The information from this article is based on an interview with Philip Williams
Investments can often seem like an intimidating and unattainable venture for many; however, this isn’t true. While it may seem like the only people who do it have a lot of money or are highly financially literate, investments are a financial process open to anyone. Yes, it requires some knowledge and some financial advice, but it is available to everybody and it’s something everyone, especially young people, should consider and do.
In episode 13 of the Bankers Association of Trinidad and Tobago’s Facebook Live Series, our host, Pauline Joseph discussed with Philip Williams from Phil In The Gap, how more Trinbagonians can learn and actually consider personal investments.
Here are some tips to get a better understanding of investing:
- What is the difference between savings and investment?
While some people think they are similar, savings and investments are very different. Savings is money that is being put aside for more short-term financial goals, it has no risk however, it has minimal returns. Investments, on the other hand, are more long term and position people to have a higher earning potential. For example: (hypothetical numbers)
If you put 3% of $2,000 into a savings account over 20 years, you would end up with around $3,600.
If you invested that amount over 20 years, in a long-term asset returning 10%, your return would be close to $13,000.
- Why Should I invest in my 20s and 30s?
It is important to invest in your 20s and 30s to cultivate the discipline from early on. More importantly, the sooner someone prepares for their future in their 20s-30s, they are putting themselves in a better position at achieving their financial goals later on.
It is important to keep a balance in life, so while it is important to cultivate the discipline from early on, people in their 20s-30s can still ensure they are doing things they like, just with a bit of sacrifice. These small sacrifices, in the beginning, will help 10-15 years in the future.
- Should I invest in stocks?
Before investing in anything it is important to assess and analyse your financial position. This includes factors such as high credit card debt, no emergency fund, etc. Essentially you want to assess your relationship with money and your comfort with investment.
Once you have an idea about that then it is important to go to a financial consultant or stockbroker for some advice about how to move forward. Williams suggests that one of the better investments for a new investor is a Mutual Fund. A mutual bond is defined, as:
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus. (Investopedia)
Williams suggests this for new investors as it is a balanced fund with a mix of stocks and bonds, and it is managed by someone. That being said it is still important to monitor this quarterly to benchmark its success for you!
If you want to learn more about investing in Trinidad & Tobago, watch the video below:
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