INVESTING CAN be considered as preparation for financial health. As children we learn from our elders that we must save for a rainy day. Like them, we may choose to save in commercial banks, credit unions or through insurance-based investment schemes.
To appreciate investing, a simple understanding of the investment rule 'The Rule of 72' and compounding (compound interest) is required.
Not all investment rates are the same. Different methods are used to calculate interest earned. The 'Rule of 72' allows you to understand the relationship between interest rates and the time it takes for your money to double. Divide the number 72 by the percentage rate you are earning on your investment.
For example, if you are earning six per cent interest on your investment, it will take 12 years for your money to double (72 divided by 12 is six). At 12 per cent interest it takes six years! What you need is as many doubling periods as possible from your investment. How do you do this? You must find the best possible investment offering the most competitive rate.
In order to know if you are truly creating wealth, you need to know what your financial institution does with the money when it is handed over to them. Usually it is invested in the Jamaican, Caribbean or world economies. Having worked hard for your money, your money should work even harder for you. Your money needs to work harder, because of ever-changing fiscal and monetary policies pursued by the government and, of course, inflation.
MONEY DOUBLED
Many persons who invested in the Jamaican economy between 2003 and 2004, in instruments such as equities or Government debentures, have seen their money doubled.
Where you choose to invest is a critical decision. There are institutions that do both saving and investing but just as you would not go to a general practitioner for surgery, but rather a surgeon, so too you need to go to the experts in investing for investment advice.
Know your goals, short and long term; familiarise yourself with what is out there; and make that call or visit. Investment houses provide sound advice to its clients in a highly personalised and professional environment, walking you through the various processes, thereby making your experience productive and fundamentally rewarding.
Begin preparing for your future financial health today. Simply start by applying the 'Rule of 72' to all your investment decisions, in order to uncover the best possible investment choice for you. Allow your money to work hard, and finally, seek the guidance of an investment adviser.
To further discuss investing and the many options we have available, contact DB&G at info@mydbg.com or toll free at 1-888-CALL DBG.
