The topic of investment can be an intimidating one, particularly for those of us who are not versed in the language. There are many areas to cover coupled with the ever present fear of losing your investment. You don’t have to look far to see some examples. Years ago, there was an implosion of Ponzi Schemes in Jamaica. What started out as a ‘God send’, became a nightmare for investors.
I am personally acquainted with stories of individuals who borrowed from the traditional financial institutions to invest in companies such as Cash Plus and World Ventures. Today, they are stuck repaying loans that have not yielded any good returns.
Even more recently, news emerged of the man who won $45 million in the lottery some years ago but today is broke, again because of bad investments. It is therefore clear that the language of investment, even in its most basic form is important for the layman.
Investments may be denoted in three main formats; cash, stocks and bonds. On whichever end of the investment spectrum you may fall, i.e. the investor or the investee, it is important to learn the intricacies and differences between the varying types of investments.
Cash is money in its rawest format. Usually when a financial advisor suggests that you put some of your portfolio into cash, he is referring to certificates of deposit, treasury bills or money market accounts.
A bond is essentially a loan to a company or to the government. Recently, local investors cashed in on the National Debt Exchange bonds which matured after a five year period. It is reported that the Government of Jamaica paid out US$550 million including interest in February 2016. A nice chunk of change for persons who were able to invest in that instrument.
When you buy stocks in a company, you are purchasing ownership in the firm. Generally, the better the company performs, the more your share of stocks is worth. If the company does not do so well, your stock may be worth less.
To continue reading, purchase Vol.8 #5, 2016 Issue.