How to find new investment products

new investment products

Aug 22, 2022

Last week my colleague Dwayne highlighted the importance of opening a new account when one closes. As he mentioned technology and high levels of customer service should help make this a seamless process. The real dilemma that many investors face when their accounts are closed is what should they do with the available funds.

Investors may be overwhelmed by the process of finding a new investment product. Before making any decisions, it would be good to speak with a licensed financial advisor to help find the replacement product that suits you best. Speak with them about your financial goals and the role the previous investment held in your financial plan.

When considering replacements ensure you are comparing apples to apples and not oranges. Was your previous investment for income generation or growth? Which of the available products out there are aligned with your current financial trajectory?

One cannot only consider the coupon as there are various other factors to consider. One such factor is the taxation implication of the new product. Are they taxed at source? Are they tax free or tax deferred? The tax implications will affect the real return on investment.

Another important factor to consider is the credit worthiness of the issuers of your new investment. Are you comfortable with the level of risk associated with the issuer? Do your research and seek guidance on the financial stability of the issuer.

If you are considering moving the invest to a new institution, you should also shop around. Ask advisors about fees involved with their products. You should also ensure that there are no hidden features to new products being shown to you. Enquire about the spreads that the institutions take, do not be afraid to shop around on price. You should also have full details about exit points from your investment. Are there points where you may exit the investment or are your locked in until maturity? If you are allowed to exit early are there any penalties?

For new funds you should also enquire if the rates being given to you are special rates on new funds? Will the rate change drastically after maturity?

Whichever product you decide to invest in and be a part of your portfolio, ensure that you have a true understanding of the risk involved. It is pertinent that the new account fits with your financial goals.

Investing in a new account with sound financial advice from a licensed advisor will help you navigate the investment landscape and balance your portfolio to suit your financial goals.

Christine Rankine is the Manager -Personal Financial Planning at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm

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