Mr Francis Nana Baffoe Appiah of the research unit of Liberty Capital Ghana Ltd, an investment advisory company at Tema, has advised young Ghanaian investors to see companies' prospectus as major sources of information for their investment decisions.
He said: "the prospectus accompanies every stock/share offering and it is a very important document because for many people it is the first formal introduction to the company they plan to invest in".
Speaking to the Ghana News Agency on Wednesday, Mr Appiah said the scope of investing for a lot of Ghanaians has now gone beyond vanilla government securities like treasury bills and notes.
He said the only downside to this rapid increase in equity investing in Ghana was that the country still had very low trading volumes and activity with most of the movement on the exchange being large block trades of one or two securities from institutional investors.
According to him, the prospectus outlines the history of the firm, its main line of business and organizational structure as well as contains important information about the financial performance of the firm in past years.
Another consideration when buying shares or stocks, Mr Appiah said was to know the dividend policy of the firm as opposed to ones investment objectives.
He said in Ghana, because a lot of people treated equities as buy and hold securities they looked for regular distributions in dividends and an upward movement in prices over the very long term.
"In reading a prospectus, future outlook, dividend policy and how the firm plans to use money raised from the share offer are very important.
"Just like you want to know that money being loaned out to a friend or family member will be used properly so as to ensure full recovery of the debt, it is equally important to know what a firm plans to do with the money you are paying them to purchase their shares and stocks.
"Always remember a share gives you part or fractional stake or ownership of the firm and you share in the profits through increased dividends or share price appreciation.
Mr Appiah said the lesson to be learnt was that equity investing for the everyday Ghanaian was still new and with all the excitement that came with participating in a share offer, it was very important to remember that fundamentally you were buying part ownership of the firm.