How to start investing on a GH¢2,000 salary: A simple 3-year plan

You earn GH¢2,000 or GH¢3,000 a month. After paying rent, buying food, covering transport costs, settling bills and supporting family, there is often very little left. The thought of investing may therefore seem like something reserved for people with bigger salaries.

But where do you start when your income barely covers your expenses?

Financial planner Patrick Baah Abankwa has shared a three-year roadmap designed to help low-income earners begin investing gradually, without putting unnecessary pressure on their finances.

The approach focuses on building an emergency fund first, moving into growth investments and eventually expanding into income-generating assets.

Before thinking about buying shares or investing in property, start by understanding where your money goes.

Draw up a monthly budget that accounts for your essential expenses, including rent, food, transport, utilities, debt repayments and family responsibilities. This will help you identify an amount you can realistically save.

The suggested target is to put aside 5% to 10% of your monthly income for an emergency fund throughout the first year.

For example:

• If you earn GH¢2,000, save between GH¢100 and GH¢200 monthly.

• If you earn GH¢3,000, save between GH¢150 and GH¢300 monthly.

The money should be kept somewhere relatively safe and easy to access when unexpected expenses arise. Options identified in the plan include personal investment plans and money market mutual funds such as DigiSave by Achieve by Petra, among others.

The first major target is to build a fund that can cover at least three months of basic living expenses. This could help you deal with an emergency without borrowing money or dipping into your long-term investments.

Once you have built an emergency fund covering three months of essential expenses, you can begin directing your monthly savings towards investments aimed at growing your money.

Options to consider include endowment funds, balanced mutual funds, equity mutual funds and shares listed on the Ghana Stock Exchange.

These investments do not carry the same level of risk. Equity investments, for instance, can rise or fall in value, while balanced funds combine different types of assets. It is therefore important to understand what a product invests in, its fees and how easily you can withdraw your money.

If you receive a salary increase, promotion or additional income, consider increasing the amount you invest rather than allowing all the extra money to go towards a more expensive lifestyle.

Even a small increase in monthly contributions can help build consistency over time.

By the third year, the focus shifts to maintaining your investment habit and exploring other ways to generate income.

If your savings and investments have grown into a substantial amount, you could consider starting or expanding a profitable side business, or acquiring land and real estate.

These options require careful planning. A side business needs research, time and working capital, while land and property purchases involve legal checks, documentation and other costs.

The important thing is to avoid rushing into a major purchase simply because you have accumulated some money. Continue building your investments while assessing opportunities that match your financial position.

The roadmap follows three stages:

• Year 1: Stability - Build an emergency fund covering at least three months of basic expenses.

• Year 2: Growth - Begin investing in suitable funds and shares.

• Year 3: Expansion - Maintain contributions and explore income-generating assets or a side business.

The key is to start with an amount you can sustain. You do not have to sacrifice essential needs or borrow money to invest.

Before choosing an investment product, check that the fund manager is licensed by Ghana's Securities and Exchange Commission (SEC), understand the fees and risks, and remember that returns are not guaranteed.

The SEC provides information on collective investment schemes, their risks and licensed providers.