Category: Personal Finance

Investing in bonds is one of the long-established foundations of any well-diversified portfolio.  Even in times of low-interest rates, bonds provide a bulwark against stock market and real estate crashes, while throwing off interest income.  If the past tells us anything is that even a small fixed income component, grounded in highly rated bonds, can significantly reduce volatility without subtracting too much return from the overall portfolio.

While investing in individual bonds is typical, it is not advisable unless you have significant funds to go into one; at least US$100,000.  For smaller investors, there is an alternative, called a bond fund.

When most investors discuss bond funds, they are often talking about professionally managed investment funds that invest in stocks, commonly in the form of an index.

Bond funds, in contrast, pool money from investors to purchase bonds, gaining diversification that would otherwise be difficult.

Some bond funds specialise in corporate bonds, others in municipal bonds, still others in junk bonds.  In fact, the odds are if you want to own a specific type of bond, there is a bond fund that will let you do it with as little as a few hundred, or perhaps even a few thousand, dollars.

The Benefits of Investing in Bond Funds

There are several advantages to investing in bond funds.

• Bond funds typically pay higher interest rates than certificates of deposit, money market funds, and bank accounts.

• Investors can get the benefit of professional money managers that know their field.  It wouldn’t be worth the time or effort for the average person to learn the different rules for municipal bonds.

• Bond funds typically receive better pricing than the small investor on the bonds acquired bonds.

• Investing in bond funds is much, much easier than owning individual bonds outright because you don’t have to take care of “laddering” your portfolio (that is, managing the maturity date of different bonds).

• Many bond funds pay out interest and gains monthly instead of semi-annually, as is the case with individual bonds.  It makes cash flow much less stressful for income-oriented investors who need more frequent deposits for day-to-day bills.

The Drawbacks of Investing in Bond Funds

Like all things in life, there’s always a bit of sour to go with the sweet and bond funds are no exception. Despite all of the benefits mentioned above, there are several drawbacks to investing exclusively through bond funds, these drawbacks include:

• Bond funds typically have higher expense ratios, meaning that more of each dollar goes to management fees than a comparable stock mutual fund.

• With an individual bond, risk decreases the longer you hold the security because you get closer to maturity when you receive your principal back from the company or organisation to whom you lent it.  It is not true with bond funds because the individual holdings are continually maturing, being bought and sold, etc.

• In the case of aggressive management, bond funds can take on leverage.  If you don’t pay attention to this, you might be exposed to significant potential capital losses and not even know it.

• Monthly income from bond funds fluctuates as the underlying bond assets change.  You won’t know precisely how much you are going to collect in any given year.

 

Should You Consider Investing in a Bond Fund for Your Family’s Portfolio?

The truth of the matter is that there is no right or wrong answer when it comes to investing bond funds. Bond funds make sense for those who have less than US$100,000 to devote to their fixed income portfolio or for those who simply want the convenience of buying and selling a basket of bonds with a single transaction.

 

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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Most investors buy and sell stocks based on emotions rather than cold, hard evidence. You may want to believe 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 traded 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 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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Accumulating wealth and living financially secure begins with healthy financial habits. Practicing healthy financial habits takes diligence and hard work. It is no walk in the park in the age of consumerism and social media’s dopamine induced highs that motivate persons to always show their best life. It’s quite easy to see the need to buy and experience more, and get thrown off track, swaying from your financial goals.

Here are some simple tips to avoid wasting money and build wealth:

Don’t Spend Your Money on Excessive Living

Ask yourself what you really need and don’t need. Do you really need that new, fancy smartphone even though your current one is still functional? No you don’t! Not if it doesn’t directly correlate to income for you. Do you really need to eat out at a sophisticated restaurant every weekend? No. Not unless you are a food blogger. You can cook two of those four weekends and eat in. Limit being excessive in your lifestyle and find ways to enjoy life while saving money.

Invest Your ‘Spare Change’

Investing is one of the most effective ways to build wealth and contrary to popular belief, you don’t need a lot of money to get started. The random $100 bills and $20 coins you get back in change from a purchase can go towards your investment portfolio. You can also choose to keep a change jar that you keep near your door. Every day when your return home, you can add to your change jar and every quarter, use that money to add to your investment account.

Track Your Spending

You can’t build wealth if more money is leaving your wallet than coming in. To ensure you’re earning more than you’re spending, track your daily expenses. Use an excel sheet or an app to always keep a tab on where your money is going. Periodically through the year, you can assess your spending habits and compare them to your financial goals. Where there is a gap, make the necessary changes and stick to it.

Start Saving Now

No one but you is going to look after you in your older years!  No matter how small the amount, the sooner you start saving, the better life you will have in your later years. Having ample savings prevents you from needing to liquidate your investments when life gets a little rough. Saving is a habit and with all habits, it can be hard to start. Bite the bullet and start anyways and keep going for 3 months. After those 3 months, it may not get easier but you’ll feel great about the fact that you are putting you first. Don’t worry, give it time; you’ll soon become an expert saver.

Treat Investing Like Your Bills

Pay yourself first. Apart from savings, be sure to set aside your money for investments before you pay anything from your salary. Bills are important but paying yourself is critical to your overall success. The same commitment you show to paying your light, water and internet bills monthly, is the same commitment you should have to adding money to your portfolio monthly. There is never enough money to do everything you want to. It’s just the reality we all face. But, when you commit to achieving your financial goals first, you make your future a priority.

Surround Yourself With Persons With Similar Goals

Award winning talk show host, producer and philanthropist, Oprah Winfrey once said, “Surround yourself with people who are only going to lift you higher.” Find a trustworthy person(s) that will keep you accountable in your financial journey and surround yourself with friends that are on similar financial missions to you. Learn from each other and keep listening to sound advice to stay on the path to securing a solid financial future.

Stay In Close Connection With Your SSL Financial Advisor

Your SSL Financial Advisor is always aware of market opportunities that can help you grow your portfolio. It’s important on your journey to tap into that expertise regularly and capitalize on the opportunities to grow your investment portfolio.

Preparing for your financial future isn’t something you have to do alone! SSL’s team of experts can help you to get started and grow your wealth. Contact us via our website, social pages or simply give us a call. Don’t be intimidated by the investment market or share prices. Start small and as you grow, you will be happy that your money is working for you.

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.

When a person uses money to make a purchase, they often believe that the only thing they are giving up is the money itself, but this is only the half, or even the quarter of what they really lose. Many individuals are unable to identify the opportunity costs when weighing the benefits and against the costs of a payment for a good or service. Take for instance an individual makes the decision to go to the movies. They might think the only cost to them is the movie ticket and possibly something from the concession stand, however, what they don’t realize is that they forego the time they are spending watching the movie, when that time could have been used to do something else that might bring more benefit than the movie, at a lower cost. Investopedia defines opportunity cost as the benefit that a person could have received, but gave up, to take another course of action. In layman terms, an opportunity cost represents an alternative given up when a decision is made.

This can be applied to the principles of investing. The volatility of both the local and international stock markets have sparked uncertainty in many tend to stash their savings to make the best possible gain. Conservative individuals may opt to take the safe route by depositing their money in savings accounts and earn measly percentages every quarter or year, more aggressive ones will take on the stock and bond markets to wager their wealth and stand to earn significantly more returns, with far greater risks. So, who has the upper hand? For everyday that passes with money sitting in a savings account, a conservative investor loses the opportunity to put their cash in low risk bonds and generate returns higher than what a commercial bank is offering. At the other end of the spectrum, everyday spent not being proactive or aggressive about investments, is another lost opportunity in making more gains than a more a conservative, or even a moderate investor.

With more private companies edging their way into the public sphere, I urge those who aren’t knowledgeable about stock markets to take the time out to learn about the wealth they can gain by investing in equities and bonds, rather than leaving money lazy in a savings account. There are risks involved in the safest instruments, but the gains far outweigh the possibility of losses, as well as the opportunity costs.

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.

You hear the term, you probably listened to some financial guru speak about it, you researched the term, so you have a basic understanding. But how does inflation affect you?

Inflation refers to a situation in which you find that it takes more units of currency to buy goods and services than it took you yesterday or last year to buy the same products and services.

What are the specific effects of inflation?  

Why should you be concerned about its spectre haunting the economy?

Inflation Begins with Money Losing Value

To understand the effects of inflation consider this; a J$100 bill in 2000 cannot buy the same things today. A patty cost J$30 or J$40, but now the same patty cost J$150.

The same situation applies to bread, gas or everything you use on a regular basis. The significant effect of inflation is that a nation’s nominal currency loses value – it takes more Dollars, or Pounds Sterling, or Swiss Francs, to buy the same quantity of goods.

The obvious effect of this is that inflation makes it more difficult for people to afford the necessities of life if their labour is not able to keep pace with the inflation rate. This results in families struggling to keep up with the price of everything from cornflakes to college tuition.

Inflation Transfers Money From Savers and Investors to Debtors

Moving beyond the underlying effects of inflation, you come to realise there are two other significant effects of inflation.

The effect of inflation on savers and investors is that they lose purchasing power.  Whether you’ve buried your money in a coffee can in the backyard or it’s sitting in the safest bank in the world, it is becoming less valuable with the passage of time.  This can create an incentive to spend money or, under the wrong conditions, a disincentive to invest money in things that would otherwise be good for civilisation in the long-run.

The effect of inflation on debtors is positive because debtors can pay their debts with money that is less valuable. If you owed $100,000 at 5 percent interest, but inflation suddenly spiked to 20 percent per year, you are effectively watching 15 percent of your debt get paid off each year, entirely free of cost.  At some point, you’d be able to get a minimum wage job for $100 per hour and obliterate your debt.

Put more bluntly, the net effect of inflation is that it serves to transfer money from savers and investors to debtors.  It punishes those who postponed their enjoyment and invested in building roads, schools, factories, and businesses and gives their reward to those who are in debt.  It is a severe moral injustice, mostly caused by governments printing money — or, these days, making electronic entries — to cover expenses that cannot be paid out of the general treasury revenue.

Think about it.

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.

 

Investors work against their own best interest by making foolish, emotion-driven mistakes.  It is this lack of rationality, combined with an inability to stick with a valuation-based or systematic-based approach to equity acquisition.

All of this while paying little attention to marketing timing, which explains the research from studies put out by Morningstar and others that show investor returns are often far worse than the returns on the stocks those same investors own.

In fact, in one study, at a time when stocks returned 9 percent, the typical investor only earned 3 percent. Take into consideration all of the risks of owning stocks and enjoying a fraction of the reward being too busy trying to profit from a quick flip rather than seeking foreign cash-generating enterprises that might enrich your portfolio for the medium to long term.

We will address five of the most common investing mistakes inexperienced investors make. Though the list certainly isn’t comprehensive, it should give you a good starting point in avoiding moves that may come back to haunt you:

Paying Too Much for an Asset in Relation to Its Cash Flows

Any investment you buy is ultimately worth no more, and no less, than the present value of the discounted cash flows it will produce.

If you pay a higher price, you earn a lower return. If you pay a lower price, you earn a higher return.

The solution is to use the P/E ratio.Know how to compare the earnings yield of a stock to the long-term. This is basic stuff that is covered in beginner’s finance. If you’re unable to do it, you are one of the people who have no business owning individual stocks.

Incurring Fees and Expenses That Are Too High

Whether you are investing in stocks or a bonds costs matter. You have to know which costs are reasonable and which costs are not worth the expense. It can be tricky, but the consequences are too high to waive it away.

Ignoring Inflation

Focus on your purchasing power. Imagine you buy $100,000 worth of 30-year bonds that yield 4 percent after taxes. You reinvest your interest income into more bonds, also achieving a 4 percent return. During that time, inflation runs 4 percent.

At the end of the 3 decades, it doesn’t matter that you now have $311,865. It will still buy you the same amount you could have bought three decades earlier with $100,000. In short, your investments were a failure. You went 30 years without enjoying your money, and you received nothing in return.

Choosing a Cheap Bargain Over a Great Business

Warren Buffett warns against this in more shareholders letters than we care to count. If history is any indication, investors, are likely to have a much better chance at amassing substantial wealth by owning an excellent business that enjoys rich returns on capital and strong competitive positions, provided your stake was acquired at a reasonable price. This is especially true when compared with the opposite approach — acquiring cheap, terrible businesses that struggle with low returns on equity and low returns on assets.

Buying What You Don’t Understand

Many losses could have been avoided if investors followed one, simple rule: If you can’t explain how the asset you own makes money, in two or three sentences, and in a way easy enough for a kindergartner to understand the basic mechanics, walk away from the position. This concept is called Invest in What You Know. You should almost never — and some would say, absolutely never — deviate from it.

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.

One of the many viral stories closing out 2017 was of a man who after ten years of paying rent in the house he lives with his family, fell into a coma after he discovered that the landlord of the property and his wife were the same person! While making the rounds on social media, many commented: “how could he not know that his wife owned the house?” This is not a totally unbelievable situation as money is a very challenging topic to discuss between couples. Many go to great lengths to avoid the topic altogether which can possibly result in expensive lessons and heartache. This Valentine’s day we are highlighting five money topics all couples should discuss (not all at once!) over the length of their relationship.

Start with finding a quiet area free of distractions and journey into these important money- related topics:

Retirement

You may want to retire at 50. What if your partner wants to work until the ripe old age of 70? Do you maintain separate retirement accounts or is it wiser to have one joint account? You can explore the idea of starting an investment account with SSL (shameless plug).

Children

The pitter patter of little feet may be on the horizon for you two, but how many can you afford? Children are major financial commitments and couples should discuss what is possible rather than ‘would be nice’ before starting to expand the family.

Debt

Are you or your sweetheart in the process of paying student loans? Does the apple-of-your-eye have climbing credit card debt? If marriage is on the horizon then maybe a goal before saying ‘I do’ is to tackle outstanding debt together so you can begin the next phase of life with considerably more financial security.

True Passion

Your partner is their own person with passions and goals all of their own and so are you. Knowing what keeps them going and sharing what makes you feel may not only bring you two closer, but you can pool resources and agree on what direction you will take to achieve your passions.

Once your financial goals are shared, you can get to the fun part of planning! At SSL, we have products that can be suited to whatever you need. Our team of financial advisors can help you to plan your financial future through investing in local or international equities.

 

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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Inflation and unemployment are two of the most important economic variables that affect the quality of our daily lives.Based on the principles of supply and demand, the two have an inverse relationship, where high unemployment rates, implicates low inflation rates and vice versa.

The country’s unemployment rate, or the percentage of citizens of legal age to work who are not currently employed, is a vital rate used by governments to measure the health of a country’s economy.

In October 2017, Jamaica recorded its lowest unemployment rate in a decade at 10.4 percent which indicated that there have been positive changes in the performance of the economy.

Jamaicans are reeling at the fall in unemployment, especially since a large part of the fall is due to the rise in youth employment. However, it is essential to note that this fall in unemployment will eventually lead to a rise in inflation, and more significantly so if the unemployment rate falls below the natural rate of unemployment.

While an increase in the number of employed residents is something to cheer about, the country has to ensure that the pace of growth does not exceed a pace that cannot be sustained. An unemployment rate below the natural rate suggests that the economy is growing faster than its maximum sustainable rate in the short-term. This can create a domino effect which will see upward pressure on wages and prices, in general, leading to increased inflation.

This is evident in the upwards trend of the inflation rate between 2002 and 2017 where the average inflation rate was 9.41 percent. The latest recorded rate was 5.20 percent in October, which indicates a rise since the third quarter of the 2017.

Following a decade long record low rate in unemployment, Jamaicans must beware of the high possibility of rising prices. Inflation has negative impacts on every group in society and cannot be easily corrected.

It has been noted that the current international market slump is inducing  anxiety and fear among investors. Analysts theorise that the increase in wages in a tight U.S. labour market (forcing a rise in inflation) is one of the triggers for the fall in indices. Therefore, until the government is capable of reducing unemployment while keeping inflation rates low using stable monetary and fiscal policies, inflation is inevitable.

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.

Follow us on Facebook, LinkedIn and Twitter please leave us a review.

 

 

Most people get stressed out when thinking about managing their money; seeing it as just too complicated.
So to help you out, here are five simple ways to increase the odds of getting in and staying in good financial shape. We consider these five steps as key investor habits.

1. Automatic
Technology is there for a reason.

Every Investor should use it.

Set up an automatic salary deduction or a standard order, your human resource department or bank can facilitate this. More companies are giving employees this option.

Ideally, with every paycheck, have your bank send a set amount directly from an account to an investment account. You won’t miss what you don’t see in your account/salary. If you can, increase that amount over time.

The point is just to get in the habit. Even if you start small, it’s a start. And seeing your money grow can be very motivating.

2. Expect Financial Emergencies
Most persons cannot cover an emergency expense without selling something or borrowing money. So setting up an emergency fund is essential.
A more daunting prospect than needing a couple of thousands for a car repair or emergency dental work is saving in case of a layoff.

We recommend building a stash that will see you through six months of expenses. The older you are and the higher your salary, the bigger your emergency fund should be, since it may take longer to find a job you want.

3. Set An Asset Allocation And Diversify

Asset allocation is one of the most important decisions for every investor. The vast majority of returns over time come from asset allocation rather than picking the right security or the right time to invest in the market.

One rule of thumb used for setting a stock-bond allocation is that your age should equal your bond allocation. A 50-50 or 60-40 split is a good starting point, but then you need to figure out your risk tolerance and tweak your portfolio to reflect that.

Remember, investment is customized, your risk tolerance depends on you.

4. Keep Fees Low

It is important to keep fees low.
Most investors tend to panic when a stock drops, however this can provide a great buying opportunity to lower your average cost.
Focus on a cost-effective strategy.

5. Spend Less Than You Earn

Spending more than you earn has become a pattern in Jamaica. So it’s not surprising that less than a third of the population has an emergency fund in place.
Part of what can make it tough to build an emergency fund is “keeping up with the jones” lifestyle.

As we (hopefully) earn more, we often ratchet up our spending—we upgrade phones or cars or take fancier vacations—rather than increasing our retirement contributions or setting a higher amount of savings to be taken out of a salary automatically.

If you spend less than you earn, you can likely avoid getting trapped in any downward financial spiral. That can happen if you need to take out a high-interest rate loan to pay for a financial emergency you haven’t saved for.

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.

Follow us on Facebook, LinkedIn and Twitter please leave us a review.

As heartwarming as it may be to see a company like Walmart [NYSE: WMT] raise wages or getting an increase in pay at work, does this add any benefits to the working class income earners?

Let’s be honest here, J$ 2,000 ten years ago cannot buy the same things today.

Don’t get me started on the exchange rate either?

On this day ten years ago, US$ 1 was the equivalent of J$70.73, today US$ 1 is equivalent to J$ 124.17.

How are typical hardworking Jamaicans suppose to survive?

In recent years, overall inflation has been decreasing since 2013 at 9.36% compared to 2017 4.7%. As of December, core consumer prices were up just 0.2 percent from two months earlier.

That said, inflation isn’t the same for everybody. The working class have experienced more of it in recent years because the stuff they buy has become more expensive faster than the stuff the wealthy buy.

The most notable drivers are rent, food, gas, healthcare, education which comprises a much more significant share of total spending for working-class consumers.

While I wait on Statin to update their website with 2017 numbers.

Just by talking to fellow working-class members and experience, I believe in relative terms, the working class is worse off.

So how do we go about changing this?

Two words.

Financial Intelligence.

“Money without financial intelligence is money soon gone.”

Educating ourselves on how money works, options outside of savings and acquiring assets vs liabilities, I believe will aid all of us to get out of what Kiyosaki called the “rat race“.

…more to come.

 

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.

Follow us on Facebook, LinkedIn and Twitter please leave us a review.

 

People often use Saving and Investing interchangeably, but the terms mean different things; impacting our lives in different ways.

For many, the decision to save or invest can be confusing but how do you know when to start either? That decision is based on one’s ability to take on risks, their financial goals and financial situation.

Risk

A savings account carries minimal risk. You put money aside, usually in the form of cash, to be withdrawn at a later date. An investment is not cash. Investment involves using cash to purchase assets; whether it’s equities, bond or mutual funds, which have the potential to generate significant returns with the possibility of making you wealthy over time.

This can be achieved through income generated from the investment or through gains made once the investment appreciates in value. However, the risk in investment is far higher than a savings account.

Financial Goals

Saving money should always be the foundation on which you build your financial tower. Emergency funds and school fees should be done through saving.
On the other hand, long-term goals such as retirement, planning a college fund, starting a business or even to leave a financial legacy to a family member(s), should be done through investing.

Defining short term and long term regarding the number of years for each is not set in stone or defined. However, we would like to think that short-term is under five years and long-term is over five years.

Though saving and investing may have their differences, they go hand in hand. Never forget that the money used for both saving and investing is out of the league of expenditures. Additionally, whether short term or long term, both are meant for the benefit of the future and both takes discipline.

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.

Follow us on Facebook, LinkedIn and Twitter please leave us a review.

The first week of 2018 saw robust data for multiple stock-market records and while that is excellent; what remains a concern is complacency when investing.

Don’t misunderstand, we maintain our optimistic outlook for the first-quarter of 2018; however, it is imperative that investors be vigilant on matters such as geopolitical issues, central bank actions and inflation.

We are in line for a market correction, with high valuations and cryptocurrencies take over, it is too early to call an end to the bull market.
What must end is the passive investing.

To achieve better risk-rewards ratio aggressive tactics must be used. Your asset allocations must reflect where we are in the business cycle and what comes next.

The biggest risk to your portfolio is your complacency, remember the ‘Goldilocks’ environment won’t last forever.

Have you called your advisor yet?

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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It’s 2018!
The new year brings new found hope and positive energy to tackle the year; leaving 2017 problems in 2017.
While you are thinking about how to make 2018 your year, remember to consider your financial resolutions as well.

Think about the financial mistakes or missed opportunities that happened last year and develop a plan to prevent them from repeating in 2018.

Look at your finances, from your paycheck to your portfolio. It is not enough to create resolutions, “a goal without action is a wish“, you must take action. Some will be easy; some will challenge you, but remember the end game and don’t follow the 99% who will fall off the wagon.

With that said, here are a few things to help guide you while creating your financial resolutions:

Credit Care
Yes, you read that right. Reassess every and anything that affects your credit reputation. While credit scores are more prominent in the U.S, Jamaica utilises credit scores too. In fact, check out yours for free at CreditInfo – http://creditinfojamaica.com/
Loan payments such as your mortgage, car payments, higher purchase and credit cards should be reevaluated and refinanced if possible. Improper care of these will affect your credit information and will make it difficult to secure loans for the future.

Retirement Fund
Do not neglect your retirement funds.
Regardless of age, a pension plan is something every working individual should be setting aside funds for. This year look at your paycheck and consider increasing the percentage you contribute. Remember that even if you are married, it is recommended to have separate pension plans.

Rebalance your investment portfolio
Call your SSL financial advisor today!
Your portfolio may be off balance due to stock-market fluctuations and may need to be rebalanced to ensure that one investment isn’t an outsized portion of your portfolio.
Has your risk appetite changed?
Has your focus or goals deviated from your original plan?
These affect your investments more than you think. As you change, so should your portfolio.

Remove underperforming securities, take gains from others and diversify your portfolio. Securing your financial wealth should be a top priority.

Beneficiaries
Last year you may have gotten married, divorced or had a baby, this is an excellent time to make sure that your assets go to the right person in the event of your death. Understandably it is not a fun discussion, but it is an important one.

Big Picture
Use this time of year to consider the bigger financial picture. For most, we look at short-term payments or goals but what about the future?
What do want five, ten, twenty years from now? 
Aside from retirement, you may have other goals in mind that might take you a while to achieve. Keep those in mind when creating your financial plan. They encompass just about all aspects of your life and warrant serious consideration as you face the year ahead.

Remember the key to success is making simple financial changes.

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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Many people often delay saving by saying “I’ll begin saving in a few years, it won’t make a big difference.” This is a problem for two reasons. Firstly, “in a few years” may never come. It is not unusual for people to delay saving year after year until suddenly a decade or two have passed and a person still has very little in savings. The second problem with this mindset is that, contrary to popular belief, saving early actually makes a massive difference, even if the delay in saving is only by a few years. For example, let us consider a person that decides to save $10,000 a month every year for 30 years. We’ll assume this person saves $120,000 a year, and his savings are compounded annually at a rate of 7% a year over the 30 year period. At the end of the 30 year period, this person would have saved a total of roughly $11,335,294. How does this amount saved change if the person instead decides to delay saving by only five years? Well, if a person saves $120,000 a year at 7% a year compounded annually for 25 years, at the end of the period the person would have saved $7,589,884. By delaying saving for five years the person would have lost $3,745,410 – which is close to $750,000 for every year the person chose not to save, or over $2,000 for every day the person delayed saving!

Why is this? Why does delaying saving by only a few years have such a major impact on the total amount saved? This is because of the effect of compounding. The money you save continues to earn interest year after year, and over time the amount it earns in interest becomes even greater than the $120,000 contribution you make. For example, the amount of interest earned in the final year of the scenario above (from year 29 to year 30) would be over $730,000!

The total amount you save gets a lot bigger if you increase your contribution over time. Suppose you decide that every year you want to increase your contribution by 5%. This is similar to deciding to save $10,500 a month in your second year of saving, rather than the same $10,000 you saved in your first year. Using the same interest rate above, if your contribution increases by 5% a year you would have saved almost $20 million at the end of 30 years!

So the best time to start saving is today, but now you’re probably thinking “Okay, how do I save?” Talk to a financial advisor or investment firm about the options available to you. Ideally, you would have your money invested in a mixture of stocks and bonds – depending on the level of risk you are willing to take and the interest, or what we call return, you are seeking. What exactly are these stocks and bonds I mentioned earlier? By purchasing a stock you basically purchase a very small share in a company, and you make money when the company increases in value or pays out excess cash to its investors. You essentially become a part owner of the company! A bond is slightly different; by purchasing a bond you lend a company money and in return the company gives you fixed payments over time. Don’t worry if this looks like a lot to take in, your financial advisor can explain both to you in more detail and will even manage your entire portfolio for you hassle free. Your financial planner will buy any stocks and bonds that he/she thinks are a suitable investment for you, and decide the best times to sell the stocks you own. Your actual involvement in the investing can be as hands on or hands off as you would like.

The last thing you need to do is ensure that when you save, your portfolio is well diversified. This means that rather than invest in one stock or one bond, it would be best to invest in a large basket of stocks and bonds. As the old phrase goes, “don’t put all of your eggs in one basket”. Ensure that your financial planner doesn’t put too much money into a single financial instrument, but instead invests in a large variety of stocks and bonds. This will make it so that any single stock/bond losing value will not significantly impact the return earned on your portfolio. Being properly diversified will significantly reduce the risks you face as an investor.
The best time to start saving is right now. Every little amount counts, and a small investment today will be worth a large sum of money years in the future!

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.

Follow us on Facebook, LinkedIn and Twitter please leave us a review.

Many people are fascinated by the idea of being ‘rich’ or to a lesser extent, financially stable. However, what is being done to achieve this goal? Is it possible? and what can be done? Wealth is measured relative to an individual’s current financial status, how they live relative to their income and what he or she believes is wealth. Example: A and B are two persons earning the same amount of money per month, but, the obligations A could be significantly more than B, hence, B having more disposable income would, therefore, be classified as being wealthier than A.

Yes, we do know that with the state that the economy is in and the constant rise in prices of products that are essential to everyday living, it is very hard to set aside money for the future. However, it needs to be done!

Knowing the priorities in your life and setting financial goals are key factors in financial success. When I say priorities, I mean, living within your means and not allowing how other person’s lives look, or what they do, to influence how and what you spend your money on. A lot of persons put on a façade, “flossing” money without hesitation, allowing outsiders looking in, to think they are wealthy and thus wanting to match up to them so they aren’t being called “lame”. What will be “lame” is when your monthly bills come in and you cannot afford to pay them, or when your child is ready to go to school and you are unable to pay their school fee much less give them lunch money. Where will those persons be to help you? You need to help yourself!

I’ve found that the more you are secure within yourself and what you want out of life, the less you have to prove to persons and can then build yourself quietly.

Every individual has to mentally condition their minds to save. If you are the type of person that is not disciplined enough to see and not touch, here are a few pointers for you.

• Have separate savings account from your current account so that you can transfer money into.
• Get a savings pan that cannot be opened unless full.
• Give your money to a trustworthy person to hold until needed.

Personally, I allocate a specific amount of money to be used for a particular day, depending on my activities. If I end up using it all, (which is never the aim) then fine, however, if I don’t, I would then drop any extra there is, even if it’s $5, into my savings pan.

Making a conscious effort to be able to say no to yourself is most important. You see a nice shirt you want to add to your closet? A new pair of shoes that catches your eye? You need to ask yourself if it is necessary to get that at that very moment. I am of course not saying no one should treat themselves because everyone works hard, so treating yourself is necessary, but when and how often is the question. Some persons will be able to treat themselves more often than others but a good tip to this is if you do really want the shirt and it costs $2000, put down $1000 per month and at the end of two months you would be able to buy that shirt. The aim, however, is to be able to buy what you want, how much you want and when you want it, of course with also being able to satisfy your obligations.

It is very important to know yourself and what you are able and unable to do. However, it would not be wise to put all your eggs in one basket. The majority of the wealthiest persons in the world or specifically Jamaica, have different streams of income. Therefore, investing in stocks and bonds, real estate, opening your own business, spending wisely or even savings, aids in how comfortable you feel about your financial security.
Of course, everyone has different levels of income, responsibilities, and goals, but no matter the amount, make an effort to save a percentage or a fixed amount of your income every month for emergencies or just future plans. It is better to put down money in small portions to mitigate the impact it has on your pocket than to take a big chunk out of your pay in one go. Depending on your financial status and availability of startup funds, investing or starting a business will not be easy, the benefits may not come quickly but once there is persistence, you will see your wealth grow. Risks and sacrifices have to be made for everything in life but the more you put your mind to achieving something, the easier it gets even with failure. Failing means to try a different strategy or simply try harder. Step out of your comfort zone and always tell yourself that you can be where you want to be financially. Life is about making mistakes and picking yourself back up from it and then keep pushing. However, one mistake you don’t want to make is to never make that next step in securing your future. No one wants to be living pay cheque to pay cheque. Everyone wants to be able to do the things they love while tackling the things they must do, so everyone needs to take that next step and put aside fear and negative thoughts so that their tree may bear fruit. You do not have to start big but start somewhere. Start small and keep growing.

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 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.

Follow us on Facebook, LinkedIn and Twitter please leave us a review.