Financially Fit & Fabulous – Investing in Stocks and Money Market instruments – Part 1
WE know you may have been thinking about new ways in which you can increase your cash flow and savings. In this issue, we will be looking at two investment alternatives which will allow you to passively grow income, which means, your money is virtually working for you while you sleep.
What is investing?
Making an investment is primarily speaking to the process of putting your accumulated savings into financial products which are expected to grow in value, faster than that of day to day banking products.
The first option we will consider is the stock market which allows you to buy shares in companies on various trading exchanges like the Jamaica Stock Exchange. Double benefitEarnings for growth
When you decide to invest in a company’s stock, there are two main ways you are likely to get a return or increase on your money. First, companies on the stock exchange periodically pay dividends, which is usually a share of profit, to shareholders.
The other avenue is for the stock to increase in value. When a company’s stock goes up in value, so will the value of your shareholding. Note however, that trading on the Exchange can also result in a fall in value as well, positive growth isn’t a guarantee. So you will have to research the company, examine its prospects, and get advice on how long to continue to hold this stock. You should also carefully think about this asset fits into your general risk appetite, goals and time horizon. Getting into the gameBe Cautious
Opening a stock brokerage account will allow you to trade in stocks and shares, as you can either directly discuss with your investment advisor which company to invest in and which to sell as you move along your investment journey.
Do not be impulsive in your decision to buy or sell shares. Read company reports on the Exchange and also ask for your financial advisors or broker’s opinion. Remember that investing in the stock market is usually for the long term.
Get professional advice
Choosing an investment advisor or stock broker is an important decision, as not only will this individual/company help company help you to select investment products, but products but should provide comprehensive financial advice. They will look at the total you and you and all the financial goals you may have in general, including retirement, healthcare, and everything related to money. Also be sure to talk about administrative fees or fees or investment minimums and other general company guidelines.
Investigate the fees and commissions charged, as this will also affect your personal earnings. Some brokerages require a larger amount of money to open an account. Shop around.
Shynelle Anderson is a licensed Investment Advisor from Scotia Investments Jamaica Limited.
