Building a strong financial future for a child does not necessarily require a large income or substantial savings. Even a modest amount such as GH¢50, invested regularly from an early age, can grow into a useful financial foundation over time.
Starting early is particularly important because it gives investments more time to benefit from compound growth. Parents in Ghana can explore several investment options, including education and wealth policies, mutual funds, and shares listed on the Ghana Stock Exchange.
Financial expert Patrick Baah Abankwa has highlighted three options parents can consider when planning for their children’s financial future.
1. Educational and wealth policies
Educational and wealth policies are designed to combine long-term savings with insurance protection. Products such as WealthMaster allow parents to make regular contributions towards future financial needs.
The policies can be structured around important milestones in a child’s life, including secondary education, university, or even capital for starting a business.
Parents contribute regularly over an agreed period, with the funds becoming available when the policy reaches its maturity date.
One notable benefit of some of these policies is the protection they offer if the parent dies or becomes unable to continue making payments.
According to Abankwa, many such policies include a waiver of premium, which means the insurer may continue the policy’s benefits if the parent is unable to pay because of circumstances covered by the policy.
Before choosing an educational or wealth policy, parents should carefully examine the premiums, projected maturity value, benefits, exclusions, charges, and other terms and conditions.
2. Mutual funds
Mutual funds provide another option for parents who want to invest relatively small amounts for their children.
With mutual funds, money from different investors is pooled together and professionally managed by fund managers licensed by Ghana’s Securities and Exchange Commission (SEC).
There are different categories of mutual funds, allowing investors to select products based on their financial goals, investment period, and tolerance for risk.
For example, equity funds can offer greater potential for long-term growth but generally involve higher levels of risk. Money market and fixed-income funds, on the other hand, are typically considered more conservative and may provide comparatively steadier returns.
Abankwa says parents can set up standing orders and contribute amounts ranging from approximately GH¢50 to GH¢100 every month.
Consistency is particularly important when investing for a child. A parent who begins contributing when the child is still young could have more than 15 years for the investment and its returns to grow before the child reaches university age.
Parents can also explore establishing a trust account in the child’s name through an asset manager licensed by the SEC.
3. Buy shares on the Ghana Stock Exchange
Parents who are willing to accept higher investment risk may also consider purchasing shares in companies listed on the Ghana Stock Exchange (GSE) on behalf of their children.
Investing in shares gives the child an opportunity to own part of publicly listed companies and potentially benefit from increases in share prices as well as dividends.
When the market value of a company’s shares rises, investors can potentially make a capital gain if they eventually sell their holdings at a higher price. Companies that distribute part of their profits to shareholders can also provide dividend income.
Abankwa recommends that parents consider reinvesting dividends rather than spending them immediately. Over a period of 10 to 20 years, reinvested dividends can be used to acquire additional shares, potentially accelerating the growth of the investment.
Parents who want to invest in listed shares must typically open a Central Securities Depository (CSD) account through a licensed GSE stockbroker and provide the required identification and documentation.
Start with GH¢50 and remain consistent.
The key lesson is that parents do not have to wait until they have thousands of cedis before beginning to invest for their children.
A one-time GH¢50 investment may appear small, but regular contributions over many years can accumulate into a significant amount, particularly when investment returns are reinvested.
Abankwa encourages parents to start with what they can afford, automate their contributions where possible, and remain disciplined over the long term.
For instance, investing GH¢50 every month amounts to GH¢600 in contributions over a year. Over 15 years, the total contributions would reach GH¢9,000 before accounting for any investment returns or compounding.
The earlier parents begin, the more time their children’s investments have to grow.
However, parents should not choose an investment solely because the starting amount is low. They should consider fees, potential returns, risks, liquidity, investment terms, and the regulatory status of the provider before committing their money.
Parents should also remember that investment returns are not guaranteed, particularly when investing in shares or other market-linked products.
Why starting early matters
Time is one of the most valuable advantages an investor can have.
A parent who starts investing when a child is a few years old has considerably more time to build wealth than someone who waits until the child is about to enter university.
Regular contributions combined with reinvested returns can allow an investment to grow progressively over many years.
The ultimate goal is not simply to hand a child a large amount of money when they become an adult. It is also about creating a financial cushion that could help pay for education, support entrepreneurship, or provide a foundation for future investments.
Parents in Ghana have several ways to begin investing for their children’s future without needing a large amount of money upfront.
Educational and wealth policies, mutual funds, and Ghana Stock Exchange shares are three options worth considering, depending on the parent’s financial goals and appetite for risk.
With some investment products allowing contributions from around GH¢50, the biggest barrier may not be the amount of money available but the willingness to start and remain consistent.
Starting small, investing regularly and giving the money sufficient time to grow can potentially make a meaningful difference to a child’s financial future.