A resolution worth keeping
The Sterling Report
It's that time again when we sing 'Joy to the World' and 'Jingle Bells'; enjoy that fruitcake and sorrel with family and friends. The festive season is indeed here and for persons that celebrate Christmas it is truly a wonderful time. However, while we buy gifts, get that well deserved treat for ourselves or take that long overdue vacation please bear in mind that January 1, 2014 is literally knocking on our doors. While it may be too late to give tips for Christmas shopping let's explore the possibility of including investment tips in our New Year's resolution. Even though we say it every year, let's commit to putting an action plan in place this time around.
For many of us, putting aside funds for investment is not an easy task and we have to make a concerted effort to do so. What better time to start but at the beginning of the year. This is a good time for an honest self-analysis: What have your saving habits been like in the past year? 2014 is the year to pay yourself first before the money gets gobbled up by bills and other expenses. It doesn't matter the amount you put aside at first, just start the habit of investing.
Ok, so you have decided to put funds aside, the next big decision is where to put that money. Are you planning for a specific goal? Depending on your goals the investment options available will vary. If it is, for example, you are looking to buy a car or a house within a year then you are likely to need a short-term investment such as a Repurchase Agreement Account (denominated in either US dollars or Jamaican dollars). If your goals are short-term you will require that the funds be liquid so that you can put your hands on them as quickly as possible. The repurchase agreement allows you to place the funds for periods of 30-days, 90-days, 180-days or 365-days giving you more flexibility. For longer term goals, you may want to explore the world of bonds (sovereign bonds, corporate bonds, bonds denominated in US, Jamaican dollar or any currency, the possibilities are endless), mutual funds, equities and the list goes on.
Do you contribute towards a pension fund? If your employer does not offer this benefit you may consider opening an Individual Retirement Account (IRA) and start saving independently. Having now opened the account, try to invest as much as possible in your retirement account. Retirement is a "no joke matter" and proper plans should be put in place to support your "golden years". To many persons end up waiting until a few years before retirement to start a plan, the best advice would be to start now.
It has been said many times before and it can never be stressed enough, it is always best to prepare a realistic budget and stick to it. This is a great way to save for things you require in the future. If you track your expenses you will quickly spot over-spending, this helps you to avoid buying things you don't need and breaks you into the habit of putting funds aside.
Resolutions have been made before and usually by the end of February (if we are lucky) we are right back to where we started. For 2014, in order to be financially sound, we have to strive to keep this resolution and learn to pay ourselves first. We have to form the habit and continuously put funds aside in order to experience a joyful season all year round.
Dian Blackwood is Manager/Personal Financial Planner with Sterling Asset Management Ltd. Sterling provides medium to long term financial advice and instruments in US. and other world market currencies to the corporate, individual and institutional investor. Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: firstname.lastname@example.org