Why Preference Shares May Be Perfect For You?

Imagine having an investment that provides you with a consistent income stream and beats inflation. Would you be willing to take a little more risk, than that typical of savings accounts, to reap these rewards?  If you answered “yes,” preference shares may be your “preference” for investments.

What are preference shares?
Preference shares/stocks give investors part ownership of the company. However, unlike ordinary shares, if you invest, you will not have voting rights, but you will have “preference” over ordinary shareholders, in the following ways:  

• typically you will receive scheduled dividend payments at a predetermined dividend rate, which is higher than dividends received by common shareholders;
• you must be paid dividends before ordinary shareholders are paid their dividends;
• if the company  goes bankrupt, after settling debts, as a preference shareholder, you must be paid in full before ordinary shareholders receive any payment; and
• take less risk than the stock’s common/ordinary shareholders.

    
Why is investing in preference shares a good option at this time?
Conservative and moderate investors have limited options to earn above the inflation rate, which stood at 4.86% (January 2016 to January 2017); in fact, below are the returns on some investment/ saving options on the market. 

Investment Options	Approximate Return (per annum)
Savings Account	Less than 1%
9-Month Treasury Bill	4%
US$ denominated Government of Jamaica (GOJ) 2025 Bonds	4.57%
JMMB Group Preference Share (J$)	Rate Variable after 2 years Clients - 7.25%  and Non-client – 7%
JMMB Group Preference Share (US$)	Fixed Rate Clients – 5.75% and Non Clients – 5.5%

So, if you are saving or investing at these rates, close examination reveals that, although you would see an increase in the dollar value of your funds, your spending power to acquire your car, home or the retirement of your dreams, would still have been eroded.

How can you benefit from investing in JMMB Group’s Preference Share? 
JMMB Group’s preference share offer contains both J$ and US$ preference shares.  So, picture yourself enjoying the benefits of: 

• higher rates of return than the existing saving accounts and bonds of a similar tenure;  
• freedom to sell/tradability of preference shares,  at any time, on the Jamaica Stock Exchange (JSE);
• using a portion of the stocks as collateral for a loan, while it continues to earn market rates for you;
• experience real growth in your portfolio by earning above the inflation rates;  and
• dividends will be paid monthly (for J$ preference shares) and quarterly for the (US$ preference shares); dependent on the amount you invest, the return may be able to pay bills and/or be reinvested.

To take advantage of this opportunity, see below for the details of the JMMB Group Preference Shares: 

Currency	Price Per Share	Minimum Investment	Cash Flows Payable/ Dividend
JA$	J$2.00	J$50,000 Purchased in increments of J$1,000	Monthly
US$	US$2.00	US$10,000 Purchased in increments of US$500	Quarterly

Do you want the JMMB Group preference shares to help you to win against inflation and lower market rates? If “yes”, do not miss this opportunity by calling 998-5662 or visiting any of our locations, between February 28 and March 7.  For more information, and to read our prospectus, please click here.

 

 

Written by: Michelle Sinclair-Doyley, Manager, Client Financial Education, JMMB Group