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 maybe 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 ceases operations, 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 5.19% (December 2019 to December 2020); 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 |
0.99% |
|
JMMB Group Preference Share (J$) |
Fixed rate | Clients:7.35% and General Public: 7.15% |
So, if you are saving or investing at these rates, close examination reveals that, although you would see an increase in the dollar value of your funds, your spending power to acquire your car, home or the retirement of your dreams, would still have been eroded.
How can you benefit from investing in JMMB Group Limited’s Preference Share?
If you think the JMMB Group’s preference share offer, which is denominated in J$ is right for you; 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, as these shares will be listed 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;
• affordability, with a minimum investment of J$60,000 (J$3 per share, with a minimum investment of 20,000 shares)
• experience real growth in your portfolio by earning above the inflation rates; and
• dividends will be paid monthly, dependent on the amount you invest, the return may be able to cover some monthly expenses and/or be reinvested.
Do you want the JMMB Group Limited preference shares to help you to win against inflation and lower market rates? If “yes”, please tell us about your financial goal and how much you would like to invest towards your goals. Simply visit http://bit.ly/3s9MsmS
Written by Michelle Sinclair-Doyley
Manager, Group Financial Partnership Support & Financial Education, JMMB Group