Assessing the investment portfolio of a 30-y-o

Published: Sunday | December 8, 2013 Comments 0

Personal Financial Advisor OranHall

QUESTION: I am seeking some assistance in building my portfolio and choosing the right types of investment plans to suit my goals. The market is flooded with various options and I am a bit confused regarding which direction to go or how to choose the right mix of products. I am 30 years old and I have accumulated the following:

Savings with both COK and AAMM credit unions which I use for rainy days or if I need a little 'top-up';

ScotiaMint for my emergency fund;

Critical Health Care Plan and also a Gold Accumulator Plan with Sagicor.

I have successfully paid off all education loans for undergraduate and graduate levels with only a car loan of $23,000 monthly. My next big goal is to purchase an apartment within the next year. I am not sure if I'm being overly ambitious. I currently have $300,000, which I would like to invest to build my deposit. In addition, I also want to start now in investing long term in stocks and bonds, etc.

Thanks in advance for any assistance you can give.

- Maxwell

FINANCIAL ADVISOR: I am encouraged by the steps you are taking to secure your financial well-being in the early career phase of your life.

There is a limit to how much advice I can offer you considering the limited amount of information you have shared. This is understandable.

Our financial market has really been developing. This means that all of us must make every effort to know and understand what is available and to determine how suitable these many products are to our needs. You should continue to educate yourself so that you will be able to make decisions on your own as much as possible. In addition to the increase in the available products, they are getting more complex, so continuing education is an absolute necessity.

Let us look at what you do not have and what you have. You do not have much debt. This is good in the sense that it gives you much flexibility in making your financial and lifestyle decisions.

It is good that you have invested in your education. This is the best investment anybody can make.

I note that you are saving with two credit unions for the rainy day. This is the same as saving for emergencies and it is sensible to earn income on such funds while keeping them in a form that makes them easily accessible.

You should perhaps determine how much that emergency fund should be and seek to place any amount over that in a higher-yielding instrument. That does not mean that you have to move your funds from any of the credit unions. They have products that offer competitive returns.

You should take another look at your ScotiaMint savings. You already have a pool of emergency funds and, moreover, your ScotiaMint offers you several benefits. The particular benefit I will underline is the tax-free returns you can derive from it if you maintain those funds for five years investing up to a maximum of $1 million per year and withdraw no more than 75 per cent of the interest earned each year. This is, therefore, a medium-term instrument, not a short-term instrument.


Having a critical health-care plan makes sense. Critical illness is not a respector of age and it can be quite costly. Your Gold Accumulator policy provides you with life insurance coverage and an investment opportunity with potential for good returns as it is linked to equities and segregated funds. Consider this as the foundation of your long-term investment programme and value its insurance component.

Apartments are not cheap these days and there are many expenses associated with purchasing one in addition to the deposit which is required. Investment returns are not very significant so I wonder to what extent you can grow $300,000 in one year to realise that goal.

Additionally, you want to diversify your investments by investing in stocks and bonds. You are being quite sensible in seeing the investment portfolio you want to build as long term. That is how it should be. I wonder, though, if you have the capacity to build a dedicated long-term investment portfolio while building up funds for the deposit on the apartment. You have a serious balancing act on your hands.

One other positive approach that you are taking in managing and planning your affairs is in setting a time for the achievement of your goals. Without it, it is hardly possible to have proper direction and to gauge the progress you are making.

I am sure that you recognise that you must save aggressively to generate funds for investment, but you must be patient in pursuit of your goals. You are sufficiently focused and disciplined to achieve them.

Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of "The Handbook of Personal Financial Planning", offers free counsel and advice on personal financial planning. Email

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