Each month, thousands of Jamaicans contribute 5%, 10% and as much as 20% of their monthly salary to a pension fund or individual retirement account. In some cases, this is matched by your employer. The most important message for these contributors is that - your pension investments will NOT support you in retirement. These funds will NOT be sufficient to replace your income 20 years from now. Why?
As I wrap up my article series "Securing Your Legacy," we look back on the journey we've shared. Throughout the series, we've explored the significance of defining your legacy, establishing clear goals, and delved into the importance of estate planning, selecting the right financial partner, drafting a will, and understanding their impact on generational wealth. To conclude, here's a summary of the key topics covered in this series.
“Bad luck”, “Jinxed”, “Silly”, are adjectives’ some clients have used to describe themselves when speaking to me in our initial conversations. I’m sure I am not the only advisor who has heard these terms before. In a world of information overload, influencers and unfortunately fraud, we can easily become hooked on data that is not beneficial to our financial health. While ease of access to financial information has its benefits, it also comes with risks. An awareness of sound financial concepts and where to find reliable information is key to safeguarding your financial situation.
A very important, but often overlooked aspect of investing and wealth creation is protecting and preserving your investments. Generally, we focus on the risks associated with individual assets or asset classes, as we should, but having made those investments it is equally important to take all precautions to protect our investments. In recent times, technology has become a vital part of how we communicate, gather information and monitor our investments.
In the world of bond investing, risk mitigation is critical, hence bond covenants serve as important safeguards of investor interests. These contractual agreements outline the terms and conditions of bond issuances, providing a framework to protect bondholders from potential risks and uncertainties. Among the myriad of bond covenants, change of control restrictions, ratings restrictions, and sale of assets restrictions stand out as key provisions aimed at fortifying the position of bondholders.
Last week our team watched the Bob Marley One Love movie, as a part of a staff movie night that was dubbed “One Team, One Love”. While watching, I got an appreciation of Bob Marley's music and message of love, unity, and justice and how it continues to resonate with people worldwide. As I watched, I also realized how much his life and legacy also offer profound lessons in estate planning. Despite passing away at a relatively young age, Bob Marley's estate planning, or lack thereof in some respects, has been the subject of much discussion and legal battles.
While it's important to note that individual investment strategies vary widely and should not be generalized based on gender, there have been some observed trends and differences in the way men and women approach investing. These differences are often influenced by a combination of social, psychological, and economic factors.
Albert Einstein allegedly called compound interest the 8th wonder of the world. In the realm of personal finance, few concepts wield as much transformative potential as compound interest. Compound interest can help turn modest investments into substantial wealth over time. At its core, compound interest is the concept of earning interest not only on the initial investment but also on the accumulated interest from previous periods. This compounding effect can lead to exponential growth.
Throughout my article series entitled, "Securing Your Legacy," we've explored the importance of estate planning in wealth creation, having the right financial partner and choosing the right financial assets. As we continue the journey, this week we explore advanced strategies to protect and distribute your assets, specifically the importance of having a will. This article is written in collaboration with Stacey Knight, attorney at law*.
