Financially Fit & FabuIous – Investing for Income

INVESTING is critical to wealth creation, as it’s usually more difficult to amass a large net worth with just regular savings. However, the financial marketplace in Jamaica is filled with many investment choices and sometimes it might be difficult to decide where to invest your money.

Before making any major investing choices, you first need to think about what you expect to gain from your investments. Do you want your investments to grow significantly over time, or is it more important for you to realise immediate gains from investing your money?

While investing is definitely an important route to accumulate wealth for the future, there are several reasons why you may also need to invest towards short-term goals or to satisfy your cash flow requirements. With the current pandemic and the impact on earnings, many households are facing reduced income. Let’s look at some of the benefits of investing for income:

SUPPLY RETIREMENT INCOME

One reason to own investments which supply income is to ensure that there is a steady stream of cash to cover your retirement needs. Sometimes your pension payments may not take care of all your expenses when you’re retired, so these investments can help to boost your cash flow.

SUPPLEMENT WORKING INCOME

You don’t have to wait until you’re retired to benefit from your investment income. Placing a lump sum on a short-term income-generating investment can provide you with regular cash flow to help cover your regular bills, or a periodic amount to take care of expenses such as school fees.

To meet your objective of receiving an income, consider investments which are designed to provide cash flow. Some options include money market instruments such as government treasury bills, debt instruments such as bonds, and stocks which pay dividends.

UNDERSTAND YOUR OPTIONS

Money market instruments are ideal for meeting your short-term income needs, while bonds can supply you with a fixed income amount for several years. Stock companies with established dividend payment policies will consistently pay out some of their annual profits to shareholders.

GET EXPERT ADVICEKarelle McKenzie is a licensed Investment Advisor from Scotia Investments Jamaica Limited.

When making investment decisions, it’s best to consult with a professional who can help you to select the types of investments that will suit your needs. Speak with a Scotia Investments Advisor who will guide you in designing an investment portfolio that’s right for you.