The global financial markets have been ravaged by stormy seas for the past 4 years. As we enter the second quarter of 2013, here are some tips to help you navigate these tumultuous waters as you journey towards creating, sustaining and increasing your wealth.

1. Consistently put aside funds in interest-bearing accounts: Pay yourself first and have your money work for you. Don’t underestimate how much money you can earn by saving. See the example below for an idea of how much money you can earn from saving just US$5000 per year:

Year Savings amount Investment size Interest Rate End Value

0 (now) $ 5,000.00 3.25% $5,162.50

1 $ 5,000.00 $10,162.50 3.25% $10,492.78

2 $ 5,000.00 $15,492.78 3.25% $15,996.30

3 $ 5,000.00 $ 20,996.30 3.25% $ 21,678.68

We recommend saving in hard currencies such as the US dollar to protect the value of your investment. Deduct your savings from your paychecque before the money gets gobbled up by bills or by other frivolous expenses.

2. Establish your goals and keep them in mind: A map will be of no assistance if you don’t know where you’re going or where you want to be. Precisely identify your fiscal targets and remain conscious of them at all times. If you focus on where you want to be in the future, this will help you make the necessary sacrifices in the present. Create a “vision board” that displays pictures or numbers of exactly where you want to be.

3. Educate yourself: Before you map out your journey, you must understand the potential benefits, downsides, risks and nuances of each path. It is essential for all investors to understand the instruments they are investing in and the risks associated with same. You don’t have to be a finance guru to understand how investment products work. Inform and empower yourself by reading and asking competent analysts as many questions as possible.

4. Select investments in line with your goals: Now it’s time to map out your journey by selecting the route that will most efficiently take you to your chosen destination. Remember there is a positive relationship between risk and potential return: the higher the risk, the higher the potential return, and the lower the risk, the lower the potential return. Choose your comfort zone along the risk/return trade-off continuum. Avoid schemes that seem too good to be true.

5. Monitor the performance of your retirement savings: Do you contribute towards a pension fund? How is it performing? Don’t forget to monitor the performance of your pension fund manager to make sure that your retirement nest egg continues to grow and keep its value. All too often investors are surprised that their savings are insufficient to maintain their lifestyle during retirement. Remember that money loses its value over time, thereby increasing the importance of having a good investment manager.

6. Good places to start: Bonds, mutual funds and stocks are the most widely retailed investments and present good vehicles to grow and preserve your wealth. The proportion of your portfolio that you hold in each instrument will depend on your goals and your appetite for risk. Whichever instrument you choose, we recommend that you invest in institutions that have strong financial and strategic positions – ask a financial analyst to help you find them both locally and abroad.

Contributed by the team at Sterling Asset Management. Sterling provides advisory and financial services 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: info@sterlingasset.net.jm