Home' Trinidad and Tobago Guardian : March 1st 2015 Contents SBG6 PERSONAL FINANCE
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt MARCH 1 • 2015
Investing is normally considered a good
way to make your money grow and
create future wealth. However, before
you begin to invest your hard-earned
money, you must consider a few things
such as your objectives for investing
and the level of risk that you are willing
Ask yourself these questions:
1. How much risk is right for me?
Remember, higher risk means that you may
lose some or all of your money. It is important
to ask yourself: do I want to take the chance to
make more money if it also means I may lose
money? Or would I rather make less and keep
my money safe?
2. How much am I hoping to make by investing?
This aspect deals with the return on your
investment which can sometimes take the form
of income (interest or dividends) or capital gains
or capital losses. Generally, more risk is incurred
if you expect a higher return.
3. For how long do I plan to invest?
An investor's investment horizon ie the total
length of time that the investor expects to hold
a security or portfolio, is primarily determined
by the investor's investment goals, including
income needs and risk tolerance. For eg, saving
for a car is a short-term goal whereas allocating
money for retirement is a longer-term goal.
Once these goals are clearly defined, the appro-
priate investments can be selected to best achieve
4. How easy will it be to get back my money
from an investment?
Cash is normally considered the most liquid
asset since it is normally kept in small quantities
in a purse or wallet while larger sums are kept
in a regular bank account. The amount which
is placed in a bank account can usually be
retrieved from the teller or via an ATM.
In most cases, when you give up the oppor-
tunity to easily access your money, you should
obtain higher returns. However, it must be noted
that many investment options which promise
a fixed rate of return, usually lock your money
into a specified time frame.
Know yourself and understand what is impor-
tant to you. In this way, you will be better
informed to make the best choices that are right
So, now that you have considered the issues
above and answered the questions, it is time to
visit a registered financial adviser/broker to
The next question that you must ask yourself
is: which investment product(s) should I use?
Warren Buffet, famous philanthropist and
one of the world's richest men, always says:
don't put all your eggs in one basket and he is
We recommend using a varied approach to
investing so if something goes wrong with one
product, you don't lose all of your money.
The three major types of investments products
which the TTSEC regulates and which you can
consider are: equities (stocks/shares), bonds
and mutual funds.
Here is a simplified explanation of these invest-
Ownership of a corporation represented by
shares. Shareholders are entitled to a propor-
tionate share in the corporation's assets and
• A debt instrument issued by a private cor-
poration or government agency to raise money
for various long-term projects
• The investor is "lending" money to a com-
pany or a government
• There is a periodic interest payment which
is normally stated "up front"
• The "loan" is paid in full at maturity
3. Mutual funds
A mutual fund is a professionally managed
collective investment scheme that pools money
from many investors to purchase a diverse mix
of securities. Each investor owns shares or units,
which represent a portion of the holdings of
The types of securities that a particular fund
invests in are identified for the benefit of investors
in the fund's prospectus, which is a legal doc-
ument, required by and filed with the T&T
Securities and Exchange Commission.
• Simplicity: A minimum investment enables
a small investor to get a full-time investment
manager to make and monitor investments
• Diversification: An investor obtains a broader
range of investments than he could purchase
• Liquidity: The investor can request that his
shares be converted into cash as per the rules
of the fund.
Before confirming any investment decision
you should also undertake these steps:
• Obtain written documents detailing the
nature of the investment;
• Read and understand those documents;
• Verify the legitimacy of the investment;
• Deal only with registered financial institu-
tions and intermediaries;
• Find out your options if something goes
Before investing, educate and empower your-
Visit our Web site to view the full list of reg-
istered investment advisers
Visit our Web site or YouTube page, follow us
on Facebook, read our Blogs or call 624 2991.
Disclaimer: The T&T Securities and Exchange
Commission is not an investment adviser nor is it
a brokerage house.
This article is intended solely to provide you with
the information you need to make sound investment
decisions and to ensure that you are familiar with
and understand your rights and responsibilities as
a consumer of financial services.
I want to start investing, but how?
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