Want to Earn Higher Returns?

21 October 2018

“No, no, no! My money has been in a savings account for over five (5) years and I have not even earned 5% on my money! This is less than inflation and the fees have eaten out everything,” Richard said upset. Have you ever felt this way? If you have, today we are going to explore: 1) why your savings account offers such low interest rates 2) how much money should you keep in your savings account; and 3) an easy way to earn more on the stock market, even if you do not have a lot of time or experience.

Why Savings Account Rates Are In Single Digits . . .
We, like Richard, need to change our strategy if we want the potential of earning double digit returns, because savings rates are dictated by the Treasury bill (T-Bill) rate and this is currently at single digit. The T-Bill gives a good indication of the lowest rate investors are willing to accept on their money. You see, when the government wants to borrow money for less than one year, it invites investors (including financial institutions) to an auction. It will borrow from those who are willing to accept the lowest rate, which will determine the T-Bill rate. This rate has been declining over the last five years and the 180 day T- Bill rate was 1.87%, as at September 14, 2018. Hence you will continue to see a decline in the interest paid on your savings account.

How Much Should You Keep in a Savings Account?
Savings accounts are designed for money that you need to access quickly, not for funds that you are trying to accumulate towards financial goals that are more than 2 years away. So, how much should you really keep in your savings accounts? Complete this table to find out.

MY FUNDS	$ AMOUNT	SUGGESTED ACCOUNT	ADVANTAGES
My monthly expenses	$	JMMB Ez Access (J$ or US$)	Most transactions FREE!
3 to 6 months of my expenses	$	JMMB Bonus Saver (J$ or US$)	Quarterly Interest + Semi-annual bonus.
Accumulated savings towards goals which are less than 2 years away	$	JMMB’s CD (J$ or US$)	Fixed Rate for 30, 60 90, 180, 365 days.
TOTAL	$

The Stock Market is a Great Way to Earn More
Douglas as a savvy investor, who could trade for himself and was willing to take some risk, is basking in his gains on the stock market, unlike Richard who is disappointed with his returns. According to Bloomberg’s article, published about the Jamaica Stock Exchange (JSE) in its October 3, 2018 article, “The Caribbean island’s benchmark index has gained 19 per cent in dollar terms this year, the most among more than 90 primary equity gauges tracked by Bloomberg. Over the last five years, its 233 per cent rally dwarfs the 86 per cent rally in the second-top performer….” (https://www.bloomberg.com/news/articles/2018-10-03/jamaica-s-world-beating-233-stock-rally-continues-full-steam)

JMMB Provides an Easy Way to Earn More
Tanya, who did not even understand the stock market, saw her money grow from J$100,000 to $245,000 (June 2013 - June 2018); that is 145% in five years! How? She allowed JMMB to trade on her behalf, by simply investing in the JMMB Income and Growth Unit Trust, which has a heavy stock component.
Are you ready to risk a little more to potentially earn more too? Schedule an appointment with one of our financial advisors to determine whether investing directly in the stock market and/or JMMB’s Income and Growth Unit Trust can help you to earn more.

Written by: Michelle Sinclair-Doyley, manager, client financial education, JMMB Group