Tue | Sep 21, 2021

A guide to navigate the world of investments

Published:Sunday | March 14, 2021 | 12:19 AM
Understanding Investments
Understanding Investments

Financial adviser, educator, and newspaper columnist Oran Hall is on the move again. Having co-authored the Handbook of Personal Financial Planning – a first for the local market – he has now produced his latest book appropriately titled Understanding Investments.

The timing of the release of this book is more than propitious. It is consistent with the increased national interest in investing, perhaps triggered by the public response to the Wigton Windfarm Ltd ordinary shares listing followed closely by the Transjamaican Highway Ltd share offer, and of late, the frequent Additional Public Offerings (APOs) by some corporate giants.

Not surprising, the book, which is designed to demystify a great deal of financial jargon, is written using a simple, direct writing style – a style he has no doubt mastered from writing his weekly personal finance advice column in The Sunday Gleaner.

The newly released book takes a comprehensive view of the many investment issues likely to bother the new investor namely:

• The ABCs of investing

• How financial markets work

• Creating an investment portfolio

• Investing in ordinary shares

• The most common investment options in the local market

• Investing in overseas markets

Hall uses the first chapter of his book to expose his readers to themes that will obviously recur in any discussion of investment. In this regard, he explains the critical role the financial market plays in an economy, that is, to balance the demand of individuals and corporations that have surplus funds and are looking for a place to park and earn on the funds with deficit entities willing to borrow to meet their needs and to source equity capital. Interestingly, Hall also addresses the controversial issue of common mistakes that investors make. He lists these as:

• Lack of investor education

• Poor understanding of investment tactics

• Concentrating on selection and timing

• Having too short a time horizon

• Basing decisions on past good performance

• Treating past performance as irrelevant

BEHAVIOURAL ISSUES

Significantly, he also tackles behavioural/psychological issues affecting investment decisions such as fear, greed, and aversion to loss. But he asserts that the aforementioned constraints can be addressed by “their (investors’) grasp and practice of the basic elements of investing.”

In “The ABCs of Investing” – the foundation chapter of the book – he begins with a description of the assets used for investment. He lists securities such as bonds, preference shares, ordinary shares; business; real estate; precious metals, such as silver and gold; collectibles, such as paintings; and antiques.

Then, having defined securities – the main focus of the book – he immediately moves into defining the main elements of investing, such as asset allocation, diversification, goal setting, risk, and volatility.

In an interesting paradox, though he uses the term the ABCs of investing, he makes it clear that investing is not quite as easy as ABC and that “making successful and effectual investment decisions requires considering the uniqueness of each investor … with the objective of getting the best returns in light of existing tax policies, the inflation rate and the market.”

It is also noteworthy that in his just-released book, Hall allocates a fairly detailed treatment of investing in bonds. Starting with the different types of Government bonds, he explains how bond prices are determined and explains the inverse relationship between bond prices and interest- rate changes. He also discusses the pros and cons of bond investments and details some formulae for determining the quality of corporate bonds. He ends this chapter with a reminder that the quality of a bond is critical as it determines the safety of the principal and the certainty of income.

RETIREMENT INCOME

Hall ends the book by offering a guide on ‘Investing to Make Retirement Income Last’, but not before returning to familiar territory in the penultimate chapter to the matter of personal financial planning – the subject of his first book. Titled The Role of Investments in Personal Financial Planning, he discusses investments in relation to insurance, tax management, estate planning,and retirement planning and also reviews the financial planning lifecycle.

Hall’s conscious effort to create a better understanding of investments succeeds because in addition to his focus on markets, instrument, and strategies, he essentially buttresses explanations of critical topics with immediate examples. For example, in his treatment of how interest rate changes affect bond prices, he inserts a section in the chapter termed Illustration, where he does just that, with simple figures to put his readers at ease. Additionally, he ends each chapter with a conclusion that summarises the main point/s of the chapter and uses useful tables to illustrate important matters such as the asset mix and the comparative returns of money market and capital growth unit trust funds.

All told then, Oran Hall’s Understanding Investments is a definite first for the local financial market. It gives a comprehensive guide on investing for the inexperienced investor as well as the more seasoned investor who wants to keep current with trends in investments. It is a must-read for students doing undergraduate courses in finance as well as professionals doing any serious course in financial management.

Title: Understanding Investments by Oran A Hall

ISBN paperback: 978-976-96559-0-4

ISBN ebook: 978-976-96559-1-1

Copyright: Oran A. Hall

Publisher: Claremont Publishing

Ebook available at: https://payhip.com/b/UvL9