Budget - $100,000

Investors seeking to build up retirement funds can expect average returns of 12 per cent per annum on fixed income investments and 25 per cent per annum on the stock market over the next 18 months.

Hence, an investor who can start such a fund with J$100,000 and save J$10,000 per month over the next 18 months, can expect their funds to grow to $346,000, assuming a portfolio mix of 50 per cent in fixed income investments and 50 per cent in stock market investments.

An investor who starts their investment with J$500,000 and saves J$20,000 per month over an 18-month period can expect their funds to grow to J$1,070,000. Certainly, by investing more in the stock market, one can expect higher returns.

OPTIONS

One option for investors is the DB&G Money Market Fund (MMF), which is invested in a pool of local and overseas fixed income investments, government bonds and certificates of deposit. This is ideally suited for persons who are more cautious and as such, desire a high level of security. This fund has grown by 124 per cent (17.5 per cent per annum) over the past five years.

The DB&G Premium Growth Fund (PGF) on the other hand, is invested in a pool of local regional and United States based stocks. This fund allow investors to take advantage of the higher returns of the stock market while reducing their risk, as the fund is expertly managed and well diversified across companies, industries and countries. This fund has grown by 261 per cent (29 per cent per annum) over the past five years.

Recommendations from DB&G Stockbrokers

Budget - $50,000

Many small investors and small business people are wondering what to do with their money right now. Although the stock market is an excellent option for long-term investing, another alternative, especially on a tight budget is to invest in you.

Building your human capital can give returns faster than even the stock market. Consider taking $50,000 to upgrade your current skill base by going back to school. This can benefit you in a couple of ways. By increasing your knowledge base. Within 18 months, you could qualify for a higher paying job. If you negotiate even a 20 per cent pay increase, you would have exceeded the expected inflation rate.

Alternatively, you could learn to make something for resale. This is an excellent way to take the $50,000 and grow it exponentially as you will have the skill for the rest of your life.

Another alternative is to take the $50,000 and put it back into your business. Take the time to find out what your clients really want and consider buying that to resell to them. Meeting customers' needs in a profitable way is the same thing that the big companies do, so why not you?

Recommendations by Mayberry Investment

Budget - $200,000

Let us make the following assumptions: A typical college graduate, 22 years of age and new to the world of savings and investments. An individual this age is usually ready to take measured risks to get attractive returns.

Let us start with the car. A recent college graduate is usually eager to obtain a car, and as such, he or she would want to minimise the risk and protect his or her capital within this relatively short investment horizon. A first car should be simple; one that is comfortable and reliable to get you around for at least three years.

Given $200,000 to split between the car payment and an investment portfolio, it is recommended that this individual also take advantage of financing options available. Assuming the individual can comfortably pay $15,000-$20,000 per month for a car payment, we will recommend the following strategy:

For Example

Type of car: Mitsubishi Cedia

Price: $600,000

Investment Horizon: 24 months

RECOMMENDATION

Invest $80,000 for two years at current interest rates in government paper to meet down payment of $100,000. Borrow $500,000 from a banking institution.

The balance of $120,000 left from the initial investment amount can be placed in a balanced portfolio of equity and fixed income. Given the individual's age, he has the ability to accept more risk, and as such, he can place 60 per cent in stocks and 40 per cent in a fixed income unit trust fund.