Simple can be considered as boring, but sometimes simple is exactly what we need. I recently met with a prospective investor (virtually of course) who had gotten badly burned in the stock market. After licking his wounds, he decided he was ready to invest again, but after his bad experience he wanted a simple, short term investment that would allow him to sleep better at night. A promissory note seemed like the best fit.
What is a promissory note?
According to FSC data, the total assets of the private pension plan industry as of September 30, 2020 stood at J$639.29 billion. 37% of this J$639.29 billion is invested in “pooled investment arrangements” (I.e., mutual funds or unit trusts). This is the single largest concentration in any asset class. In other words – pension fund managers primarily use Pooled funds to store value and generate returns. What are “pooled investment arrangements”? Why is the concentration so high and if this is a good thing, is it possible for me to buy these investments myself?
All great relationships begin with trust and understanding. This applies in both personal and professional situations. Choosing a financial advisor for investment guidance should also adhere to this principle. The investor/advisor relationship should be one where the investor trusts the expertise and integrity of the advisor and the advisor should understand the goals and risk-profile of the investor. This will allow for a mutually beneficial relationship.
You have probably heard the phrase that interest rates and bond prices move in opposite directions. That is, as interest rates rise bond prices are expected to fall and vice versa. However, since the start of 2021 we have observed a steady rise in international rates, yet corporate bond prices continue to increase. How can this be? Before we try to address this apparent paradox, let us explore the reasons behind the current rate moves (particularly in the U.S.) and whether this should be cause for serious concern for bond investors.
Does it make sense to hold your investment portfolios with different financial institutions in case one runs into trouble? In the world of investing, the ways in which you can diversify are endless- across currencies, countries, industries, asset classes and more. When done in a structured, meaningful way it can protect and improve the performance of your investment portfolio. But what about diversifying across financial service providers? Does it help or hurt?
Why do people choose more than one broker?
As investors we seek to make the best investment decisions with the intention of maximizing our returns. However, the reality is that with so much information and so many investment options available, it can be difficult for an individual to sort through this information to make an investment decision. As a result, many seek investment advice from persons they trust.
Important questions to ask when someone yells “diversification!”
What are the metrics of diversification that really matter?
Diversification; be specific
“Diversification” - hands down the most overused term in any industry. Why do people love this term and why is it so universally revered? Anyone that owned a small number of Tesla or Apple shares a few years ago is certainly wishing they did not “diversify” so much. Meanwhile people who owned Exxon or Uber shares are probably happy they own other assets and limited their exposure to those stocks.