BASSETERRE St. Kitts, October, 17th, 2012 -- Thinking of ways to grow your wealth? If not, you probably should. Most of us face the reality of growing old and being increasingly limited in the ability to work and generate income at the same robust pace as in earlier life. We also face the reality of increased longevity, that is, living to a riper old age than previous generations.
Therefore, the challenge of providing for ourselves all the way through retirement age makes it necessary to focus on savings and investments today, as early as possible. Building wealth through investment is one way of preparing and providing for our future needs.
Savings and investment, simply put, is using money today in a way that allows us to spend it - and any surplus it generates - at some time in the future. Most employees, young and old, dream of a day when life would not depend upon a month-to-month paycheck.
Some convert such dreams into enterprises, which allow them to generate incomes of amounts greater than their monthly needs. The result is significant savings and wealth. However, others do not manage to realize these dreams, as there are risks inherent in every investment, and enterprises can fail just as well as succeed.
The key is to be mindful that the budget for basic needs must be completed and satisfied first, before funds are allocated to investments. Next, the monies allocated for savings and investment must be carefully used in wealth-building opportunities based on a balance of lowest risk and highest possible yield. The aim is to place your money in savings and investment opportunities that generate surpluses; and where, even if they fail to generate any surplus, there is relative certainty that you will get back that money itself, when you need it.
Here are some options that many have used to generate wealth:
• Invest in the shares of companies, dividends can be generated and or capital gains realized;
• Become an entrepreneur by creating a successful business, such as a local shop or bar, as a limited liability company to generate dividends;
• Lend money to private companies (e.g., debentures) or governments (e.g., bonds and treasury bills) and to banks (e.g., certificates of deposit) to earn interest income.
• Acquire real estate and let other people use your property for residence, office, business place, entertainment venue or storage facility, to generate rental income. In addition, it may be possible to realize capital gains or profit on sale of the real estate at a future date.
Although these are only four options, they are good examples of asset classes that OECS persons can use as investment vehicles for building wealth. With these, you have the opportunity to acquire sources of future dividends and capital gains on shares, interest income on debt instruments, rents and/or profits on real estate as a means of starting and growing your wealth.
The purchase or creation of certain underlying assets, which have value because they can generate or be converted into cash and be available to us to be used for goods and services, is the essence of successfully wealth building.
The ECSE makes it possible for the purchase of shares in companies and the lending of monies to companies and ECCU Governments through bonds, notes and T-bills. For details on how to invest on the ECSE, visit a licenced broker/dealer, and see up-to-date market information on the ECSE’s website www.ecseonline.com.
This article was written by Mr Tarlie Francis, Senior Manager, Market Operations Division, Eastern Caribbean Securities Exchange (ECSE) the as part of the activities commemorating Financial Information Month, October 2012, celebrated under the theme: Challenge Yourself: Innovate-Compete-Succeed.
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