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The Benefits of a Money
MENTOR
» 2021 Real Estate Trends » Market Update & Economic Overview - July 2021
The Benefits of a Money Mentor
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2021 Real Estate Trends
Market Update and Economic Overview
Peta-Gaye Russell-Peart MEET THE TEAM
Assistant Manager, Sales VM Wealth Management
Peta-Gaye is known for her superb customer service which she displays to her clients, having worked for 4 years in the Banking Sector. She joined VM Wealth Management on November 1, 2018 as a Wealth Advisor. In January 2020, she was promoted to Senior Wealth Advisor and then 11 months later, she was promoted to Assistant Manager, Sales. Peta-Gaye is determined and focused on providing sound financial advice and solutions to her clients. Her hobbies include reading, researching new information, perusing company financials, listening to financial podcasts, traveling and listening to music.
The Benefits of a
MONEY
MENTOR
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After you’ve got your feet wet and you’ve been investing for a bit, chances are you’ll be interested in ways to get better at it. One way that’s been shown to work is benefitting from the expertise of others. Of course, you can find a team to professionally manage your portfolio. But if you’re interested in more autonomy or just want a better understanding of the markets and how to make strategic decisions, an investment mentor is usually a good bet.
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It’s the difference between getting the fish and learning how to fish, which, as you might imagine, can have long term positive effects on your earning potential. Just as professional athletes have a coach to help them optimize their performance, so too does an investment mentor provide guidance and expertise to help investors achieve more. Your mentor could be a professor, acquaintance, family member, or an investment support group. The idea is to choose someone (or ones) who have demonstrated knowledge in the area and enough experience to have seen a variety of market conditions and scenarios.
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It can even be someone you don’t have immediate access to. Just ensure you can access enough information to understand their investment philosophy and get familiar with their strategies. Michael Lee Chin, for example, was inspired by renowned investor Warren Buffet and applied Buffet’s investment strategy to achieve the kind of wealth that’s made him the wealthiest Jamaican investor alive with a net worth of US$1.40Bn. The two may never have met but reading about Buffet and studying his financial choices were enough. By choosing a mentor who has already achieved the results you desire, you’ll have someone who has already mastered the same goals as you. They will also have valuable insights to help you navigate the challenges you might encounter in getting to those goals. To put it in perspective, Warren Buffet has an annual charity auction where bidders vie to pay for the privilege of having lunch the man know as the Oracle of Omaha. The last winner paid US$4.6M to have Buffett’s ear for three hours. Given Buffett’s track record and what he’s achieved over the course of his career, that money is a solid indicator of the value to be gained just from talking to the right person. If you go with a group, you’ll have the benefit of a range of perspectives. Whether you meet with them all at the same time or individually, you’ll have access to the combined knowledge and opinions of your very own brain trust. It’s important to connect with individuals who have different risk appetites and backgrounds so you can get a balanced view of potential investment opportunities. This ‘diversification’ could help to amplify your returns and minimize risks.
With investment mentorship you’ll benefit from one-on-one coaching or the synergy of a support group. Having a mentor means having expertise in your corner and on tap. If you decide to seek mentorship, here are a few ideas on how to go about it: • You can start by reading books about successful investors whose achievements or philosophies resonate with you. Read any articles or think pieces you can find by them and try applying some of their strategies. • Look for successful local investors and study their journey, also try to meet them at public forums or local investor briefings to ask questions and gain insights. • Connect with older individuals who are enthusiastic about the markets and who have years of experience working and investing in the local financial markets (e.g., CEOs, traders, portfolio managers, etc.) • Create a WhatsApp investor group where market developments are discussed and perspectives shared on companies or offers such as IPOs and APOs. This can be a great way to stay abreast of emerging asset classes and other opportunities. Remember to create a diversified group, not just friends with similar perspectives and ideas. Mentorship is a tried-and-true way to develop skills, gain knowledge and grow. It works for athletes, monks and investors alike. With investment mentorship you’ll benefit from one-on-one coaching or the synergy of a support group. Having a mentor means having expertise in your corner and on tap. They can help you define your investment philosophy or fine tune it. You can learn from their mistakes, follow the path they’ve already travelled to achieve success, or receive guidance as you create your own. However you choose to go about it, two rules will ensure you get the most out of the experience -find the right fit and be open to the experience. Success could be one conversation away.
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2021
REAL ESTATE
TRENDS
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midst a global health crisis that has already caused upheaval in some markets, Jamaica’s real estate market appears relatively buoyant.
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There has been a decline in rental rates since the start of the pandemic, but high demand for residential properties is among the factors supporting high sale prices. Here’s a look at some of the factors behind the trends we’re seeing this year: TAX ADJUSTMENTS: The local residential real estate market has remained strong. This was especially notable following a series of tax adjustments made by the government in 2019. These include: • The replacement of stamp duties with a flat rate of J$5,000 • The reduction of transfer tax from 5% to 2% on the transfer of real property and financial instruments • The increase in the transfer tax threshold for estates from J$100,000 to J$10 million OVERWHELMING DEMAND: In many segments of the market, housing supply remains low relative to demand. The number of houses put up for sale in Jamaica is estimated at less than 5,000 units per year compared to a demand of roughly 20,000 units per year. COVID RELIEF: Amidst the spread of the pandemic across the island, the National Housing Trust (NHT) introduced special relief measures to continue the stimulation of the housing market. This move is expected to contribute to the maintenance of market stability in the wake of this global event. These relief measures include: • A reduction in interest rates on all new loans by 1%, effective April 1, 2020
The Jamaican real estate market remains relatively underdeveloped compared to some of our regional counterparts. • A reduction in interest rates on all existing NHT loans by 0.5%, impacting roughly 100,000 households • Interest rate discounts to special groups, such as mortgagors aged 55 and above, the disabled, and public sector workers • More benefits for NHT contributors over the age of 65 SELLERS MARKET: Higher housing prices will likely continue to be supported by the downtrend in mortgage rates (falling below 7% at some service providers) and competition between mortgage providers. Rental rates, however, have gone down since the onset of the pandemic, which has reduced property yields. EXPANSION: The Jamaican real estate market remains relatively underdeveloped compared to some of our regional counterparts. Against this backdrop, despite the decline in activity during the pandemic, the commercial real estate market has remained fairly stable. Within that segment of the market, the warehousing niche continues to be particularly resilient. Warehousing is likely to benefit from the continued buildout of the island-wide road network combined with the emergence of e-commerce in Jamaica.
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The Negril Education Environment Trust (NEET) Resource Centre allows children without access to Wi-Fi or a computer at home to access the facility for free. VM Wealth Management Ltd., in partnership with the VM Foundation, recently made a visit to the NEET Resource Centre, with a donation of $100,000 towards the Centre. The Resource Centre was recently refurbished, and the donation will be used to purchase kitchen appliances. The team had a great time getting to know the staff and children. Cleopatra Beharie, Assistant Manager, Sales, VM Wealth was on hand to present the cheque.
Wealth Knows
Asset Allocation Asset allocation is the process of dividing your investments among different classes of securities based on your tolerance for risk and your personal investment goals. 8
Market Update and Economic Overiew July 2021
Fixed Income Investors remained tuned into comments from the Fed and its stance on the current economic environment. Concerns regarding a possible slowdown of the economic recovery, particularly amid rising cases of the Delta variant of the COVID-19 virus, were echoed throughout the month. Read the full report
Money Market The Treasury Bill auctions for July saw the yield on the 91-day and 182-day tenors decreasing. The yield on the 91-day tenor fell 11 bps to 0.94%, while the yield on the 182-day tenor fell 9 bps to 1.18%. Read the full report
Emerging Markets On July 27th, 2021, Standard & Poor’s (S&P) affirmed Trinidad and Tobago’s ‘BBB-‘ rating and revised the rating outlook from stable to negative. The revised outlook came against a backdrop of weak long-term growth performance, a deterioration in fiscal accounts, lower natural gas production and other associated economic risks. Read the full report
Foreign Exchange In July, the JMD, according to the Bank of Jamaica’s (BOJ) Weighted Average Selling Rate (WASR) lost $6.07 (3.9%) to close the month at $154.59. Demand for USD remained strong amid limited supply.. Read the full report
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