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FINANCIAL MARKETS IN REAL TIME :

FAQs

WHO IS AN INVESTOR?
An investor is a person or an institution who uses his/her savings or borrowings to buy securities (stocks/shares, treasury bills, bonds, etc).
WHAT ARE STOCKS/SHARES?
a) They represent part-ownership in a company.
b) They are also long-term investments.
WHO CAN INVEST IN SHARES?
Investing in shares is open to all Ghanaian citizens, institutions and foreign residents in Ghana and abroad.
HOW DO I PURCHASE SHARES?
a) To buy shares the potential investor must first contact UMB Stockbrokers Limited (UMBS).
b) Investment officers of UMBS will advise and assist you in choosing the equities that suit your profile.
c) UMBS will then buy the equities at the prevailing market price, that is, at the price obtainable at the time of dealing on the Ghana Stock Exchange, GSE, or at whatever price agreed with you.
d) After purchase of shares, UMBS will send you (buyer) a contract note, indicating the date of the transaction, the number of shares purchased, the price per share and the applicable commission charges.
HOW LONG MUST I INVEST?
As long as you deem fit. But we advise that you invest for a longer time frame in order to maximize your returns.
IS THERE A LIMIT AS TO HOW MUCH I CAN INVEST?
No! There is absolutely no limit on how much one can invest.
WHAT ARE THE RISKS IN INVESTING?
The main risk associated with stock market investing is the diminution in value or price depreciation. This is the risk of the price falling below the purchase price, thus reducing the value of your investment.
WHAT ARE THE ADVANTAGES OF SHARES OVER OTHER INVESTMENTS?
Studies have shown that over the long term, shares record greater returns than most other investment products. Shares can provide you with a regular stream of income through dividends.

Also, your shares have the potential to grow in value (when the price of your stock holdings rise above your purchase price). This is called capital gain.
HOW DO I GET OUT OF THE INVESTMENT?
By selling your shares through UMBS on the GSE
HOW DO I SELL MY SHARES?
a) Complete a sale order form detailing your sale instructions.
b) If the shares to be sold are not registered on the securities depository, you will have to surrender your share certificates to UMBS to be deposited before the sale.
HOW DO I GET INFORMATION ON MY INVESTMENTS?
UMBS provides you with a detailed report on your investments. This will among other things include, the companies that you have shares in, the number of shares that you have in a particular company, and the value of your shares at the prevailing market price. This information is sent to you through the mail, fax or e-mail, based on the client’s instruction.
DO I NEED A BANK ACCOUNT BEFORE INVESTING IN SHARES?
No, there is no need for one to open a bank account before buying shares/stocks and bonds. However if you have a bank account into which sale proceeds and income from investments are paid, it is an added advantage.
HOW CAN A NON-RESIDENT GHANAIAN INVEST THROUGH UMBS?
Just contact us by mail, phone or fax and we will be more than happy to serve you at no extra cost to you. We also do have the various forms on our website which you can download, fill and forward to us.
WHY SHOULD I INVEST THROUGH UMBS?
One should invest through UMBS because, first of all one needs a broker to be able to invest in the stock market. In addition UMBS:

a) Provides you with in-depth research reports on the stock market.
b) Has very competent staff to take care of your needs.
c) Provides prompt delivery.
d) Provides exceptional service.
WHAT ADDITIONAL SERVICES DO I GET?
Equity Research: To support our advisory and brokerage services, the firm has an in-house research department that publishes extensive reports, profiling the technical and fundamental performance of Ghana’s listed companies, industries and the economy.
IS THERE ANY PROTECTION FOR THE INVESTOR?
Yes there is. The GSE has various regulations, namely membership regulations, listing regulations and trading and settlement regulations, which are designed to protect the investor. The Securities and Exchange Commission (SEC), the apex regulatory body has as its primary mission the protection of investors and the maintenance of the integrity of the securities market
WHY DO COMPANIES ISSUE SHARES?
Companies issue shares to raise money from investors. This money is used for the development and growth of businesses of companies. A Company can issue different types of shares such as ordinary shares, preference shares, shares without voting rights or any other shares as are permissible under the law. These give shareholders a stake in the company’s equity as well as a share in its profits, in the form of dividends, and a voting right at general meetings of shareholders.
WHAT ARE DIVIDENDS?
Dividends are returns paid to shareholders out of the profits of the company. Returns can be in the form of cash or additional shares of the company called bonus shares. Dividends are usually paid once or twice a year depending upon the company’s profit distribution policy.
WHAT IS CAPITAL GROWTH?
A capital gain is a profit that results from the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor. This gain is realized upon a sale.
RISK -REWARDS
Buying shares can offer advantages over saving in deposit accounts: your investment may increase in value besides paying you dividends. You share the rewards when the company does well and the price of the shares goes up.

But if the company performs badly, the share price may go down and the value of your investment will be reduced. Other factors, such as the performance of the stock market as a whole and the general economic climate, may also affect the price of your shares. Investment in shares is therefore investment in ‘risk capital’. The shareholder can be rewarded for taking this risk and the potential return on your money can be higher than for example on fixed income investments. You can reduce your risks with careful planning.