Issue 2 July 2016 23
FEATURED ARTICLES: INCOME INVESTING: The Power of Dividends
Six Millionaire Habits We Should All Adopt Balancing The 4Fs:
Family, Forty & Financial Freedom The tax break could help you achieve your
financial dreams
+
WHAT’S IN DR. GIBSON’S PORTFOLIO?
TIME A TESTAMENT: Scholarship Winner turns Young Investor
4 6 12 14
Welcome Letter Lamar Harris
Six Millionaire Habits We Should All Adopt Renee Barnett
What’s in Dr. Gibson’s Portfolio Ann Jackson-Gibson
Balancing the 4Fs Sarah Meany
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#BOSSTIME
18
A Testament: Scholarship Winner turns Young Investor
20 22
Matthew Gray
Romario Sterling
PAINTING THE TOWN
PLUM!
The Tax Break Could Help you to Achieve your Financial Dreams Justine Cork
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#BOSSTIME
28
Income Investing: The POWER of Dividends
31
Kaci Fennell
Jonathan Khoury
#BOSSTIME
Michelle Jackson
Editorial Team July 2016 Issue 2
GRAPHICS Judine Johnson
Alanah Jones
Renee Barnett
contributorS Lamar Harris
Brand Supervisor & Project Manager
Brand Associate & SSL Foundation Co-ordinator
Ann Jackson-Gibson
Alanah leads the Marketing &
Renee is a vital element to the
Sarah Meany
Brand team and her main focus is to
Marketing & Brand team at SSL.
Matthew Gray
build brand value at SSL. She
Renee takes charge when it comes
Romario Sterling
oversees
the
to compiling SSL's BusinessLife
Justine Cork
BusinessLife publication, ensuring
articles and ensuring that everyone
Kaci Fennell
that is properly aligned with the
is well informed on the company's
SSL’s painted picture.
happenings.
all
aspects
of
Renee Barnett
Jonathan Khoury Michelle Jackson
Judine Johnson
info@sslinvest.com
Graphic Designer & SSL Foundation Co-ordinator
www.sslinvest.com
Judine plays an integral role at SSL
33½ Hope Road, Kingston 10
by bringing communication to life
876.929.3400
and
that
BusinessLife
involves with
her
designing excellent
graphic skills. Judine handles all the design and layout elements for the publication. The team relies on her to create the aesthetic appeal for our readers.
Unit B10 10 Fairview Town Centre Montego Bay 876.764.0276 @ssljamaica
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Dear Friends, As BusinessLife releases its second issue, we reflect on the strides we have made as a team at Stocks and Securities Limited (SSL). In the last edition, published in February, we announced that plans were in place to ‘Paint the Town Plum’. Our team has worked diligently to increase the level of financial literacy in Jamaica and encourage the message that “Everyone Needs to Invest!” You will notice that the theme of most of the articles featured in this issue are encouraging ambitious Jamaicans that their financial dreams are achievable through behavioural changes, taking control of their money, and putting it to work. It makes me extremely happy to welcome contributions to our magazine from clients themselves. It is a true reward to see that there is a mutual loyalty and a feeling of safety and security between our team and our clients, as this represents the independency that we strive for as we continue to evolve from a family business to being more institutionalized. Perhaps what is most exciting to see, is the manifestation of ambitious Jamaicans, specifically the case of a young client who didn’t realize how easy it was to open an account and officially call himself an “investor.” This young man is one example, but there are many other examples that make us proud to continue to ‘Paint the Town Plum’. The sales and service driven culture is consistent across all segments at SSL; delivering portfolio returns, while maintaining an exceptional service standard. As we expand as a Company and extend our reach and access to Jamaicans, to our people that need the financial guidance and planning the most, our core values and what motivates us most will remain. We want to create investment portfolios for every single Jamaican. Nobody in our society should be alienated because of intimidation or fear because investing seems only for the rich. We are continuing to demystify the complexity that the financial industry can sometimes create. It is at the core of our values to help attain financial freedom. At SSL, We make Investing Easy! Yours respectfully, Ms. Lamar Harris General Manager & Company Secretary
6
Six Millionaire Habits We Should All Adopt
- RENEE BARNETT
T
oo many of us think that becoming a wealthy millionaire is such an unattainable goal. Well I am here to tell you that it is not. Several people from undesirable circumstances have done it. However, once you tell yourself that something is not achievable, you have limited yourself, and for that reason alone you won’t be able to achieve it. If you want something badly enough you have to be willing to work for it and sometimes this means going through struggles and failures and embarrassment, but that’s ok because this will help to build you into the resilient person
you’ll need to be to survive. To help you reach your goals of financial success here are a few habits that were found to be common with most millionaires.
There is a solution to every problem.
7 Increase Your Income Now I know what you’re thinking, it’s not that easy to increase your income, employers aren’t just giving out raises. You’re right, they’re not, but you shouldn’t let this stop you. Most millionaires have several income streams. In these harsh economic times you have to create other sources of income for yourself. A great way to start is to find something you’re good at and capitalize on this skill. Create a business for yourself on the side, a business that is scalable. There is a solution for every problem. create these solutions and believe everything is possible even when others see impossibility. Allocate Your Funds Correctly Managing your money well is a crucial habit to learn, and it’s something many persons don’t know how to do. After all they don’t teach you how to manage your finances in school. The first step is to evaluate your income in proportion to your expenses. A general rule almost every single wealthy person adheres to is ‘pay yourself first’ this means you have to put a portion of your earnings away before you even begin to pay any of your bills or spend any money. I know this may seem hard but once you start making a habit of this it will become second nature and in turn, will force you to implement rule number one (increasing your income). Your expenses should never exceed your income. I know, minimum wage in Jamaica is low, the cost of living is high etc… However, most times, these are just excuses. Create a budget and track all your expenses, then find room to cut back on some of these expenses. Once you’ve
done this, allocate a percentage of your income to saving. Now it’s important to note that saving alone isn’t enough and you must always save to invest (as this will give you returns on your funds). Split your savings into two segments; your emergency fund and your investments. Forget the Jones’ If someone were to ask you if you think that most persons are financially successfull, your answer would probably be no. Which brings me to my point, if most persons aren’t financially successfull then why are you following the crowd? You need to study the habits of those who are financially successful, find a mentor and learn from them. If you’re always following the crowd you’ll never achieve the success that only the small percentage are able to achieve. Be Decisive “Analysis of several hundred people who had accumulated fortunes well beyond the million dollar mark disclosed the fact that every one of them had the habit of reaching decisions promptly” Think and Grow Rich, Napolean Hill. You may not necessarily be a decisive person but it’s something you can train your mind to be by making decisions that can be corrected easily and quickly. Persons who are decisive know what they want and more often than not they get what they want. This trait is not just a trait of the wealthy but it is also one of the most crucial qualities a leader should possess.
8 People Skills “In the process of reaching the seven-figure mark, I’ve learnt dealing with people is the most important attribute”- Daniel Ally. After all, the core of a business is sales and these sales can only come from consumers (who are people). Businesses are in business to serve people therefore in order to perform profitable behaviour one must master the art of dealing with people assertively and with charm, just as much as strategising. No one likes doing business with unpleasant people. It is important to understand and have the ability to relate to your consumers in any given situation. Understanding your Risk Tolerance and taking the Right Ones The only way you will reach your goal of true financial success is by taking risks. We have to learn to take risks, when you play it safe in life you’ll get mediocre results.
No one ever achieved great results by playing it safe. In order to succeed, your desire for success must be greater than your fear of failure. Sometimes the risks you take won’t pay off and you’ll end up failing, but that’s okay. Failure is part of the process but it is not final. Failure is to be treated as a lesson which in turn makes you better prepared to take the next step to success. Understand your risk profile and how much risk you are able to endure and make strategic decisions in accordance with this.
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WHAT’S IN Dr. Gibson’s PORTFOLIO? Why did you start investing? I started investing because when I got my very first pay cheque one of the surgeons I work with now, said to me “Ann, no matter what you earn, you must put aside something, no matter how small it is” and I went and bought some NCB shares, a very small amount at $5 and history will tell you that I made the right decision. I started the habit of investing from my very first paycheque and I’ve been investing from then until now. Why did you choose SSL and what has your experience been like with us so far? I would say SSL chose me, what happened was, you had a very very enthusiastic young man who came and explained what you all did. Because I had been investing from I started to work, you can imagine I’ve been through almost every single investment house in Jamaica and I said to him, “Why should I go to SSL? I’ve been with everybody.” Over the course of a year he would call me regularly, give me tips and I said to myself, “You know, I want to come over to SSL.” Additionally, I tried to get into the bond market but the minimum to get into the bond market was a bit prohibitive for me and SSL was the only investment house that allowed me to invest less than what the minimum was elsewhere. So I was able to partake in what only the so-called “rich” are able to partake in and I was very happy for that opportunity. So I brought quite a few of my colleagues with me so they could also benefit from this. We’ve had our ups and downs, as I’ve had with all brokerage houses, but I stayed with SSL because you offer services that no other brokerage firms are offering. Also, whenever I do have a problem and express it to management, the management team is very good with solving them. They listen patiently and they try to find a solution and I appreciate that. What has investing done for you? In essence, investing is providing me with my pension. what advice would you give to a young investor? The same that was given to me, start with your very first pay cheque, no matter how small. It must become a habit to invest and it must make you uncomfortable if you have earned and you have not put aside something because in the end this is what will allow you to make bigger investments and ensure you have financial independence.
13 who is your favourite SSL employee? I am absolutely in love with Mr. Ammar, ABSOLUTELY in love with him. He has a fantastic personality! He is a young man with a very bright future. I love Jon too, I think he really understands the business and in truth he has given me advice which if i had followed, I would have been in a much better situation with my equities than I am right now. How do you balance managing your own portfolio with work? Managing my portfolio? You guys manage my portfolio , so I am able to work! What is your favourite equity and bond right now? AT&T is my favourite equity right now, it has stood the test of time when I bought it was niggling because in terms of capital appreciation it was just trading between $30 & $35 and now it has taken off. My favourite bond right now will always be my JPSCO Finance, 11%, you can’t beat 11%. how will we get more people in Jamaica to invest? Keep talking to them, keep calling eventually they will come around. When SSL came to our MAJ symposium and spoke, people came back to me and asked about my experience and how I did it and I take every opportunity to encourage them to invest because as far as I can see, this is the only way to become financially independent. There is nothing more secure than being able to receive my bond payment on time every month.
Dr. Ann Jackson Gibson is a Jamaican
anesthetist
and
a
faithful SSL client since 2012. She shares her point-of-view of what SSL means for her and when is the right time to begin investing.
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Balancing the 4 Fs:
Family, Forty and Financial Freedom! - SARAH MEANY
Everyone wants to be considered financially savvy and effortlessly attract wealth. We all know the premise that the earlier you start, the longer your money works for you and the greater your chance of amassing a fruitful nest egg. As a nation we understand that saving and investing create a snowball effect, wherein you start small and build over time. We constantly acknowledge that it’s never too early or too late to start saving. So why, with all this knowledge are we still shrouded in debt with an ageing population of non-believers? As individuals get older, approaching the dreaded 40s, one’s priorities, earning potential, dependents and net worth change dramatically. In life, the best practice of hedging against uncertainty is continually striving to create a financial plan that will help you navigate the reefs and choppy waters till you are able to steady your course and continue your journey towards securing your finances. However, in reality, we are living in a consumer-centric society that strives to surpass the concept of “Keeping up with the Kardashians”. It is this ingrained societal flaw that creates a sure-fire way to get oneself totally off the track of securing financial freedom. In life if you don’t have a plan, you keep doing more of the same, and you never have anything to show for it. This theory also resonates true for creating fiscal independence.
In order to obtain balance between providing for the family, the amassing needs of a 40-something and the desire for financial freedom, we suggest following these five tenets to move along the path to securing your financial freedom. 1. Be a Planner: Most people don’t plan to fail, they just fail to plan. Create a budget that targets short-,medium- and long-term goals, and be prepared to revisit these every three to six months to adjust. Decide why and what you are willing to give up to achieve those goals. Ultimately, you should become your own money manager, using fiscally sound best practices to plan and grow your wealth. 2. Be Crafty: How do you increase your net worth? Plan to save 20 per cent of what you earn, while continually striving to diversify what you have in your financial portfolio. Don’t know where to start? Enlist a licensed financial advisor to educate and share options to ‘tun up yuh’ money for 2016! 3. Be a Risk Taker: Investing money is not just for the wealthy. It may be overwhelming, particularly in a recession, but a recession is the best time to invest! Most things are down or going down. However, only invest money you have planned and stick to it! 4. Be Diverse: Why simply preserve what you have? Alternative investments such as US-dollar based ETFs, bonds, and managed financial plans are a great way
15
Prosperity is not only a mindset but a choice!
of keeping your money safe from fluctuating interest rates, while creating a diversified portfolio that matches your risk appetite.
can become lost, or disheartened along the way. Plan a course of action and stick with it to manifest and secure financial security.
5. Be Positive: Prosperity is not only a mindset but a choice! If you have a negative association with money then ultimately you are limiting your financial potential!
One needs to understand the assets that they have and the liabilities/responsibilities that tap into your net worth. On a continual basis, families need to evaluate assets, liabilities, investments and goals and see if they align and are both fiscally sound and appropriate for one’s age and financial goals for the future.
Remember to consistently create and stick to a budget; it’s the cornerstone that helps you track expenses, control in/out flow of funds, creating controls for your wealth, so that you can begin to see how your money is working for you. With a little planning, you can reverse this spendthrift mindset, and put yourself on the pathway towards financial independence. By changing your ‘financial state of mind’, although a massive adjustment, it is one that is uber necessary to insist on securing your ultimate net worth. We are living in an ‘instant gratification’ pursuance society, where people demand immediacy in all aspects of their lives. This conundrum creates a ying and yang whirlwind that messes with the natural ebb and flow of creating compounded wealth. One has to keep in mind that investing is a patient process, where many individuals
In order to consistently attain key financial goals that are germane to every individual, especially families with parents approaching 40, there are areas where you will have to curb your relationship with money and how you use it. Becoming fiscally savvy is a balancing act of needs and wants, one has to continually prioritise short, medium- and long-term ‘core’ individual/family goals for one’s finances. So if you’re at that turning point where you want to take control and rejuvenate your finances then you are in the right place.
Decide to change your financial future, say no to debt, and pursue financial freedom relentlessly!
16 23
Managed Plans Six Month Performance as at April 29, 2016
PRODUCT TYPE
6 MTH ACTUAL RETURN
ANNUALIZED RETURN
Conservative
5.26%
10.52%
Moderate
3.96%
7.92%
Aggressive
3.26%
6.52%
PRODUCT TYPE
6 MTH ACTUAL RETURN
ANNUALIZED RETURN
Conservative
4.50%
9.00%
Moderate
0.61%
1.22%
Aggressive
2.34%
4.68%
* The annualized returns are not guaranteed returns. Returns may vary due to market fluctuations. * The historical returns are not indicative of future results.
info@sslinvest.com | 876.929.3400 | @ssljamaica
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TIME
with
MATTHEW GRAY Age 37 | CEO - Coppershot Sound | Brokerage Client At only 15 years old, Matthew’s entrepreneurial spirit was ignited. Fast forward to today where Matthew has propelled into a thriving music powerhouse with his Coppershot Sound label. 1. What makes you a #Boss? Firstly I gave up the conventional to chase my dream, most people only talk about that, few actually do it and in doing so I've lived life on my own terms doing what I want to do, how I want to, and when I want to. 2. How and when did you know you wanted to get into the Music Industry? And what plans did you make to ensure success? My first experience was at a school event where I noticed the DJ had the whole crowd moving and having fun. It seemed like nobody had a care in the world and that was what got me interested as a hobby. To ensure success and keep it going we had to make sure we were never out of sight whether it be with mixes, doing other dates or just keeping a presence somewhere in the industry through social media. 3. What drew you to invest with SSL? Nothing about my lifestyle is traditional I think gone are the days where once you work hard u will prosper. I think it's all about working smart and reaping the benefits and that's what SSL embodies for me (working smart). Their team is always on top of what’s going on in the markets they have options for every level of my investments and their returns always put a smile on my face. 4. What’s your ultimate #BossGoal? I really think I've achieved my ultimate boss goal in doing what I love most, making a living from it and being at the top of the game. But I think maybe having more money than I know what to do with and to not have a care in the world would also be really nice; ...weekday trips to Dubai on the jet maybe haha...
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A Testament: Scholarship Winner turns Young Investor M any may say investing is for rich folk or even old folk; however, this could not be any more false. Investing is for everyone — everyone should have an investment account just as almost everyone has a savings account. It has become our culture to teach the youth from early that they need to save, but we forget to teach them everything else about managing their finances. Saving is not the be all and end all and it won’t get anyone to their goal of financial freedom. Yes, saving is important as we should not squander away our earnings. However, after saving must come investing — this way your money is hard at work for you to make you profits. There are several types of investment options, from starting your own business to investing in stocks, bonds, real estate, and the list goes on. There’s no one investment type which is better than the rest, and diversification in your investment portfolio is always important. So you may ask yourself, what should I invest in? This may be a very difficult question for you to answer if you’re new to the world of investing. However, it has now become very easy for anyone to start investing in the stock market, and so this is a great place to start. Whether you’re a student, young professional just starting out, a struggling single parent — no matter who you are — an investment portfolio can be made for you. With as little as JMD$5,000.00
you are now able to purchase shares in publicly listed companies. Still, if you are new to this it may be a bit confusing, which is to be expected. That is why it is important to consult with a licensed investment firm. Last week we had the pleasure of meeting with Romario Sterling, a recent recipient of a Cranwatawow Talk Up Yout Scholarship, and an aspiring lawyer who shared his story with our team at Stocks & Securities Limited (SSL). After a mentorship session with the CEO, Mark Croskery and Service Supervisor, Talon Yong, he opened his very first investment account. Romario’s experience goes to show that you’re never too young to start investing, as it is a means to pave the way to your financial independence. The earlier you start, the better off your future self will be. Here is the letter that initiated this very big step: “My name is Romario Sterling; I was the recipient of the 2015 CranwataTalk Up Yout scholarship. I am currently a student at UWI (The University of the West Indies) studying international relations and public policy management, and I have a big dream of one day becoming a lawyer and an international investor. I plan on achieving this from taking the LSATs after completing my studies at UWI and hopefully gaining admission to a top-10 law school, preferably Harvard or Stanford Law to pursue a JD/MBA. This will put me in a position to establish links and learn from some of the smartest and
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most motivated people in the world.
I became interested in investing after completing sixth form at Wolmer’s. I stayed home for a year before going to UWI, [and] during that period I discovered a book called Rich Dad, Poor Dad by Robert Kiyosaki. It was after reading that book that I realised that investing and being financially literate is the best way to acquire and sustain wealth. During that same summer I started reading and watching videos about financial securities, starting with stocks on Investopedia and Wall Street Survivor. I eventually signed up for the Investopedia simulator to gain a more practical experience in investing. I am still learning and this summer I will be committed to learning as much as I can about investing in stocks and other securities, as well as real estate. I hope that one day, as a Jamaican, I can achieve a similar level of success like Michael Lee-Chin in investing. My goal is to have investments in industries positioned for long-term growth, such as the manufacturing, transportation, financial, technology, agricultural and real estate sectors in emerging markets all over the world.
. .everyone should have an investment account just as almost everyone has a savings account. That is because I believe that emerging economies in Latin America, Asia, Eastern Europe and Africa are virgin markets that are poised with opportunities that will eventually be realised over time. The intention is to create investments that will provide employment for people all over the world and aid in the development of emerging economies. I would really appreciate the opportunity to meet the force and knowledge behind Stocks and Securities Ltd, so that I could learn more about investing in the Jamaican and Caribbean markets. This would definitely be an important step in my journey to becoming a successful investor, as I will be given an opportunity to learn from the best investment firm in Jamaica.” Romario has now started his journey to financial freedom with his first investment account. We should all take a page out of Romario’s book and be as proactive with our finances and our future. It’s as easy as picking up the phone and making that call to an investment firm such as SSL to get that information you need, or even just stopping by and speaking with a representative.
Your future is in your hands; it’s best to start preparing for it now.
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THE TAX BREAK COULD HELP YOU ACHIEVE YOUR FINANCIAL DREAMS - JUSTINE CORK It’s no secret that Jamaica has been undergoing extensive tax changes since its new government was elected in February, with more slated to come during their term. The Government has committed to their political promise of raising the income tax threshold in stages, however, and intends to shift the weight of government revenues earned from income taxes to consumption taxes.
will decrease the Government’s potential revenues and ability to meet their debt obligations.
Taxation of any kind is not generally welcomed in any society and stereotypically causes people to believe they will be “poorer”. This does not need to be the case. Although taxes will remain, the shift from income tax to consumption tax can positively affect a person’s ability to increase their wealth if they allow it to, simply by investing.
Many economists believe that consumption taxes are better as they do not change spending habits significantly and thus, they describe it as neutral. It also is believed to encourage more productive work behaviour as people are actually able to “see” the value of the work they put in reflected on their pay cheque.
On an individual note, consumption taxes give persons more freedom on how their income earned is actually used and essentially how much they can save. A person’s increased ability to save will in turn increase their ability to invest.
CONSUMPTION TAX VS INCOME TAX Consumption tax is based solely on what a person consumes. This consumption can be either a good or a service. Income tax, on the other hand, is an annual tax levied on one’s personal income earned, causing there to be an imbalance between what an individual works for and what they actually receive.
Income tax tends to take away that pleasure, as the more you earn is typically the more your income is taxed. Consumption taxes have helped the economies in many European countries. The Value Added Tax (VAT) is the type of consumption tax they use and has worked beneficially in their economy, allowing them to raise more revenue while having no long-term damage to their economy in relation to this approach.
ADVANTAGES OF CONSUMPTION TAX A shift towards consumption tax has many benefits. It is harder for a government to increase consumption taxes excessively as it will cause persons to be more selective in what they purchase. Selective purchase refers to only buying the necessities which
HOW DOES THIS HELP INVESTING? As of July 01, people will begin to see extra money from their pay, although it may not seem like a lot of money “every mikkle mek a mukkle”. The shift from income tax to consumption taxes will be beneficial to individuals because now you will have
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A person’s increased ability to save wil in turn increase their ability to invest. control over the money you are able to save.
you part of their profits for investing with them.
The money saved, if invested, has the potential to grow significantly more than if it is sitting in a savings account at a bank.
Come July 1, 2016, the first phase of the income tax threshold reduction will take place, allowing most people to take home thousands more dollars a month. The freeing up of this additional income will help put people in a better position to start investing or even just giving them the ability to invest more funds – which will allow them to gain much higher returns on their money than in a bank, and increase their overall wealth.
What some people fail to realise is that it doesn’t require large capital to start investing. You can start investing with as little as $5,000.00. Which essentially means, the extra money that you will start to see reflected on your pay cheque can go directly towards your investment account every month, helping to secure your financial freedom. Therefore, investors will ultimately have a higher rate of return on their funds. Also, by investing in dividend-paying stocks, this will again allow you to increase the return on your investment through not only the stocks growing in monetary value but by the companies essentially paying
In the long run a shift towards consumption taxes and away from income taxes will also allow people to take greater advantage of the investment opportunities available to them. By choosing to invest this extra income they will begin to see their money “working” for them, see their wealth grow and come closer to achieving their financial dreams.
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TIME
with
KACI FENNELL Age 23 | MJU 2014/Model | Non-Client Her recent success in the Miss Jamaica Universe competition has hurled Kaci forward as an influential face in our society. Now she is planning for her future with success always on her mind! 1. What would you say makes you a #BOSS? I have respect, control and I know what I want and will work hard for it. 2. Who inspires you? My mom, she's the real boss lady in my life and has paved the way by leading as a strong, respectful woman. 3. How has being in Miss Jamaica Universe changed you? It helped me discover my passion for helping others. I learned that I do best when constantly going, constantly meeting and talking to new people. Being an ambassador for my country took me outside my comfort zone by conquering my fear of public speaking. 4. What’s next for Kaci Fennell? Starting my own business! Very excited to unveil my new project to the public, it's something I have always dreamed of doing. 5. Are you interested in investing? I see that it is essential for where I want to be in the future not only for me but my family as well, so absolutely. 6. What’s your ultimate #BossGoal? Run a successful business, love and live life, find happiness in my journey and not in what I expect to find at the end of the road.
Look out for the daily biz in the jamaica observer! Every Monday to Friday with the latest Market News.
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SSL ASSET MANAGEMENT'S
TOP 6
Our Asset Management Team at SSL is extremely busy. They are constantly monitoring the markets, creating investment proposals, identifying opportunities, negotiating prices, and making sure that your money is working for you at optimal efficiency. They had limited time to spare, but was able to give the BusinessLife editorial team some insight into the securities on the Local and US market that they recommend, and why.
TOP 2 STOCKS [USD] APPLE "Fundamentally strong, inexpensive valuation, attractive dividends."
TOP 2 BONDS [USD]
JOHNSON & JOHNSON "Attractive dividends, strong healthcare sector, defensive stock (low volatility during market lows)."
GOODYEAR 7 03/15/28 "Favourable returns, good income play, and global presence."
TOP 2 STOCKS [JMD] NATIONAL COMMERCIAL BANK “Attractive valuation, great dividend track record”
GRACEKENNEDY LIMITED “Diversified income streams, in both currency, and revenue lines. ”
BANK OF NOVA SCOTIA 4 ½ 12/13/25 "Has a very strong, stable track record."
NEED A SMALL LOAN? Possible loan purposes: Credit Card Debt Consolidation Back to School Expenses
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2 most recent pay slips Proof of Address Valid ID & TRN Job Letter 36 hour turnaround time for loans once all documents are in place. loans@dollaďŹ nancial.com | 876.927.4881| Unit #1 Barbican Business Centre, 88 Barbican Road, Kgn 6
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Income Investing The POWER of Dividends - JONATHON KHOURY
I
ncome investing is crucial in every step of one’s investment cycle. Whether you want to accumulate wealth, buy a house, send your children to school, plan for retirement, or enjoy your golden retirement days comfortably, there is always an income investment that can help achieve your goals. Income investing is simply putting your money to work in assets that generate a steady stream of income, and the money paid out may be called something different depending on what the investment is. Bonds, shares, and real-estate pay in the form of coupons, dividends, and rent or yield respectively and are the most common forms of income investing. When one hears the term income investing, they typically think retirement planning, or boring investments that don’t offer much growth, and so these investments are often not considered in the early days of investing where young professionals are trying to accumulate wealth. This is however a false misconception, as bonds are not the only way to generate fixed income streams, and despite their lower yields, bonds play a vital path in achieving stability in times of
market volatility, and also plot a path in terms of providing better long term risk adjusted returns in the long run. The general rule of thumb is when it comes to determining your appropriate bond allocation, is to “buy your age in bonds”. Of course this can be different from client to client, depending on their financial needs and goals, and also more importantly the stage in their investment cycle among other factors. A higher fixed income allocation will be needed for those investors who have shifted gears from the accumulation stage, into their retirement phase, as they will be using their income to live or supplement their living among their other income investments. It is always important to have a balanced approach, when investing, and to apply proper diversification techniques so as to mitigate company specific or issue specific risk within each asset class. A strategic asset allocation can be chosen based on the client’s investment parameters, and this can be easily customized based on the client’s evolving financial needs and goals as they move along the investment cycle. Portfolio managers
29 may also use a tactical asset allocation, as to keep up with changing market conditions thereby adjusting or going outside of the prescribed asset allocation to take advantage of select opportunities. Real estate investments for income are most often chosen in the later years of an investment cycle, as more often than not liquidity is an issue in the early days of accumulating wealth. That being said, investors seeking liquidity and flexibility, can still generate income from this asset class through a real estate investment trust (REIT) which trades like an equity on international markets. Through this vehicle, investors have the flexibility to choose the desired country, or currency; they would like this real-estate exposure in and can be proactive in exiting, if the country economic fundamentals deteriorate thereby allowing for a more active portfolio management approach. In addition, they can be selective by choosing the type of REIT, whether it be retail, residential, healthcare, office, or mortgage and can have the ability to diversify among the types due to the relatively low cost per share. REITs in the U.S. are obligated by law to maintain a dividend payout ratio of at least 90%, thereby
passing most of the rental income on to the client, making them a favorite for income-seeking investors. In terms of equities, dividend investing can apply across all spectrums of the investment cycle and therefore can be used in all client portfolios regardless of the investment objective. Dividend investing is all about owning a business that will pay you and the best dividend stocks will have a consistent track record of increasing their dividend year after year for a period of at least ten years. The key here as with many investment strategies is investing in quality companies that are fundamentally strong and are growing. As equities are more volatile
It is always important to have a balanced approach, when investing..
30 than bonds, you will have to be selective in choosing companies that you will buy more of if the price of the stock falls. The reason is that the dividend yield will rise, once the dividend is constant or increasing, and the price of the share falls. Providing a fundamentally strong company, these times of declining prices will represent a buying opportunity to lock in a high dividend yield, and a great value, to then benefit from the power of compounding and potential capital gains down the line once the stock approaches again its fair or intrinsic value. This is the foundation of true dividend investing by combining a dividend and value investment strategy together thereby amplifying the compounded returns from the dividends along with the high margin of safety to lock in future potential capital gains. A great example of this was the Bank of Nova Scotia Toronto which was down 45% from a year ago as of mid February, for their exposure to energy, as well as Canada. At a price of 38 dollars per share, the dividend yield was approximately 5.8% which was higher than the 4.5% the BNS bond was offering at the time. Those income seeking clients that locked in the 5.8% dividend yield, bought it for the dividend, and in doing so also
realized unrealized gains as of the end of April of approximately 40%. In summary, income investing is beneficial to all types of investors, regardless of the stage in their investment cycle, and plays an important role in all investment portfolios by providing fixed income streams and smoothed out long term returns. No asset class should be avoided in its entirety, as even select dividend paying equities at times can be included in strict income portfolios, providing the risk return ratio is attractive and the dividend yield is compelling for a fundamentally strong company. Real Estate exposure can also be achieved though equity REITs regardless of the size of your portfolio and can give you the opportunity to acquire ownership in real estate ventures as large as some commercial properties or office buildings, offering you the choice to choose your own country and currency risk associated with them. Bonds and select preferred shares should always be used to stabilize your portfolio, as a means of generating income and preserving your capital. Finally, diversification among asset classes, and within asset classes, along with strategic asset allocation based on the stage of a client’s investment cycle, are among the best portfolio management techniques.
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MICHELLE JACKSON Age 43 | Magazine Publisher | Brokerage Client The word dynamic best describes this Brokerage Smart investor. Not only is she a Publisher, but she also holds the title of Event Planner, Editor, Innovator, Parenting Consultant and Fashionista. Michelle loves traveling the world, networking with new people and she sees challenges as chances to succeed.
1. What would you say makes you a #BOSS? When people hear the term ‘Boss’, they generally think this person is in charge. And they’re right! But being a Boss is a lot more than just being in charge and managing a Company or brand. It’s about being a visionary and creative in your approach to the business through the execution of core functions and the ability to lead by example. 2. Where is your top travel destination? My former life as a Purser at Air Jamaica allowed me to see so much of the world, yet despite that, nowhere compares to Jamaica. From the untouched beauty of Portland, to the homestyle hospitality of St. Elizabeth, to the sophistication of our North Coast destinations, (and everything in between), I am continuously blown away by the beauty of this little rock. 3. What is your key for a productive day? The 3 Ps: Pray, Prepare, Produce. I try to always start my day with prayer. I find that prayer centers me, and my best; my calmest days start this way. After that it’s just to prepare for the day and produce the necessary outcomes. 4. What’s your ultimate #BossGoal? To inspire others to step outside of their comfort zone, create new and challenging goals and to achieve what they once thought impossible.