Dennise Williams, Staff Reporter
"IT CANNOT be done! What difference will saving $2,000 per month mean?" Asked an irate reader of last week's Sunday Business article, "With no savings and no pension plan...What should you be doing in your 40s?"
The argument was that if you needed to save for a major purchase or even create a rainy day fund, $2,000 monthly savings would not make much of a difference.
"Really, when you go to the supermarket to shop for your family, the money is finished just like that!" Well, that might be true. However, investment advisers who spoke to Sunday Business disagree that savings of $2,000 is pointless.
Below, we present a chart submitted by Glen Warren, senior risk and research analyst at Guardian Asset Management. Depending on the length of time and rate of interest earned, a monthly savings of $2,000 can grow to nearly $500,000 in nine years.
Now, Mr. Warren along with a number of brokers suggests that the best routes to get the most out of your 'smalls' or even larger investment funds are through equities.
In fact, the returns that Mr. Warren quotes in his chart are based on the returns one can earn from the Jamaica Stock Exchange, as the savings rates paid by commercial banks for $2,000 are in the low single digits.
Sunday Business was admonished by brokers to highlight the fact that with investments in the JSE, there is the risk of loss, and there are fees to buy and sell shares. But for a person who is prepared to take such risks, an appointment with a broker would be the best course of action.
A stockbroker, who spoke on the basis of anonymity, related this story.
"One day, a man came into my office. He looked stressed out and at the end of his rope. He said that he had gone to his bank to get a loan for $50,000 to clear off some of his bills, but he was denied.
A few years ago, he had a successful business enterprise. During the time his company was making money, his accountant advised him to purchase shares. He did and now presented the certificates to me and asked if they had any value.
When we finished calculating the current worth of the shares, he had over $1,000,000 available. So you see, stocks can be a good investment over the long run."
