How to begin investing as a millennial in The Bahamas
The idea of investing could be scary to some, but should be welcomed by all. Regardless of how limited resources may seem, one should start investing as soon as possible. It may seem like an impossible task, but sacrifices and balanced risk are required for most investments. And while Bahamians can generally be risk-averse, young Bahamians shy away from investing and miss the potential lucrative benefits because of this fear. This hesitation to invest is simply because of the uncertainty that comes along with the stagnant financial market in The Bahamas.
This fear of investment could be a result of most millennials witnessing the United States’ housing market crash in 2008, which was triggered by subprime mortgages. This market crash lasted for two years, and millennials were in the front row as the global and Caribbean economy suffered. But despite this setback the market eventually rebounded.
So where does this leave millennials living in The Bahamas? Fact is, simply hoarding your money in the bank isn’t wise and won’t provide any return on your savings. To be honest, you will only lose money by leaving it in the bank with fees and taxes. But despite this gloomy picture one may think I’ve painted, there are many ways we, as millennials, can get out of this rut and help ourselves.
Here are some useful steps to overcoming the common risk-averse tendencies and jump start the local economy:
Get a financial advisor. This is a crucial step. Having a trained and experienced professional guiding and giving you great advice on how to invest and what best to invest your money in is perhaps the smartest thing to do. Most financial advisors and planners can be found at all of the major financial institutions in The Bahamas. Believe it or not, they would be happy to get a call from millennials on how to invest and plan their money.
Create an investment portfolio. This will be explained to you by your financial advisor or planner, who will give you a list of options that stem from annuities, stocks and bonds, mutual funds, savings, pensions and mortgages. The key to financial wealth is having a balanced portfolio with all of the previously mentioned products.
Commit to a financial amount to invest annually. After you have seen and reviewed all information, you must now calculate how much you should set aside to invest annually as compared to monthly. This will allow you to invest one lump sum, so you don’t have to be troubled every month or week with setting aside “investment money”. This helps a lot because you can watch your investments better from a long term perspective. It is recommended that you invest between five percent and 10 percent of your annual income.
Patience. One of the heaviest criticisms about millennials is that we want instant reward and success in our careers and personal lives. Well, with investments this is not the case, my friends. Being committed to the goal at hand is paramount in the world of investments because long term wealth isn’t easily acquired. Even when it may seem that your investments aren’t moving as fast as you would like, don’t panic. This is when you should go in and speak with your advisor/planner for an update. Ask them direct questions on your investments and a month-by-month report on your portfolio. A good advisor/planner will be able to provide this information for you and explain it thoroughly. After you review the monthly reports, you can then make an educated decision on which parts of your portfolio you should remove.
These four investment tips will indeed help any millennial who wants to begin investing in The Bahamas. The great Warren Buffet once said, “Be fearful when others are greedy and greedy only when others are fearful.”
• Quinton C. Lightbourne is a certified financial planner with the Chartered Institute of Bankers in Scotland and presently works with the investment and financial services team of a local law firm.