your financial adviser before making a significant investment. With that disclaimer out of the way let’s get started.

Reduce allocation to the money market as much as possible. The money market refers to the market for debt securities that mature in less than a year. Examples include 91-day treasury bills, 182-day treasury bills and money market mutual funds. I am usually a fan of the money market because it is one of the best ways to generate a decent return while having easy access to your money when you need it. In fact as at April 2021, I had argued that it was still a good investment despite falling interest rates. By December however, inflation had risen to the same rate as the 91-day treasury bill and essentially reduced the real return (return after inflation) to zero. It is therefore time to find better alternatives for your portfolio until interest rates rise.

Load up on more longer term debt. A great alternative to the money market in this case is a fixed income mutual fund which has a lot of longer dated bonds in its holdings. You can also directly purchase a bond yourself through a broker or a bank. These bonds pay interest semi-annually with interest rates ranging from 17% to 21%.

Buy stocks with good dividend yields. In times of economic crises, it is not uncommon for people to pull their money out of the stock market and place it in less volatile investments. However, stocks which have a track record of paying dividends can provide you with some extra cashflow while also having the potential to generate a decent return through share price increases when investors come back to stocks.

Consider foreign exchange investments. There are eurobonds, domestic dollar bonds, emerging market bonds, US-focused mutual funds, Asia-focused mutual funds, Europe-focused mutual funds and so on available for investors in Ghana through brokers and banks. The days of holding foreign exchange as a hedge against cedi depreciation without investing that foreign exchange should well be over. Although these investments usually have high minimum capital requirements, they serve as an excellent source of protection against currency debasement.

Watch out for your retirement funds. If you haven’t done so already, check that your contributions and that of your guardians, to SSNIT are in order. This is not the time to have yourself or family being unable to receive pension payments because of a mishap.

Look out for deals on real assets. Are there people who are panic-selling real estate, businesses, agricultural land or other assets in order to leave the country? It could be possible that there are undervalued assets available which you can take advantage of and reap the benefits when the economy rebounds.

Apart from these investments be sure to take care of your health, do the best at your job and work hard on your business. Losing the ability to generate income in times of economic uncertainty is something you want to avoid as much as possible. And that should be at the very top of your plans to navigate the choppy economic waters.