In­vest­ment ad­vice for a hard worker

Jamaica Gleaner - - BUSINESS - Oran A. Hall, prin­ci­pal au­thor of ‘The Hand­book of Per­sonal Fi­nan­cial Plan­ning’, of­fers per­sonal fi­nan­cial plan­ning ad­vice and coun­sel. Email fin­viser.jm@gmail.com.

QUES­TION: I am a hard­work­ing in­di­vid­ual who is seek­ing ad­vice to go into in­vest­ing. I have been in­ter­ested in in­vest­ing from an early age, but I grew up poor, so I did not have the funds to start. How­ever, I have now saved up a por­tion and want to get started. At the mo­ment, I have in ex­cess of $100,000 that I am not us­ing now, which I want to in­vest and rein­vest. Could you as­sist me with op­tions that could give me a good turnover please? I am 27 years old, and I am look­ing to start a fam­ily and ac­quire a house, so, at the mo­ment, I work seven days a week to be able to start this.

— James

FI­NAN­CIAL AD­VISER: You are on the right path in many ways, but reap­ing real mean­ing­ful gains from your in­vest­ments could take some time. In­vest­ing re­quires con­sis­tency, good risk man­age­ment and fix­ity of pur­pose.

Here is what I like about your ap­proach: You have saved first, the funds you in­tend to in­vest are not funds you want to use now, you want to rein­vest your gains, you are pre­pared to ex­am­ine sev­eral in­vest­ment op­tions, you have iden­ti­fied some goals, and you want to start at a rel­a­tively young age.

You should not al­low the rel­a­tively small sum that you have saved to de­ter you, and al­though I be­lieve in hard work, I sug­gest that you do not push your­self too much. It is im­por­tant that you take care of your health, so you should get ad­e­quate rest.

I can un­der­stand why you would want your in­vest­ments to give a good turnover, that is, you want a good yield from your in­vest­ment port­fo­lio. I de­lib­er­ately re­ferred to an in­vest­ment port­fo­lio be­cause it is im­por­tant to in­vest in more than one type of in­stru­ment or in one in­stru­ment.

Di­ver­si­fi­ca­tion, as this is called, is an im­por­tant way to re­duce risk. This ap­proach will not give you the same re­turns as the high­est-yield­ing in­stru­ments or the same as the low­est­yield­ing in­stru­ments, but it can still yield very good re­sults depend­ing on the pro­por­tion of your funds in­vested in

the bet­ter­per­form­ing

in­stru­ments.

For a young per­son just start­ing to in­vest with a lim­ited pool of funds and lim­ited knowl­edge of in­vest­ment is­sues, I would not rec­om­mend that you take a high-risk pos­ture and that you go for an ap­proach that al­lows you to di­ver­sify ef­fec­tively. It seems to me, too, that you would be bet­ter off al­low­ing per­sons with in­vest­ment ex­per­tise to man­age the in­vest­ments, at least ini­tially.

Later, with more knowl­edge and re­sources, you may want to make more of the de­ci­sions your­self and take more risks to im­prove your chances of get­ting higher re­turns, but you should note that this ap­proach could also re­sult in lower re­turns.

The in­stru­ment that best fits into what I said above is the unit trust. There are so many dif­fer­ent types in the Ja­maican mar­ket to­day, and they al­low a fairly wide range of op­tions. I sug­gest you check the Yel­low Pages for help in mak­ing con­tact with them.

I am not promis­ing that you will make lots of money to­mor­row, but you can build up a fair amount of wealth over time with the right ap­proach. I will be among the first to ad­mit that the path to wealth cre­ation and ac­cu­mu­la­tion can be chal­leng­ing, par­tic­u­larly for young per­sons like your­self, but the sit­u­a­tion is not hope­less.

You have not said that you have a job, but I be­lieve you do. If you im­prove your skills, you should be able to earn more and have more to in­vest or even start a busi­ness later.

You have made some good steps. Do some re­search now and take ac­tion.

PER­SONAL FI­NAN­CIAL AD­VI­SOR

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