Category: Personal Finance

Asset Allocation is the strategic mix of financial securities (equities, bonds, real estate) in an individual’s investment portfolio. The primary objective of Asset Allocation is to maximize returns while minimizing risk. The percentage of allocation for each asset class is determined by the investor’s overall risk appetite and tolerance, and not necessarily the level of investment.

If you have a low tolerance for risk and a very conservative risk appetite, you will invest $1,000,000 the same way you would $10,000. Being aware of your risk appetite and tolerance is the foundation for every investment decision. Your risk tolerance is the amount of loss you’re willing to actually accept versus your risk appetite which is the amount of potential loss you’re willing to be exposed to.

One way to determine your risk appetite is setting a Risk Baseline.

Establishing a risk baseline will outline the amount of loss you will be able to withstand financially. This will also contribute to  the general weighting of your investments across your portfolio.

Diversification is key and a main factor in asset allocation.

Concentrating all your investment in one area runs you at a higher risk to lose everything and over-diversifying, can negatively impact your portfolio. Yes, investing in different sectors is beneficial but spreading the investment too thin can reduce the quality of the overall portfolio. For example, in a portfolio with thirty securities, you may have ten that are performing exceptionally, and twenty that have a below-average performance. That of the twenty may significantly dilute the value of the overall portfolio. Diversification is therefore is not necessarily done to maximize gains, but to minimize risk.

Another key factor to consider in asset allocation is your need for liquidity.

Along with your risk appetite and your risk tolerance, you will need to select your ideal time horizon, whether you desire to invest short-term, intermediately, or long-term.

For investments to be easily liquidated, individuals should typically place a higher percentage of their assets into a class that holds mainly short-term fixed income securities. Though this low-risk, it will generally yield comfortable returns for your portfolio.

Asset classes yielding higher risks along with higher returns making up the majority of the portfolio, may appeal more to an investor aiming to gain more over a longer time.

Below is an example of a portfolio belonging to a moderate investor with an intermediate time horizon.

15% Bonds

35% Large-cap equities

25% Small-cap equities

25% Cash & equivalents

All in all, asset allocation is involved in every aspect of the investment stage.

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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Spending without a plan is like ‘driving blind’.

Is your intention to continue living between pay cheques, or to create a lifestyle that gives you financial freedom?

A financial plan is a blueprint for your financial decisions, to ensure that the future of your finance is secure.

Here are a few tips on how you can create your financial blueprint:

Create Multiple Income Streams

Do you have a skill that you can turn into additional income? Why not take that opportunity to offer a service or product that you can earn from? The traditional 9-5 income can become a strain as the average employee may struggle to use one income to cover their daily needs. In addition, as jobs no longer remain ‘secure’, it reinforces the importance of having additional revenue to cover such an unfortunate event. If entrepreneurship is not your cup of tea, consider diversifying your investment portfolio to include instruments which pay dividends or coupons. Consider including, for example, common stock AT&T Inc. [NYSE: T] which has a quarterly dividend yield of 6.49% or Citi Group Inc bond which pays a 6.3% coupon semi-annually.  Rental income can also be used to generate revenue. Owning a home is an unrealised revenue until the property is sold, so if you have an in-demand location and a few free rooms, you can turn your space into passive income and even make it apart of your retirement planning.

Purchase Insurance

Though we can never be fully prepared for an emergency, purchasing insurance policies can significantly reduce your exposure to financial losses. Policies can be purchased to protect you from property damage, business interruption, health scares and even provide for your family in the event you pass away.

Practice Comparative Shopping

Purchasing the latest gadget or trying to keep up with the newest fashion trend can run you into significant financial trouble. The next time you have an urge to make a purchase, consider taking the time to compare the prices. E-commerce now makes it easy to differentiate the offerings of different retailers and identify ways to capitalise on bargains. You can still be trendy without the high cost.

Be consistent

Spending without a plan is almost always costly. Set a budget, realistic goals and hold yourself accountable to your financial decisions. Always check your bank accounts regularly and be prepared to adjust your financial plans to include life changes such as the birth of a child or a career change.

Automate Saving & Investing

If you find it challenging to save or invest, make it easier by setting up a salary deduction or standing order to have an amount automatically deducted from your income, that way you won’t have easy access to the funds to make bad spending decisions.

• Are you getting a bonus this holiday?
• Do you expect to get a salary raise?

Consider ignoring the new funds by putting it toward investing or increasing your savings.

Formulate a plan, and make deliberate choices to shape your financial decisions. If you fail to plan for your financial future, the outcome will be failure.

Take that first step today to create a financial plan, and stop relying on your finances to survive on auto-pilot!

Creating your financial freedom is easier than you think!

 

Goals play a significant role in investing, and we tend to aspire and make plans to ensure that our future is secured. But, what about the possible short-term needs which may pop up unexpectedly?

How does your portfolio react to something that is unexpected?

Do you need to change your car after an accident or take a vacation to rejuvenate the mind?

Do you have enough funds to cover your family in an emergency?

Investors should think to prepare and ensure that their portfolio offers enough diversity and liquidity for any possible situation.  One may ask, what are the other options to assist with short-term goal achievement? In consulting with your financial advisor, you may discuss the inclusion of Collective Investment Scheme (CIS) as this may be another avenue that allows investors to have short-term cash and, in some cases, increased returns.

CIS can take various forms such as a cash-like fund that is usually high value earning with little to no risks and short maturity periods. If we take a step back and assess our needs, ad hoc situations will require access funds that may be tied up. With a fund like CIS, investors can withdraw at any time without any associated penalties or losses.

All fees associated with these funds are usually lower and less complicated than other types of investments. This equates to more cash in hand for optimal use as dividend earnings are always up to date.

On the flip side, the low risks associated with these funds often results in higher interest rates over its maturity period which may provide solid returns. However, this might not be a viable option for younger conservative investors. Yes, funds boast liquidity, competitive rates, low fees, diversity and stability but can all investors sustain it?

When in doubt talk to your financial advisor about the possible options to meet your goals as these short-term investments may erode the overall quality of your portfolio by stifling growth in other areas, that is; limiting capital injection to your other investments to supply funds to these funds for a quicker rate of reaction.

Be cautious in deciding!

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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While you are bombarded with advice on how to make your money grow, financial skills should become a natural part of your lifestyle for your investment future. Some of these skills are; keep up to date on literature directly related to investing, business and market performance, and actively conversing with experts within the field. These are just some of the things that will help to transform anyone into a good investor and develop good financial habits.

Developing investment skills comes with continuous practice just like in every other thing we do in life. It takes commitment and drive to achieve.

Do you remember how hard it was to ride your bicycle initially?

How many times did you fall? But for every instance, you got up and tried again until you were proficient at riding.

Naturally, being a new investor, you are more susceptible to errors due lack of expertise and required skill-set that will cause you to stumble.  Investing is never a gamble and as such, it should involve varying strategies to create positive yields for impressionable results.

Some strategies employed for improved investment quality and overall growth include but are not limited to the following:

1. Never Procrastinate: Wealth can be lost within seconds and as a result, you should allow your money to work for you! Start investing now, if you are unsure, your advisor will guide you accordingly.
2. Never Risk Capital: Do not place funds on unknown or limited avenues with a negative expectancy rate.
3. Reinvest Profits: Once there is an exponential gain on an investment, funds gained should be re-worked within your portfolio to exceed your initial investment and passive income.
4. Plan for loss: Ensure that the risks taken, and the losses endured are managed and under control to limit erosion of your portfolio.

Once these simple strategies have been employed, you can safely say you are on the right path to wealth generation. It therein shapes a positive future which changes your mindset to create questions such as; how much wealth can I accumulate over [X] period? What are the expected timelines for you to achieve your plans?

Investing is a balance of defensively and offensively plays that fortifies your portfolio in any given climate. As Murphy’s Law dictates “whatever can go wrong, will go wrong…”, your investments should be well structured to eliminate maximum risk exposure while being low enough to improve your potential to purchase and develop your portfolio.

Never build a portfolio that does not react well to market conditions. Oftentimes investors make the mistake of building robust portfolios with little to no possibility of liquidity. In garnering your experiences, certain hedge funds and/or bonds will pose the risk of illiquidity this limits flexibility to the market when there is an unfortunate event such as a crash. This will limit your ability to sell, ultimately losing capital or an opportunity to take gains and latitude within your portfolio. These decisions should be discussed with your advisor or financial institution as this could limit your views on investing thereafter.

Lastly, do not be deterred or negatively influenced by the costs associated with trade and management fees. These fees may seem high as a new investor and may hinder your judgement in deciding on a good investment. However, ensure to ask the following:

What are the returns and how does it correlate to the growth on capital?

Do they surpass or meet the expected results?

In most cases, the returns will be far greater and will leave you happy with your decision to pay them, creating that well needed balance!

Once all the above have been considered your investment future should be steadily aligned for wealth and continuous growth for future years.

 

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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When is the best time to Invest

If you are anything like me when I started to invest, the question that lingers your mind is “Am I buying stocks at the right time?”

I have learnt that timing the market is not a good strategy and all the best investors in the world make calculated guesses about the market. This, however, should not deter you from investing and if you are still reading this it’s clear that you are interested in learning more.

Here is a guide to help you to make that decision.

Do not waste time

The misguided notion that you need a lot of money to start investing is false. Do you have disposable income set aside? Or reallocate a portion from your already low-interest rate savings account? Various stocks and funds exist on the market to suit any budget.

The longer you spend contemplating whether it is the right time, the more you are missing out on the opportunity to benefit. Take for example Kingston Wharves [JSE: KW], I witnessed the stock trading at $45.85 on July 2, 2018, hesitant to purchase the stock at that price I gave it time. On October 10th, the stock last traded at $82.99, that is an 81% increase in stock price in 3 months!

Learn from my mistake!

The sooner you invest the greater the benefit in the long run.

Price Dips

A dip in the share price may indeed mean an ‘unrealized’ loss for your portfolio and as a new investor you may have some concern, but look at it this way, if your favourite clothing store had a sale of up to 50% off wouldn’t you capitalize on this discount?

The concept is the price of your securities will fluctuate occasionally, and that is sometimes your opportunity to buy at a lower price or discount and average down. A data scandal earlier this year resulted in the social media giant, Facebook’s [NASDAQ: FB] stock price to decline by over 17%, the stock price later recovered by nearly double.

That being said, it is that not all companies can recover from scandals. Conversely, it is important to research the company’s financials to assess whether it’s a good entry point or its time to exit. Be mindful of ‘media noise,’ which may be deliberately attempting to affect a share price.

Initial Public Offerings (IPOs)

“An initial public offering is when a private company or corporation raises investment capital by offering its stock to the public for the first time”- Investopedia.

A company’s initial entry to the market offers an opportunity to purchase stocks at a low price and benefit from significant capital appreciation. Before you do, take a look at the prospectus issued by companies and gain an understanding of their financial position, management, markets, and plans for the future to decide whether the IPO is worth your investment.

Investing is not for the faint of heart and only those who are in for the long-term will reap the most.

Start today, call us and commit to investing.

The perfect time to invest is now!

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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Diversifying means to invest in different securities (stocks, bonds, ETFs, etc.) across assets in an effort to reduce risk on a portfolio’s performance.

Don’t put all your eggs in one basket is a saying most are quite familiar with. However, not everyone knows the importance of this. Investing in various assets can safeguard against major losses and can help protect your portfolio by hedging and capital appreciation.

While there are numerous ways to diversify your portfolio, here are three ways to do so:

Investing across sectors

Investors buy into specific sectors to mitigate volatility for capital preservation or for higher returns. The latter appeals to the more aggressive type investor. Sectors such as the:

• Financial (Banks, Investment Firms, Loan Institutions, etc.)
• Industrial/Manufacturing
• Healthcare
• Technology
• Energy

These are the most popular and lucrative sectors an investor can and should invest in.

Investing in different Countries

Look for countries that have a strong economy, as this will affect the overall performance of companies. Just recently, the Bajan economy crashed and not long after bonds followed suit. This was as a result of the vast decline in tourism of which was the main revenue generating factor for the country. These factors should be considered when deciding on an investment.

In another instant, news of Canada legalizing cannabis (marijuana) has caused many investors to hold on to a cannabis stock on the Toronto Stock Exchange (TSE) instead of other stock exchanges as they expect the stocks in that specific country to reach the highest levels. Evolve Marijuana ETF (TSE: SEED), a Canadian incorporated Exchange-Traded Fund and Canopy Growth Corp. (TSE: WEED), one of Canada’s largest producers of medical marijuana, are both recommendations from SSL.

Investing in Stocks/Bonds

Beware of over-diversification, yes that is a thing! It is unreasonable to track 100 securities from various sectors, countries and markets. It’s best to pick a few good ones to monitor effectively and maximize your returns. Having $1,000 across 5 stocks increases your chances of capital gains. Albeit, if you had $1,000 spread across 10 different stocks, your chances of profiting would be highly reduced once the trade fees and other fees have been included.

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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Investors, usually those with considerable wealth and experience, have ready access to loan capital through a practice known as securities-backed lending.

Whether through a private bank or other financial institution, securities-backed loans and lines of credit can be particularly useful for those engaging in large purchases from time to time, such as buying real estate properties or acquiring private operating companies.

Securities-backed lending, also known as securities-based lending, instead uses the securities as collateral to secure loans to investors.

What Is a Securities-Backed Loan?

A securities-backed loan is a debt collateralised by an investor’s portfolio of eligible securities such as stocks and bonds. The borrower deposits securities into an account on which the lender has a lien, and the lender will often make available loan funds ranging from 50 per cent to 95 per cent of the securities’ market value. The exact amount depends upon the specific underlying assets in the portfolio and the level of diversification. For example, a lender might approve more funding against a portfolio of U.S. Treasury notes than a portfolio that holds a single, concentrated stock position.

The Lending Process in Action

When the borrower wishes to access the loan funds, he or she writes a check against the line of credit or submits instructions to wire funds to a bank account. As the value of the underlying collateral changes, the credit capacity of the account fluctuates, which may make it necessary to deposit additional collateral either in the form of cash or by depositing other stocks and bonds previously not included in the collateral.

The borrower may also repay some or all of the outstanding loan balance. If not done within a specified period known as a “cure period,” which could range from two days up to 30 days, the lender will liquidate the securities that act as collateral by selling them.

Eligible borrowers can include individuals, joint investors, and revocable living trusts in which the trustee, trustor, and beneficiary are identical. Depending upon the financial institution, loans can range from $100,000 to $5,000,000 or possibly more for very high-net-worth individuals. These loans have terms that are tailored to the borrower with short and intermediate durations; five years is standard.

Benefits for Investors

Securities-backed lending has several advantages. They can offer the borrower substantially lower interest rates and reduced risk relative to alternatives like a margin loan, although they still contain greater risk than other forms of lending. Additionally, they offer greater flexibility in repayment and provide a cure period to meet demands for additional collateral. This differs from the immediacy requirement for paying back a margin loan.

This spread varies but, typically, the larger an investor’s portfolio value, the lower the interest rate. In some instances, a lender may lower the interest rate on a securities-backed loan if allowed to place an “abundance of caution” lien on an investor’s real estate property or properties. This may also allow the investor to deduct the loan’s interest on her tax return. Some securities-backed loans also offer an interest-only payment feature.

The Risky Business of Securities-Backed Loans

Despite their advantages, securities-backed loans come with specific risks. Even a stable company with historical stock-price stability can succumb to a challenging economic environment and see its share price tumble.

When equity and fixed-income markets perform poorly, which typically happens in cycles, the market value of many assets can hit levels previously unthinkable.

Unless the borrower has a lot of surplus liquidity outside of the securities backing the loan, or the securities supporting the loan consist almost entirely of assets such as short-term U.S. Treasury bills, this can result in the bank calling in the investor’s collateral. This could trigger forced liquidation of the borrower’s holdings at unattractive prices. The borrower has now had the option to buy and hold taken away from him, and he doesn’t have the choice of waiting for the market to recover.

Another danger with securities-backed loans is that the lender may no longer feel comfortable with specific security serving as collateral. For example, imagine that you hold a large block of stock in what was formerly a well-respected company, such as Eastman Kodak. As digital cameras eroded the company’s profits, the bank may have decided that it would no longer accept Eastman Kodak as collateral.

You would have had to either sell your Eastman Kodak shares and invest the money in something that was acceptable for the lender’s collateral needs, or you would have needed to contribute additional capital to the secured account that held your collateral to avoid having your line of credit reduced or cancelled. To mitigate other types of risk, securities-backed loans also have an important restriction: The borrower cannot use the money to pay down margin debt or to invest in other securities.

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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Knowledge as we know it to be, is having information and skills  garnered through either education and or experience. It is, in other words, how fluent a person is with a subject matter.

Have  you observed that in modern times, non- degree holders are finding it extremely difficult to secure steady employment without a degree or some form of accredited  certification?

In past decades especially in the 60s, 70s and 80s, most persons were not afforded the opportunity to gain tertiary education. The process of getting a job was mostly based on experience. This is not to say that experience isn’t very important within today’s labour force, it is. Candidates with much experience tend to get the job over less experienced candidates with a degree and it has been demonstrated by empirical research that having both is surely a plus.

As shared in a previous article, we continue to stress the importance of investing in oneself to become more marketable.

Knowledge as we know it to be, is having information and skills  garnered through either education and or experience. It is, in other words, how fluent a person is with a subject matter.

When you observe how skilled Jamaican hustlers focus their energies on making money, which is not wrong, but do they  plan on making money and being strategic in optimal earnings?

Whether you are aiming for an accounting position, a painter or  a cleaner, knowledge and experience are required. One kernel of advice that West Indian parents are famous for sharing with their children, is the premise that if your desire is  to be a garbage collector, be the best garbage collector you can be. Make the necessary investment in order to become the best in your field; that include earning a degree, maybe studying for your Masters or even learning a trade, acquiring marketable skill sets will not only develop you personally but also professionally.

Millennia believe that they can and deserve to make money overnight, but as they get older they will come to realization that life is hard and being successful is a journey.

Proven success strategies are dedication, sacrifice and investment. No matter the level or importance of the job, knowledge to carry out the job is imperative, employers not only demand that a job is complete, they require that a job is well done.

Being successful may mean making a lot of money but it is also being the best in what you do. Therefore, it is important to be wise and be knowledgeable about your given profession. Stating you are able to carry out a job and completing your duties are two different things; you must be able to prove yourself.

A JOB WELL DONE IS A JOB WORTH DOING!

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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In finance, a loan is the lending of money from one individual, entity or organization to another entity, organization and individual. It is otherwise classified as debt owed. Most times, the principal borrowed is repaid with a set interest rate for the lender to benefit while engaging in the loan agreement.

If someone acquires a loan through an institution, the interest rate is charged on the principal and has a specific payment date that is usually in equal increments.

The truth is that no one really likes owing anyone or any bank, but sometimes it is necessary. Arbitrarily taking a loan out for parties or clothes is definitely not wise, however, not much persons have the money upfront to pay for a house, car, to repay student loans or even pay for an emergency health issue.

As someone’s monthly income grows, so too their expenses, which is natural. Things you may not have been able to do when you were earning JMD$50,000.00 a month you are now able to do with JMD$100,000. The issue lies wherever you become unrealistic or greedy which can lead to living above your means.

However, there is  nothing wrong with yearning for or living a lavish lifestyle;  however taking a loan to do so isn’t the way.

Here at SSL we do not bash loans as this is a medium in which people can build their credit, however we do not encourage foolish borrowing. Just like our recent launch of the Everything Fresh IPO, it was a great opportunity for persons to make some money on their principal. Who wants to miss an opportunity as such?

Everyone has to start somewhere in life, but not everyone was born in a wealthy family where funds are readily available for investment. It is key to weigh your options and make the right decision when it comes on to your finances as it can be to your demise.

Borrow only what is needed, find out information from different institutions and choose the best option that suits your needs with the lowest possible interest rate and consolidate your loans if you can.

Lowering your monthly payment for many loans by transferring all loans for many agencies to one, can allow for increased disposable income on a monthly or yearly basis. Additionally, you can even invest in securities that give growth on your principal or income that you can have access to your own funds instead of taking a loan.

Come into SSL today and speak to one of our Financial Advisors so that they can help you make better financial decisions and help you to achieve your financial freedom. We do make investing easy!

 

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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You have probably come across the  age-old question, “how do you build credit without the use of a credit card?”

Building credit as soon as you’re an adult is vital in avoiding financial snags as you move through everyday life. Using credit cards responsibly is one of the more popular ways to begin building credit. However, if you’re against credit cards or prefer not to get one, knowing how to create credit without a credit card is a necessary skill.

Building credit without a credit card is possible, it requires a  different approach.

Note that not having a credit card could hold your credit score back; this shows institutions you can be responsible for both credit cards and instalment loans. Not having credit card experience on your credit history won’t cause you to have a poor credit score, but institutions may be hesitant to offer you the best rates/options.

The alternative to using credit cards to build your credit score is to use a loan. Your loan payment history must show up on your credit report to help you build your credit score. Some loans are more difficult to get than others, so it helps to know your options.

Start Repaying Your Student Loans

The Student Loans Bureau typically grants up to a certain amount as long as you’re enrolled at an eligible institution. You can start repaying your student loans while you’re in college to begin building your credit score. Waiting until you’ve graduated is also an option. Either way, be sure you pay on time each month to build your credit score without a credit card.

Repay a Mortgage or Car Loan

Since both mortgages and car loans report to credit bureaus, either of these will help you build your credit score. The tricky part is getting approved for either of these without an established credit history. With a steady income and proper down payment, you may be able to get approved. For mortgages, you may be able to get approved for a loan backed by the National Housing Trust and a bank, if you have made NHT contributions and made on-time rental and bill payments.

What has a tremendous impact on your credit score is cosigning for a family or friend. The downside is that cosigning is generally a bad idea. You could be held liable if the person you co signed for defaults on their loan payments. In the days of microloans, getting a loan is relatively easy, so if someone can’t get a loan by themselves, take this as a warning. Also, late payments affect the co signer’s credit just as much as they affect yours.

Pay Your Rent on Time

Your rental payments may help you build a credit history if your landlord reports payments through Rent Board. Although only a portion of landlord’s report this data.

What to Watch Out For

Beware of advance fee loans and other loan scams that prey on people with no credit or bad credit. These loans typically guarantee approval and ask for some upfront payment.

 

 

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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So what is a tender offer?

A tender offer is a public offer, made by a person, business, or group, to acquire a given amount of a particular security. The term is derived from inviting existing stockholders to “tender”, or sell, their shares. In effect, a tender offer is a conditional offer to buy. The question is posed by the individual or entity making the offer, “I am willing to buy your stock at $[x] if you tender (sell) it to me but only if a total of [y] shares are tendered to me by all stockholders.”

Usually, tender offers are proposed so that the acquirer can accumulate enough common stock to either get a significant presence on or completely take over the board of directors.  A tender offer occurs as the acquirer owns a large percentage of the outstanding stock. Therein, he or she can force all remaining stockholders to sell out and take the company private or merge into an existing publicly traded business.

A tender offer is mainly used in cases where the management and board of directors does not believe the takeover would be in the best interest of the shareholder. As a result, the management team will oppose as they consider it incompatible with their fiduciary duty. This is also a means by which a hostile takeover can be accomplished by acquirers and/or investors who would like to take control over the objection and fight of incumbent directors and executives.

Tender offers are by far more common in the stock market than a so-called proxy war. A proxy war is another example of an attempt to take control of a business. A company’s annual proxy statement breaks out important information including matters on which stockholders must vote. In a proxy war, the individual, business, or group who wants to take over management tries to convince stockholders to vote for their slate of directors, effectively removing old directors and seizing control of the business.

Proxy takeovers are usually executed by corporate raiders, these corporate raiders will strip the company of its valuable assets and sell these assets piece-by-piece. In other instances, proxy takeovers are executed by well-meaning investors with the best interest of the company in mind.  The investors will despite of mismanagement, argue with a slew of documentations citing delinquencies on the part of directors and the negative impact it has on shareholders. This battle is usually resolved via voting and oftentimes shares will be then managed and/or sold to the investor with  the most compelling argument with documented proof.

 

How Tender Offers Work on Your End, as an Investor

Imagine you own 1,000 shares of Company ABC at $50 per share for a market valuation of $50,000. One day, you wake up, and your financial advisor says that Firm XYZ has made a formal tender offer to buy your shares at $65 per share but that the deal will only close if, say, 80 percent of the outstanding stock is tendered to the acquirer by stockholders as part of the transaction. You have a couple of weeks to decide whether or not you will tender your shares.

If you decide to accept your tender offer, you must submit your instructions before the deadline or else you will not be eligible to participate. It’s usually as simple as telling your broker, “Sure, I’ll sell out at $65 per share” and waiting to see what happens. (Of course, if you have physical stock certificates, it’s an entirely different procedure, but those are relatively rare these days.)

If the tender offer is successful and enough shares are tendered, the transaction is completed. You will see the 1,000 shares of Company ABC taken out of your account and a deposit of $65,000 cash placed in. If the tender offer fails because fewer than 80 percent of the shares were tendered to the would-be acquirer, the offer disappears. You are then left with your original 1,000 shares of Company ABC in your brokerage account.

If you reject the tender offer or miss the deadline, you will get nothing. You will have the original 1,000 shares of Company ABC and can sell to other investors in the broader stock market at the first available price. In some cases, persons from the initial tender offer will return for a secondary tender offer. This occurs in the event of not receiving enough shares or wanting to acquire additional ownership in which case you might have another bite at the apple.

Something to always note, if you don’t tender but enough people do, you’re probably going to be forced out of your ownership, as the enterprise may be taken private down the road.

 

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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The subject of millennials has been the topic of discussion in countless conversations across corporate boardrooms and social media platforms over the years. This term describes both Generations Y and Z, who are individuals born between the years of 1981 and 2001.

In recent times, there has been many negative connotations attached to the term that has brought about a stigma against millennials, which has had an adverse effect on the way they are viewed in society.

Time and time again Baby Boomers (individuals born between 1946-1964) have stressed how entitled millennials are; most often because of how drastically their lifestyles differ. Researchers deduce that the main difference between Baby Boomers and Millennials is the advancement of technology.

What individuals have access to today is light years away from what the generation before even dreamt about. This affects the way decisions are made by millennials as well as how they craft priorities.

Millennials are further criticized for not owning homes and starting families by a certain age while empirical evidence suggests that many cannot afford to do so. Additionally, it can be argued that the quality of job satisfaction has plunged since finding fulfilling employment has been more difficult.

There are Baby Boomers who may think they despise Millenial’s sense of entitlement. It should also be taken into consideration that bad economic decisions from decades ago continue to plague Jamaica which further deepens the financial burdens borne by the current workforce. Issues such as inflation, currency depreciation, perpetual debt and undesirable savings offerings are a few of the economic depressions that force young adults to alter priorities. The cost of living that previous generations enjoyed  compared to the cost of living today.

Regardless of economic struggles, both the local and international financial markets have provided opportunities to gain wealth through buying, selling and holding equities and bonds. Instead of saving money in a commercial bank with subpar interest rates, millennials have found viable investment deals that may not have been available decades ago.

The discipline of investing is an important lesson that parents can teach children as well as their counterparts as it is becoming more and more trendy. Investing has proven to be even more profitable than playing it safe with a regular savings account.

We salute broker houses and securities dealers for playing the role of an efficient middleman in accommodating these investments. The highlight about broker houses is that a single individual is not required to have extensive knowledge about the workings of the stock market to realise valuable returns on investments. When you can receive up to 30 percent within a year in performances, there is no incentive to leave money idling in a savings account.

In the past,  Millennials have been criticized for their lack of savings or making proper plans for retirement. Empirical research states that the current savings plans available are still under regulations that were implemented decades ago. Contributions to pension plans are voluntary, most times tied to employers, and is dependent on the discretion of your employer to contribute anything substantial.

Furthermore, the fraying of economic and social safety nets over the last 40 years has left pensions vulnerable to emergency withdrawals and subject to change in value based on interest rates and inflation. Economists have argued that the stipulations for retirement have to be changed or regulated for Millennials to have an ounce of benefit from them in the future.

Millennials have found that delaying traditional goals until their later years has created time to focus on career development and preparation for these plans they have stalled. The availability of new investments schemes has granted the opportunity to gain more in wealth in ways deemed unconventional.

 

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Everyone knows that little rectangular piece of plastic that several individuals carry around in their purse or wallet. This is what we call a credit card, which is issued by a financial institution, most commonly banks, for consumers to purchase goods or services at the initial expense of the institution. This I like to call short term borrowing.

Do not get this confused with the other rectangular card called a debit card. They are two different types of spending, either spending your own money (debit) or spending the banks’ money (credit). The word credit merely means providing the resources or money to another party without immediate payment.

As Jamaicans, we can relate as many shops or wholesales offer regular customers the benefit of ‘Trust’, where they take the goods and pay at a later date. It is the same concept, just that a credit card allows you to purchase an item or service (the retailer gets their funds) but you pay the bank at a later date.

The phrase short term borrowing is used because minimum payments are due every month end at a specific date to lower the principal and interest and if those payments are not made, then the card is blocked from usage.

Based on a 2016 survey, over 67 percent of persons over the age of 65 was in possession of a credit card and in Q2 2017, there was about USD$ 780 Billion in credit card debt in the United States.

Credit cards can be a blessing, but how? When used responsibly and how they are slated to be used, there can be numerous advantages. Firstly, when making a reservation, for example at a hotel, a credit card is needed to either hold the reservation or be on file in case there has been any damage during your stay. Secondly, they are amazing for emergencies, when you don’t have ready cash to deal with medical bills, buying food etc.

Additionally, before the introduction of debit cards, credit cards were the only source available to allow online banking which is deemed more convenient to consumers and also provides security against fraud. Some banks ever offer bonuses, giving cash back and miles for travelling. However, one of the main uses of a credit card is to be able to have good credit history so that it is easier to get loans and even lower interest rates.

However! The Curse! – Most owners of credit cards do not use them properly or responsibly. What persons make the mistake of is making their credit limit higher than what they can afford or even higher than their monthly paycheck, which makes it difficult to repay when in debt and causes financial distress. Persons tend to even have 3 or 4 credit cards which may result in more debt and then is only able to make the minimum payment, fall short of it or even pay late. This can cause a problem.

To avoid getting bad credit and decreasing your chances of getting a loan, being able to rent or even getting employed, be smart about your credit cards, make on time payments, more than the minimum if possible, stay within your limit and have self-control.

If you generally cannot pay for an item or service that it is not an emergency or need, do not charge your credit card. If you know you have no self-control, do not get a credit card. Do not get another credit card if you don’t have to and always try to pay your bill on time.

Do not fall for the temptation of credit cards, they are there to give benefits not put you in debt. It is important to live within your means instead of finding a different source of income by loan.

Be smart and have good credit or stay away!

 

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The answer?

There’s no right age to buy a home.

But what should be the determining factor is where you are in your own life. Purchasing a home is the most significant investment most owners make in their lifetime, and your status as a homeowner can help you or hurt you financially speaking.

Perhaps most importantly, it affects your quality of life.

When Should You Buy?

Buying a home can benefit you at any age, young or old, as long as the conditions are right. You might be ready to buy when, at a bare minimum, you:

• Can afford the monthly payments and expenses of home ownership;
• Can get approved for a good loan (or better yet, pay cash);
• Plan to keep the home long enough to recoup transaction costs from buying and selling, as well as any price declines;
• Can afford the risks, including surprise maintenance expenses or your home losing value in a weak market.

None of that is meant to suggest that you’re irresponsible if you don’t buy a house at a certain age. Owning a home can be an expensive, time-consuming, and frustrating endeavour. Renting comes with its own set of challenges, but it’s a lot easier to pack up and leave when the only thing holding you down is a one-year lease.

At What Age Do Most People Buy?

It’s important to live your own life, but it might be helpful to know when others typically buy.  There may be good reasons behind the fact that homeownership rates increase with age. On average most become homeowners later in life.

Age Range    Homeownership Rate

35 to 44 years old    58.9 percent

45 to 54 years old    69.5 percent

55 to 64 years old    75.3 percent

Age 65 and over    79.2 percent

Reasons for Buying Young

If you have the ability and desire to buy young, there are potential benefits to getting an early start.

Build wealth: Assuming things go well, owning a home is a route to increasing your net worth. The forced savings of your monthly payments help you build equity in the property, which you can use for another property or other goals.

Price appreciation: There is no guarantee that your home will gain value, but that is what happens in many cases—over the long term. Real estate can help hedge against inflation, assuming your property keeps pace with rising prices.

Reasons for Waiting

If you’re not feeling rushed, that’s okay. Waiting can pay off in several ways. Making a home your own and moving can be a pain, so you may prefer to minimise the number of times you buy and sell.

More certainty: As you get older, you develop a clearer picture of your ideal home. The future is always uncertain, but you gain more information about several factors as you age:

• Your work location, or your ability to work remotely;
• Your income available for housing payments;
• The size of your family, if any;
• Financial strength.

Instead of being house poor and dealing with your property in your 20s and 30s, you can spend those years saving for a significant down payment, travelling, or doing anything else you want. What’s more, you can build credit over the years to get the best loan possible.

 

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In countries such as India, traditional norms are still surpassing the ever-changing mechanisms of modern society. In particular, gender disparity within their workforce still mimics that of century old practices, where women are expected to take care of homes, rather than play the role of “breadwinner”. Though different in each caste, women have tried for years to push barriers and enter male dominated fields even when faced with severe backlash. Some have managed to succeed and create new norms for generations to come. Kundapur Vaman Kamath, founding chief executive of ICICI Bank Ltd., developed a generation of female bankers. Among them are Kalpana Morparia who now leads JPMorgan Chase & Co.’s Indian operations and Madhabi Puri-Buch, who is a stock-market regulator.

Regardless of Kamath’s guidance, Indian women are still facing difficulties in trying to actively participation in the workforce. Approximately 21 million women dropped out of the workforce in Indian villages between 2005 and 2012, while fewer took up employment in cities compared with the period 1994-2005. Because of these numbers, younger generations have opted to stay longer in school to grant themselves adequate bargaining power in the work world and increase their chances of employment. Regardless, older women still fall victim to the expectation of staying home because of lack of pressure to contribute income to households. This wasted labour supply drastically reduces India’s economic potential as labour capital is not being maximized or used efficiently. Many would argue that the male dominated culture of India is the main cause of gender disparities in jobs, but it is also mostly the result of a lack of opportunities that are available to women in both urban and rural areas that are safe, and socially acceptable.

According to a new study by McKinsey & Co., gender equality in the workforce could drive India’s business-as-usual GDP upwards of 18% by 2025. If this study stands true in practicality, then it proves that equality can drive efficiency. Many believe that the act of granting equality means only taking from the rich and giving to the poor, which lowers the incentive of the rich to produce at the capacity that it did before. However, in this case, the workforce would just be more accommodating to the participation of female labour supply so that they can also contribute something meaningful to society. Until policies are changed in the favour of female workers, India’s chance of a higher GDP is stagnant. Women have proved for centuries that they are capable of bringing forth fruitful returns in whatever seeds they sow. Having their talents and knowledge being put to use in a professional capacity can positively impact economic development and growth.

 

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If you don’t know where you are going, you might wind up someplace else. – Yogi Berra.

This important quote can be applied to almost every aspect of life including investing. A key to earning fruitful returns on investments is having a defined end game and setting financial goals. Ask yourself, what are my goals? What do I wish to achieve in approximately five or ten years?

A new approach to managing wealth is goal-based investing, which emphasizes investing with the objective of reaching specific life goals instead of comparing returns to a benchmark. Individuals use different milestones in their lives to set the precedence for investments goals. For instance, whenever investors may have children they tend to start funds that aid preparing for college tuitions, or saving towards the purchase of a home. These goals will influence the time proximity as well as the level of aggressiveness necessary to achieve the end game. Successful investments involve defining measurable and attainable goals. These include applying a dollar amount to whatever an individual hopes to attain, as well as a time horizon in which they hope to accomplish such.

Investing is just like building a house. There is no way the house can look the way you want it to without a well thought out design and detailed blueprints. Without financial goals, an individual may not end up where they want to be, or have adverse results because of lack of planning. Important to note; it is not just about having an end game, even though it is highly necessary, but one will also need to set objectives to meet end goals. Many people who need assistance in setting objectives to meet personal goals will seek the aid of a financial advisor which is wise especially if one is ignorant about or is new to investing. These individuals are qualified to give guidance on how exactly one can achieve financial success, as well as grant smart advice on the steps to getting there. They can assist by laying out different options and help to find investments that match your risk tolerance that will be appropriate for and in line with the goal. Just like the goal itself, these objectives must be measurable and attainable within the set time span. Achieving financial success is a process and must be treated as such. It is never too early to start saving for milestones that seem to be far away. Students entering the working world need to be educated on the importance of retirement funds and setting aside funds for (possible) future dependents.

Investing doesn’t only involve daily trade requests you may send to your brokerage house, but also, it is about the goal you wish to achieve.

 

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Financial success does not come easy, you can say it as many times you want, but without the actions, nothing will change. People tend to handle money in different ways.

Actions, tell the real story.

Are you on the road to financial success, or are you still hanging on to one or two of these tell-tale financial disaster behaviours?

Here’s how you can tell:

Do You Pay Full Price for Everything?

After all, you’ve got plenty of extra money. It’s fun to see something you want and buy it right away. You have to be a little more strategic to save.

Develop a habit of taking 24 hours to comparison shop before you buy. Consistent savings on both big items — and things you buy regularly — can add up to hundreds, even thousands over a year.

Not Thinking About Retirement.

You’re living for the now, not for the later. When you put money away for retirement, you are saving for a “future you”. That “you” is going to want to enjoy life as much as the current you. As you work toward finding a balance between now and later put as much as you reasonably can into your retirement accounts. I promise you no one gets to the future and thinks, “Oh my, we saved too much.”

You Keep Doing Business with the Same People.

Entrepreneurs!  No matter what. You have to separate business decisions from friendships. That means periodically revisiting your professional relationships as far as insurance agents, financial advisors, accountants, or attorneys. Did you hire the person thoughtfully and objectively, or simply because you knew them?

Once in a while, you’ll want to take a step back and re-assess your business relationships.

You Don’t Ever Say, That’s Not in My Budget This Month.

You’ve got an image to uphold. It is so refreshing to hear people reply to a social request with something genuine like, “I have other priorities for my money this month.” Choose how to spend your money based on your values. When a decision doesn’t fit, recognise that — and acknowledge it with a statement that reflects what is important to you.

You Set No Goals.

You want to be in the same place next year as you are right now. Imagine yourself one year from now. What would you like to have accomplished? Do you want the same amount of money in the bank or more? Write down where you want to be. Then write down the action steps you’ll need to take to get there. Now, schedule dedicated time on your calendar to do these tasks. Do this consistently, and financial success will be yours.

Securing a solid financial future takes good money habits and lots of self discipline. You can achieve your goals once you take consistent action and pay attention to what’s happening in the world of finance.

 

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Most investors buy and sell stocks based on emotions rather than cold, hard evidence. You may want to believe that your trading is based on objective information and keeping an eye focused intently on your investment goals.

But you’re only human.

You may have been influenced to purchase a stock because you saw a talk about it on social media. You may sell a stock because it’s lost some value and you’re in panic mode. You’ve probably bought or sold stocks just because it feels good to make a transaction. All these actions stem from what industry experts refer to as market sentiment.

Even if you haven’t been trading based on emotion, there may be other instances where you didn’t make the optimal investment choice due to a lack of information.

Behavioural finance is a new field of study that examines this phenomenon. It looks at psychology and emotion and seeks to explain why markets don’t always go up or down the way we might have predicted.

Conventional or Traditional Finance

People have been studying finance for years. As a result, many theories and models use objective data to predict how markets will respond under certain circumstances.  But these models make false absolutes, such as:

• Investors always having complete and accurate information at their ​disposal.

• Investors have a reasonable tolerance for risk, and that understanding does not change. ​

• Investors will always seek to make the most money at the highest value.​

• Investors will always make the most rational choices.

As a result of these assumptions, conventional finance models don’t possess a perfect track record. Over time, academics and finance experts began to notice anomalies that conventional models could not explain.

 

Strange Stuff

If investors are behaving rationally, certain events should not happen. But they do.

There is no rational explanation for these occurrences, but human behaviour can explain them. Consider the so-called, “January effect” which suggests that many stocks outperform during the first month of the year. No conventional model predicts this, but studies reveal that shares surge in January because investors sold off stocks before the end of the year for tax reasons.

Accounting for Anomalies

The human psychology is complex, and it’s impossible to predict every wrong move investors might make. But, those who have studied behavioural finance have concluded that many thought processes push us to make less-than-perfect investment decisions.

These are evidenced by:

• Attention Bias: There is evidence suggesting that people will invest in companies that are in the headlines, even if lesser known companies offer the promise of better returns. Who among us hasn’t invested in Apple or Amazon, simply because we know all about them?​

• National Bias: A Jamaican is going to invest in Jamaican companies, even if stocks in the Caribbean offer better returns. ​

• Under-diversification: There is a tendency for investors to feel more comfortable holding a relatively small number of shares in their portfolio, even if wider diversification would make them more money.​

• Cockiness: Investors want to believe they are good at what they do. They aren’t likely to change investment strategies, because they have confidence in themselves and their approach. Similarly, when things go well, they are likely to take credit when it fact their good results come from outside factors or sheer luck.

How It Can Help You

If you want to become a better investor, you will want to become less emotional. That sounds harsh, but it will benefit you to take stock of your own biases and recognise where your faulty thinking has hurt you in the past.

Consider asking yourself tough questions, like, “Do I always think I am right?” or “Do I take credit for investment wins and blame outside factors for my losses?” Ask, “Have I ever sold stock in anger, or bought a stock based on a simple gut feeling?”

Perhaps most importantly, you must ask yourself whether you have all of the information you need to make the right investment choices. It’s impossible to know everything about a stock before buying or selling, but a good bit of research will help ensure you’re investing based on logic and objective knowledge rather than your own biases or emotions.

 

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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Welcome to the world of investing! Learning to set investment goals is crucial especially as a new investor, because it helps you keep track of where you have been, where you are, and where you are going as it pertains to your finances on your journey to financial independence.

The best investment goals typically have three things in common:

Good investment goals are measurable.

This means they are clear, concise, and definite. Saying to yourself, “I am going to set a goal of saving J$1,000 per week” is useful because you can evaluate your finances and determine whether you succeeded or not. Either you did, or you did not, save J$1,000 per week. In contrast, saying something like, “I am going to set a goal of saving more money each year” is vague because it doesn’t hold you accountable to a specific target.

Good investment goals are reasonable and rational.

If you say that you want to reach US$1 million in personal net worth by the age of 40, you can use things like the time value of money formula to test whether or not your present rate of saving is sufficient. You aren’t going to get there by putting aside J$5,000 a year between the age of 18 and 40 at a historically, reasonably probable rate of return. This means you need to either lower your expectations or increase the amount of money you are putting to work each year.

Good investment goals are compatible with your long-term objectives.

Money is a tool that should exist to serve you.

Nothing more. Nothing less.

The sole purpose of money is to make your life better; to give you the things that allow you to experience more happiness and utility. It doesn’t do you a bit of good to end up with an enormously large balance sheet if it means you have to sacrifice everything of value in your life and end up dying, leaving behind the fruits of your labor for heirs or other beneficiaries who are irresponsible or who have no gratitude for the labour you gifted them.

Sometimes, it is better to have a lower savings rate and enjoy the journey more than you otherwise would have. The trick is to make sure you’re wisely balancing your long-term desires and your short-term wants in a way that maximises joy. There is no formula for that as only you can determine which trade-offs you are willing to make; which sacrifices pay bigger dividends for you down the road.

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As an investor, it is essential for you to understand how to read, and analyse financial statements so you can get a full and accurate understanding how much money there is, how much debt is owed, the income coming in each month, and the expenses going out the door before investing in any stocks. To help you do that, here is a general look at financial statements.

The Annual Report

At the end of a company’s financial year, which may or may not follow a calendar year, the company will publish their financials.

Many of the financial statements you need to understand a company are contained in the annual report. These reports are free and can easily be accessed on the company’s website or the stock exchange site on which it trades.

Sheet #1: Balance Sheet

Of the three important statements, the balance sheet is the one that provides a snapshot in time of what is owned (assets), what is owed (liabilities), and what is left over (net worth or book value).

Sheet #2: Income Statement

The second of the three statements is the income statement. Sometimes called the profit and loss, the income statement shows you money coming in the door (revenue), money going out the door (expenses), and what’s left over afterwards (income, or profit). The income statement is important because you can use it, along with the balance sheet, to calculate the return you are earning on your investment.

Sheet #3: Pro Forma Financial Statements

If you read an annual report and you see something called “Pro Forma” reports, you should stop, take a moment, and seriously consider whether or not you can trust management. Pro forma means that the financial statements do not comply with the GAAP rules.

Financial Ratios

The main reason to learn how to read financial statements is so that you can calculate financial ratios. Financial ratios let you know how a company is doing, how profitable it is, whether management is taking on too much debt, potential problems investors could face down the road, and much more.

Looking Beyond

Sometimes, you need to look beyond the financial statements to understand what is going on and the dangers threatening your investments. Imagine, for a moment, that you are looking at the financial statements of a horse and buggy manufacturer in the early 20th century. No matter how cheap the business appeared, you wouldn’t want to buy shares because the automobile was going to decimate the entire industry soon.

 

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