Question: I collected insurance funds from the death of my sister over a year ago. I have some of the funds on investments at Sagicor. The thing is, she left two daughters and I'm looking to maximise the funds in the best investments I can find. Is Sagicor the best investment financial institution for me? I would like for her two girls to get the best educational help from this insurance.
Thanks in advance for your advice.
You have highlighted some important issues: the value of life insurance and education, the importance of investment and the importance of the strength of a financial institution.
I commend you for the interest you are taking in the welfare of your nieces and trust you will succeed in doing what is best for them.
Life insurance is very important for persons who have dependents, especially children. It is a means of replacing the income of a person who dies, thereby enabling beneficiaries to stand a reasonable chance of realising their goals and meeting their living expenses. As is evident in the case of your nieces, education is a very important need to be taken care of. It is one of the best long-term investments, but it is generally very costly.
It is important to have an investment strategy that addresses the needs of the beneficiaries. The same investment strategy cannot be applied to all situations. In the case of these children, it is important to preserve their capital and, depending on what is available otherwise to meet their day-to-day needs, it could be necessary to have a regular and reliable stream of income. But inflation is a very present reality and efforts have to be made to protect the purchasing power of their portfolio. One thing is sure: you cannot employ a high-risk strategy.
I do not generally comment on or recommend specific institutions in this column, but I can say that the Sagicor Group is a strong financial group. Beyond that, though, you would want to know that the financial institution you have entrusted your nieces' money to has suitable investment products for them. I do not know how the funds are invested and the nature of the products in which they are invested.
It is important that you are clear about their needs and the timeframe in which they will need certain resources. The funds should be invested such that the funds will be available at those times. The best investment is not necessarily the one that yields the highest return. It is very likely that such an investment is the most risky and the least liquid.
Sagicor Investments has a wide range of unit-trust products and other products to meet several investment objectives. My expectations are that your adviser would have selected, after a careful analysis of the needs of your nieces, suitable instruments. Two advantages of the unit-trust products are their ability to be converted to cash easily and their diversification, which contributes to the reduction of risk and allows investors to invest in instruments that they would not normally have been able to invest in with just their own funds.
I suggest that you visit the company and have a serious discussion with its representatives. Let them explain the approach they are taking in investing the funds for your girls. You should be very clear about what you want and should not be afraid to ask questions. One thing is sure, if they cannot find the time to have a profitable discussion with you, then they do not deserve your business. I wish you well.
Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of 'The Handbook of Personal Financial Planning', offers free personal financial planning advice and counsel. Email email@example.com