Oran Room | First steps towards investing | Business

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QUESTION: I am interested in investments. I need to know how much money it takes to get started and the different aspects of investing.

– Angela

FINANCIAL ADVISOR: Investing is acquiring an asset with the expectation of generating a return in the form of income, capital appreciation or both, and the income generated depends on the type of asset. Investing goes beyond buying securities, which are negotiable financial assets. Thus, it is possible to invest in real estate or a business.

Investing is using money to make money, so everyone is committed to investing in one way or another. Maybe you have already invested and you even have investments, but chances are you are interested in investing in securities of which there are several types.

The ones that you hear the most about locally are stocks, bonds, debentures, preferred stocks, mutual funds and mutual funds. The latter two allow so much flexibility in their composition, they give investors the opportunity to participate in the ownership of several types of assets in several different sectors of the economy and in several different markets.

It is also possible to invest in assets such as currency, precious metals like gold and silver, commodities like grains and oil, and cryptocurrencies, which are virtual currencies, for example. example. Some of them are volatile and speculative and require a great deal of skill and understanding of the markets and what is happening in the local economy, as well as in the global economy.

Some forms of investment also require large funds, while others are such that more than one investor can participate. Mutual funds are a good example. It is best for potential investors to stay away from investment instruments that they do not understand, as well as those that do not match their risk profile.

Investors should be aware that no investment comes with a 100% guarantee. Expected returns are not always realized for many reasons. For example, conditions may change in the market, in the economy and in the entities that issue the various instruments. The word associated with this is risk.

EXPECTED RETURNS

When considering investing, it is important to understand the extent to which you are able and willing to tolerate these variations in relation to expected returns. This can mean that stock prices are not rising as expected, negatively affecting your stock portfolio or your investment in mutual funds or mutual funds.

It is also possible that issuers of debt securities, such as bonds and debentures, may not honor their commitment to pay interest when due, or even to repay borrowed principal.

Also consider that it is necessary to align when your invested funds can be made available to you with when you might need your money. So, if you are going to need your money in a short period of time, investing in assets like stocks which can drop in value and can sometimes be hard to sell is not the best option.

But stocks may be right for you if you plan to keep your funds invested for a long time, if you are able to tolerate price fluctuations, and if your main concern is long-term capital appreciation.

For quick access to the funds you are investing, it is best to invest in mutual funds and mutual funds, which are fairly liquid instruments.

Although some forms of investment require a lot of money, such as real estate, it is possible to invest in them indirectly through mutual funds. Thus, it is possible to invest in real estate by investing in a property investment fund.

INVESTMENT DECISION

Many people leave their decisions entirely to investment professionals. It is best to have a basic knowledge of what instruments are and how they meet particular needs so that the investor is able to make an informed contribution to the investment decision. It’s time to start reading relevant literature and listening to and watching financial programs.

You will notice that I am focusing on the more basic instruments, as it is best to start with what is most easily understood and available.

If you are interested in stocks, bonds, mutual funds, I suggest you consult the telephone directory under “Investment Advisory & Securities Service”. The Jamaica Stock Exchange website – jamstockex.com/investor-centre/jse-brokers – also has a list of stockbrokers.

The minimum amount required to buy common stock varies. For example, one broker requires $ 10,000 and another $ 25,000, although some brokers require a higher amount. To buy units of a mutual fund, you would need at least $ 2,000 to invest in the money market fund and $ 10,000 in the capital growth fund of a mutual fund. particular. Another mutual fund sets the minimum investment at 200 units.

Enjoy your trip.

Oran A. Hall, author of Understanding investments and main author of The personal financial planning manual, offers personal advice and guidance on financial planning.

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