Two weeks ago, we looked at committing to a savings journey even when it seems there’s nothing to save. By returning to the tried and tested values of our elders who found value in the saying “one-one coco full basket”, saving even during high inflationary times is doable. You just need to find creative ways to decrease your everyday living expenses; that is, cutting back on your spending. After all, didn’t so many of us have pre-Independence grandmothers or great-grandmothers who would always be able to find a little extra, in the event of an emergency, which she kept under the mattress, from the little she had? Think about it. Those days were not the best, moneywise, for women. There was no equal pay for equal work law before 1975. If women even worked, that is. Yet they were able to save, send their children to school, take care of the household, and everything else they were called upon to do. If they could save, so can you.

But what if your shoestring budget simply cannot be adjusted anymore? Another option to keep rising costs from eating away at your finances whilst earning interest is by investing your money. Now, there are some people, intimidated by the term “investment portfolio”, who will insist that this applies to people more well-to-do than them. Or that investing is something to attempt when things have settled down and there isn’t so much volatility in the market.

Absolutely not true.

In fact, your financial advisor will likely tell you that now is exactly the right time to build an investment portfolio, which is really a fancy term that means your ownership of any financial asset that, over time, is expected to earn a return or grow in value, or both. These assets are designed to hedge against inflation, which simply means they will protect the value of that investment regardless of inflation.

No shame in starting small

We explored, in that column, the $500 challenge, wherein whenever you come across a spare $500-note in your wallet, instead of seeing it as disposable income which you can blow on a treat for yourself, save it. Do not, for any reason, dip into it. If you can do this even once a week, in six months you would have saved $12,000, which is more than enough to open a certificate of deposit (CD). This is just by saving $500. This, by the way, is an investment and you’ve just started your investment portfolio.

Start small; there is usually money that can be tucked away. The point is that you would have begun your investment portfolio with loose change that is the basis of this fixed-interest security. After that, you can always add on to the principal during the maturity term of the account and continue earning interest at the same rate. Or, if the maturity date is about to arrive, you could opt to cash out of the first CD and, reinvesting the money in a completely new CD. Or you could just leave it alone and allow it to keep rolling over and accruing more interest.

Three more investment options

But this is only skimming the surface of your investment options. Especially if you are risk-averse and want to start by dipping your toes in the investment pool and playing it safe. There is nothing wrong with this. In fact, deciding on which investment option is right for you depends on your appetite for risk. When it comes to investment, a tenet to understand is: the bigger the risk, the bigger the reward. Usually. You might want to go a little bigger.

Shares: The natural progression for most Jamaicans who don’t have much money to invest is the stock market. You can buy shares in a publicly listed company which entitles you to a portion of the company’s profits. The more shares you buy, the more dividends you should earn. The challenge, therefore, is to figure out the right company to invest in by finding out its financial well-being. The minimum amount of shares that can be bought is one unit and share unit prices differ, depending on the value of the company.

REITs: Real estate is an extremely effective asset to have in your investment portfolio. But if you don’t have the money to buy property on your own, you can still invest by way of a real estate investment trust or REIT company that owns, operates, or finances income-generating real estate. It’s modelled after mutual funds, in that it pools the capital of its investors, making it possible for each individual investor to earn dividends from real estate investments without having to buy property themselves.

Pension plans: Contributing to your employer’s pension plan is a good way to invest. With every pay cheque, a portion of money is taken and diverted to your pension. Depending on the percentage you choose, and if your company offers a matching contribution, then that’s really passive or “free” money being earned that you can use to build your investment portfolio even if you leave the company before you retire.

Bottom line

Forget the investing myth that says you need a lot of money to invest effectively. Start small to grow your investment portfolio if you don’t have a lot of money to invest right away. As our grandparents and great-grandparents used to say: one-one coco full basket. Start to build an investment portfolio today and begin growing wealth.

Next week: More investment options if you don’t have a lot of money