What are my investment options in The Bahamas?
When it comes to investing in The Bahamas there are quite a few options one can consider. The market may not be as robust or diversified as the United States’ but there are still some diamonds in the rough that can be found in the local financial market, given your risk profile and appetite for risk.
Many of the wealthiest people in society became that financially sound by making investments that paid off big time. In many cases, the investments may not have been theirs, but those of their parents, grandparents, etc. Making a good investment has the potential to put one in a good financial place for many years to come. And certainly, the financial benefits of a good investment can span generations.
However, investing can only be done once you have a healthy savings. As a financial professional I always seek to provide the best options for my clients and in this case my readers.
Ever heard of a mutual fund? Well, it’s a sound investment vehicle made up of a pool of money collected from many investors for investing in securities such as stocks, bonds, equities and fixed income instruments. Mutual funds are a very good investment, because they diversify your portfolio from the start. A mutual fund has holdings in various investments and one of the keys to good investing is diversity. Here are some of the top performing mutual funds in The Bahamas:
The Prime Income Fund is a steady and very safe investment with low risk. As you can see with the chart, it has shown a steady rate of return around 4.6 percent for four consecutive years. Be advised though, that redemptions that occur before five years will incur fees up to two percent depending on the time it is redeemed. Also, a $50 processing fee will be charged because of liquidity withdrawals.
The CFAL Bond Fund is a safe and solid investment that is also low risk. One of the key benefits of this fund is that it can be redeemed monthly and you aren’t tied in for any amount of years. It is advised that you treat mutual funds as medium to long-term investments though, so don’t be too quick to just redeem it after three months. Investing requires patience!
The CFAL Global Equity Fund is a high-risk investment that invests in international markets. This is very risky, but as the age-old saying goes, “the greater the risk, the greater the return”.
In 2017 this fund did exceptionally well with an 8.21% return which is very good in the local market.
Direct equities are also a very good investment choice. An equity is an ownership interest in a company in the form of shares. The Bahamas International Stock Exchange (BISX) has 23 listed companies or instruments on their index. Our local market doesn’t move as quickly as the New York Stock Exchange so most purchases are held long term. Peak season in the local market is around the late summer months. There are five broker dealer members on the exchange (CFAL, Leno Corporate Services, FG Capital Markets, Royal Fidelity and Colonial Group). The top performing stocks on the local exchange are Arawak Port Development (APD), Fidelity Bank (BBS) and J.S. Johnson and Company Limited (JSJ).
Create an account with one of the broker dealers right away. Ask questions and don’t be shy. Find out the account opening minimums, how easy it is for you to buy and sell securities and how easy it is for you to view your account details.
Making an investment in The Bahamas isn’t as difficult as some may think it is. Check out your options, save and get started.
- Quinton C. Lightbourne is a certified financial planner with the Chartered Institute of Bankers in Scotland and vice president of the Bahamas Investments & Securities Business Association (BISBA). E-mail: [email protected].