AS the sun sets on the year 2023 and the new year 2024 peeks over the horizon, we look back at the year that was, while looking forward to the opportunities ahead. There are many lessons to be learnt from the experiences of the past year which should mould our decisions with the dawn of the new year. What did we learn as investors and how can these lessons guide our investment strategies going forward?

The past year was filled with both expected and unexpected occurrences in the local and international markets. The local financial market was shocked at the start of the year by the news of alleged fraud on a large scale. Investors were forced to pay more attention to their investments in several ways. They were forced to not only know and understand the intricacies of investments made, but also the individuals and companies with whom they invest. The irony is that financial institutions are mandated to “Know your client”, but now investors have learnt that they need to “Know your investment advisor” given the happenings of 2023. This shows the importance of investor and advisor relationships in achieving your financial goals.

International markets experienced unprecedented high levels of inflation and interest rate hikes in 2023. As governments and central banks across the globe worked to control the high levels of inflation using monetary policies, different classes of financial assets were affected. With the announcement of each increase in policy interest rates, bond holders saw the prices of their bonds and market values of their portfolios fall due to these actions. Stock markets were also negatively affected around the world and investors expressed their concerns. This, however, provided opportunities for investors who were prepared, as they were able to position themselves to benefit once inflation slowed and the prospect of further interest rate hikes dwindled.

One major lesson learnt is that we must know and trust our investment advisor, whether it is a company or an individual. A good advisor will provide continuous and transparent information to ensure that the investor makes the best decisions which are in alignment with your goals and risk appetite. The flow of information between you and your advisor should continue to be clear and consistent even after making the initial investment. Markets change daily and as new information enters the market, your advisor should provide updates on how your investment may be affected. Likewise, as the investor, if there are changes in your financial goals and/or risk appetite, it is imperative that you share this with your advisor to determine if your current investment is still a proper match. This is how the investor and advisor relationship will be of most benefit.

Another major lesson was that even with market uncertainty and volatility, opportunities abound. The key to financial success is to be prepared to take advantage of opportunities as they arise, so as to reap the benefits of these investments once market stability returns. It is often difficult to make a financial decision during volatile times, but having the relevant information and foresight will help you to not only make the best decision, but to also remain calm and focused. When markets return to normalcy and a state of stability, the returns will be worth the investment.

Build a healthy relationship with your advisor based on communication and trust. This will ensure that your investments are always in alignment with your goals. Communicate with your advisor and maximise your returns by taking advantage when opportunities arise. Season’s greetings and all the best for the new year.

Dwayne Neil, MBA, is the AVP, Personal Financial Planning at Sterling Asset Management. Sterling provides financial advice and instruments in US dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm. Feedback: if you wish to have Sterling address your investment questions in upcoming articles, e-mail us at info@sterlingasset.net.jm.