Overcoming Obstacles to Saving

Obstacle - Man Jumping Over Word on Arrow

We’ve all said it, “tomorrow I’ll get to that”, or “maybe next week or next month when I’m not so busy and have a little extra cash”, but time passes on by and we never get to that one thing we’ve been avoiding – saving for our retirement. Here are some of the obstacles to saving that we may identify with:

  • Procrastinating – delaying savings or putting savings off for another time. Check
  • Poor Spending Habits – includes spending on unnecessary items; impulse buying and self-indulgent lifestyles. Check
  • Culture of Dependency – Being overly dependent on others for everything. Check
  • Lack of financial literacy – spending on liabilities or items that decrease in value over time; not knowing how to make your money grow or work for you. Check

Here are some ways by which you can overcome these obstacles:

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Investing in Challenging Times

Tips for investing in challenging economic times

Good Advice for Hard Times

An economic downturn usually makes people more aware of the importance of saving and spending their money wisely.  Here are a few tips you can adopt to help you manage your money wisely during such periods.

 Pay off your debt

The repayment of debt is the best investment you can ever make. A downturn in the economy means fewer job opportunities, wage cuts, and rising unemployment. In order to protect yourself, it is wise to repair your personal balance sheet. Reduce your spending and use the money you save to reduce personal debt first (credit cards, overdrafts, loans), then your mortgage. Build a cash cushion to help meet unexpected bills or to cover expenditure if your income falls.

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Are you too young to plan for your retirement?

Many persons who are under 40 years old have not yet begun planning for retirement. However, is there such a thing as “too young to plan for retirement?” Does “the early bird catch the worm? The earlier you start to plan for retirement the more prepared and at ease you will ultimately be. Here are some helpful tips to help you grow your financial wealth and ensure that your retirement years will be well cushioned. Continue reading

How Do I Build An Investment Portfolio?

You should establish your investment strategy by deciding on the mix of investment products (assets) that you seek to purchase. The saying Don’t put your eggs in one basket” is very relevant to investing success. In building your investment portfolio you can spread your money across different classes of investments, including:

1. Cash and Cash Equivalents 

  • High liquidity,easy to get your money when you need it
  • Provide lower return, but with almost no risk

Examples: Savings accounts, money market funds, and treasury bills. 

2. Fixed Income Investments 

  • Offer a fixed rate of return that doesn’t change
  • Provide a steady flow of income
  • Can lower your investment risk

Examples: Bonds, bond mutual funds

3. Equity Investments 

  • Buy a share of ownership in a company
  • Are riskier than fixed income investments
  • Offer the potential to make far more than a fixed income investment or cash equivalent

Future value is uncertain, and will be affected by:

  1. How well the company is doing now and its future growth
  2. News events specific to the company
  3. Economic trends

Examples: You can buy shares of an individual company’s stock, or buy units of a mutual fund that invests in the stocks of many companies.

To build your investment portfolio, choose from one or more of these asset classes to get the right balance of risk and return for you.

Remember, a well thought out asset mix is the key to your investment success. In most cases, when you mix your classes of investments, you reduce the risks associated with investing. 

The Do’s and Dont’s of Investing

DO

  • Work out what your investment goals are before you decide on an investment plan;
  • Consider what balance of risk and return you are comfortable with;
  • Remember there is no such thing as a high return, risk-free investment;
  • Ensure that the financial services firm or adviser you are considering is registered with the TTSEC;
  • Shop around: It helps you get the best value and most suitable product for your needs.
  • Make sure your read all documents carefully;
  • Bear in mind that past performance is no guarantee for future returns;
  • Diversify your investment to reduce risk;
  • Make sure that you have access to some of your savings for emergencies;
  • Find out what charges (if any) apply and what commission (if any) is paid to your adviser;
  • Find out what charges (if any) apply if you need to withdraw your money before the agreed due date;
  • Find out what happens to your investment if you die; and
  • Make sure that you have access to some of your savings for emergencies.

DON’T

  • Leave money doing nothing for long periods as inflation will eat away at its value;
  • Be tempted by offers that seem too good to be true. (Remember, if it sounds too good to be true, it usually is!)
  • Be rushed into making hasty decisions about a savings or investment  product;
  • Buy or invest in anything you do not understand;
  • Be put off or impressed by financial jargon. Ask for an explanation if you do not understand a particular term;
  • Commit to a long -term investment if you think you may need access to your money;
  • Make an investment decision based only on the advice of a friend or family member.

FAQ How The TTSEC Handles Complaints

1. What type of action could be initiated by the TTSEC in regard to a complaint by an investor?

  • Conducting investigations and holding hearings
  • Initiating criminal proceedings in summary courts against persons for failing to comply with the Act
  • Imposing of penalties for various contraventions of the Act, By-laws or Orders
  • Making certain remedial orders e.g. cease trade orders

2. How do I go about lodging a complaint with the TTSEC?

There are 3 methods of lodging a complaint

a. You can complete our online complaint form located on the home page of our website

b. You can download the complaint form in PDF and submit via fax or post to the TTSEC’s office

c. You may file a written complaint to the Commission and submit via fax or phone to the TTSEC’s office

3. What happens when a complaint is lodged with the TTSEC?

  • The Commission will acknowledge receipt of your complaint. The letter will provide you witha reference number which you will need to quote when contacting our offices.
  • The Commission has the authority to investigate if the complaint has been aggrieved by any act of any individual or company falling under the Securities Act.
  • The Commission reviews complaints made against registrants (broker-dealers, investment advisers, underwriters, reporting issuers). If the actions of these individuals or companies suggest possible breaches of the Act, further investigation may be warranted.
  • To protect the integrity of an investigation, the Commission shall not comment on the existence, status or nature of an investigation being conducted by staff until the matter becomes one of public record.
  • An investigation becomes public when the TTSEC brings a proceeding in court or a public hearing before the Commission.
  • Once the investigation is complete, the Commission will take a decision on the matter and may make an order based on the decision and in keeping with section 50(4) of the Act.
  • The outcome of our investigations will be communicated to the complainant
  • Decisions that are in the national interest will be published in the newspaper as well as on the Commission’s website.

For more helpful tips on investing and the role of the TTSEC check out our website at http://www.ttsec.org.tt or call 624-29991.

How To File A Securities Complaint

If you have a problem with an investment product you have purchased or the service that you have received, you are entitled to complain and receive some form of redress.

As an investor you have the right to:

  • Receive a clearly defined process for raising and resolving complaints: and
  • Receive information about alternatives available to you if the firm is unable  to resolve a dispute to your satisfaction.

If you are dissatisfied with the company’s response to your complaint or if you are unable to resolve your complaint with the company you should request a letter from the company stating its final position on your complaint. You should also make a note of any persons at the company with whom you discussed the matter.

Once you have a written response from the company and you are still displeased with their response you can choose to file a complaint with the Trinidad and Tobago Securities and Exchange Commission.

The Commission has the authority to investigate complaints in respect of the securities industry and models its procedures on best practices in developed securities markets.

You may file a written complaint with the TTSEC by writing a clearlydetailed summary of your issue which includes all of the key elements relevant to your complaint.

The most important thing to remember when filing a complaint is that the Commission does not regulate risk, it regulates the market players to ensure that the rules of engagement are fair and transparent. Therefore, if your investment product is not doing as well as you expect this is not a complaint for the TTSEC since risk is linked to the investment.

For more information on how the TTSEC handles complaints see our FAQ in the next post!

Make Your Retirement Dreams Come True

Wouldn’t you like to have a million-dollar portfolio when you retire?  Making that a reality requires some serious effort. While we cannot guarantee your success in making such a dream come true we have outlined some steps to help you achieve your objective. 

1. Map out your goals

The leading advice from persons who have acquired wealth is to state your goals and develop a course of action to achieve them. You can use the services of a registered financial adviser to help you map our your strategy to achieve your wealth.

2. Begin to save 

If you don’t save, you’ll never reach your goal. As obvious as this may seem, far too many people never even start to save. If your employer has a contributory pension plan, enrolling in the plan is a great way to put your savings on autopilot. Simply sign up for the plan and contributions will be automatically taken out of your salary,  thus increasing your savings and decreasing your tax liability. Furthermore,  if your employer offers to match your contributions up to a certain limit, be sure to contribute enough to get the full match. It’s like getting a guaranteed return on your investment!

3. Get aggressive 

The returns generated by an investment are dictated by the asset-allocation decision. This is the investment strategy that aims to balance risk and reward by apportioning your portfolio’s assets according to your goals, risk tolerance and investment horizon.

Although there is no simple formula that can determine the right asset allocation for every individual almost all financial professionals hold the view that asset allocation is one of the most important decisions that investors make. The three main asset classes – equities, fixed-income and cash and equivalents – have different levels of risk and return, so each will behave differently over time. If you are looking to grow your wealth over time, fixed -income investments, or a certificate of deposit (CD) aren’t likely to get the job done, and inflation can take a big chunk out of your savings.

4. Put aside for a rainy day

Part of long-term planning involves accepting the fact that setbacks will occur. If you are not prepared, these setbacks can put a stop to your efforts to save. While you can’t avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do. Work with a registered adviser to help structure your finances to avoid financial disaster.

5. Increase the amount you save

A major mistake that persons make is to not adjust their savings as time goes by. Your income should rise as time passes due to the fact that you will get raises, you may change jobs, you may get married and you may have a two-income family. Every time more cash comes in to your pocket, you should increase the amount that you save. Unfortunately for many of us with the increase in our income, additional wants/needs arise which compete for the income. The key to reaching your goal as quickly as possible is to act as if there is no change in income and save as much if the increase as you can.

6. Watch your spending

Vacations, car, kids, and all of life’s other expenses take a big chunk out of your salary. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are key if you want to boost your savings. Develop mechanisms to make it to the end of the month before you run out of money.

7. Monitor your portfolio

If you’re a mid-to long term investor, there is no need to obsess over every moment of the stock market or investment products.  Instead, check your portfolio once a year and re-balance your asset allocation to keep on track with your plan.

8. Maximize your options 

Take advantage of every savings opportunity that comes your way.  Make the maximum contribution to tax-deferred savings plans. Tax-deferred accounts provide the greatest benefit for investments that generate frequent cash flow, or distributions, that would otherwise be taxable, thereby allowing these payments to remain whole and be reinvested most efficiently. Taxable mutual funds and bonds produce the most frequent taxable distributions, such as interest, dividends and capital gains and thus so are best suited for tax-deferred growth.

9. Catch-up contributions 

Look for more ways to save money and increase your nest egg for the fast -approaching golden years. When you reach age 50, you can check to see if you are eligible to increase contributions to tax-deferred savings plans. See if your bank or other financial institutions have any special plans or reduced charges for seniors and take advantage of these opportunities.

10. Patience is a virtue 

“Get-rich-quick” schemes are usually just that – schemes. If something sounds too good to be true it usually is! The power of compounding interest takes time to build, so invest early, invest often and accept that the road to riches is often long and slow.

Remember the sooner you get started, the better your chances of achieving your goals!