Sat | Oct 20, 2018

Pay off your debt before you invest

Published:Wednesday | April 27, 2016 | 12:00 AM

How to invest small amounts of money

Many persons are frustrated with their low levels of income and are interested in growing their earnings, but are sceptical because they believe they do not have enough to invest. For every individual, the aim is to ensure that your revenues are greater than your expenditure consistently. If you want to increase you wealth over time, the aim is to ensure that the growth rate of your revenue and revenue streams are greater than the growth rate of your expenses and expenditure leakage. In today's Briefing, we will discuss ways to invest small amounts of money; these habits, if practiced on a day-to-day basis, can help you achieve your financial goals.

1. Try to pay off your debt before you start investing

No one should attempt to invest small amounts of money if they have small amounts of debt. This is important, especially if the rate of return on your investment is less than the interest payments on the debt. Your debt is unsustainable because it is growing at a faster pace than your income. This includes credit card debt; most local credit cards charge double-digit interest rates, there are few investments available that can provide double-digit returns. The trade-off between the two is negative; in such a scenario, it is better to use the money pay off the credit card.

2. Establish a retirement fund early

Set aside a small amount; between five per cent and 10 per cent of your salary or earnings every month for you retirement. Try to take advantage of retirement packages offered by your place of employment. If such an option is not available, establish you own retirement plan with a financial institution. Even if you paying pension at work, try to find a way to establish a pension fund otherwise.

3. Partner with others

Many times you have an investment project, but you don't have enough money initially. Throw 'a partner' and build up you capital, then use the partner draw to kick-start your project. It might not be the grand idea you wanted to in the initial instance, but it's a good start. You could also explore the option of seeking investors or business partners, if they share similar aspirations. Make sure that all the necessary paper-works are signed in case the business relationship should go sour in the future.

4. Invest in the Jamaican stock market or the Junior Stock Market

There is increased interest in the Jamaican stock market since it was ranked as one of the best in 2015 by Forbes magazine. Many global investors have been researching the nature of the market and are positioning themselves to enter. You should, too. The indices grew considerably last year and are expected to advance further this year, due to improved macroeconomic stability, doing-business environment, along with expectations.

5. Start practising with a cheap online investment platform or online brokerage firms

There are several websites that allow you to invest and which monitor your investment for you. Betterment and Prosper are two recommended low-cost investment platforms on the Internet. They are able to create, track and monitor an investment portfolio for you based on your risk-tolerance level. There are several others, if you are interested research, it for yourself.

6. Invest in

your own ability

Many people are good at doing something, maybe you can sew, or draw, or you can fix cars or you are bright but unqualified. Go back to school to improve your knowledge and expertise of your skill or trade. Educate yourself with self-learning tools on the Internet and YouTube videos. It will pay off in the long run. The world evolves every day; you, too, must evolve - and garner the ability to evolve which cannot be done without education and/or training. Whatever you do, try to invest in your own ability; think and research how you can transform you skill or knowledge into earnings.

7. Last but

most important

Start your own business. Nobody knows your dreams and aspirations like you do. Unfortunately, for some people their dreams and aspirations never materialise because of fear or some other disadvantage. Do not let this happen to you. The world is becoming more and more dynamic, use the skill and ability you have to offer a good or a service that doesn't exist in your constituency, and focus on growing the business longterm. Get help and advice from experts and other businesses along the way.