Indicators of a Viable Investment Opportunity

In this fourth instalment in our five-part series on competent investment management, members of the investing public are reminded that the Trinidad and Tobago Securities and Exchange Commission (TTSEC) does not provide specific investment advice to the public. This week’s article will look at the indicators of a viable investment opportunity, in compliance with our obligations under Section 6(g) of the Securities Act, Chapter 83:02, pertaining to investor education, but will not seek to offer advice to the public on what products in which to invest. It will provide suggestions on parameters to look for that point to a viable investment and is intended to promote better discussions with investment advisers.

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Importance of Diversification

Competent investment management is critical to achieving returns and helping investors meet their financial goals. Over the next five weeks, the Trinidad and Tobago Securities and Exchange Commission (TTSEC) will be providing information on the topics of portfolio diversification, financial statements, the investment process, indicators of a viable investment opportunity and the impact of interest rates on investments. This week’s article discusses two very important aspects of investment management, which include Diversification and Asset Allocation.

Diversification

Both individual and institutional investors may hold a diversified portfolio of investments rather than a portfolio concentrated in just a few types of investments. A key reason for this diversification is the desire to manage risk, which is consistent with the saying, “Don’t put all your eggs in one basket.” Diversification is one of the most important principles of investing. When securities with different characteristics are combined in a portfolio, the overall level of risk is typically reduced. Adding more unrelated securities to a portfolio will reduce risk through diversification.

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Impact of Changes in Interest Rates on Investment

When we hear the term, ‘interest rate’, we immediately think of the annual amount charged on our loans and credit cards. Interest rate is not only the cost of borrowing but it also refers to the amount earned on savings and investments. In this final article in our five-part series on competent investment management, we look at the impact of fluctuations in interest rates on the value of investments. Before so doing, however, its is important to understand the role of the Central Bank of Trinidad and Tobago (“the Central Bank”) and its monetary policy in influencing domestic interest rates.

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Getting started with Investing Part 3

Getting started with Investing: Part 3 of 3 - Avoiding Scams

In our two previous articles we shared some of the tools that you can use to get started with investing, as a means of making your money work for you. We focused on some of the available resources on our investor education website www.investucatett.com including a risk profile test, Investor Education Manual and Work Book and Online course, blog articles, life stages and our Investing Game, InvestorQuest-TT – www.InvestorQuest-tt.com. We also discussed some of the key considerations prior to making an investment, such as your risk appetite, your investor profile, setting financial goals and knowing the types of registered investments available in our local capital market.

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Getting started with Investing Part 2

Getting started with Investing: Part 2 of 3

Creating Your Investor Profile Last week we discussed the basics of investing – knowing the Regulator, setting financial goals, and understanding your risk tolerance. In this article, we’ll focus on creating your personal investor profile and guide you through the process of selecting an investment option that will help you achieve your financial goals.

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INVESTMENT EDUCATION