ADVISORY COLUMN: PERSONAL FINANCIAL ADVISER
QUESTION: I am seeking your advice on how to best invest $750,000, which I have in my credit union. I have been working for over 13 years in my current job. I have been saving an average 10 per cent of my salary in my credit union’s Golden Harvest account since 2006 to present. I am 35 years old now and my only other asset is a motor car valued over $900,000. I have a six-year-old son and a spouse.
I need a house at this time, but find it difficult to find one that is located in a decent area and of a reasonable price. So, I am considering using my cash to purchase a lot and build on it with a loan from the NHT. Until this is possible I wish to invest my money in something that will give me a sensible interest at low risk. What advice can you offer?
– H. Reid
FINANCIAL ADVISER: You have taken several positive steps to realise one Jamaican dream – home ownership – but it seems that you will have a challenge doing so. It is not going to be easy to accumulate the required funds but you should not give up.
I like the fact that you have been saving a set portion of your income over a sustained period although the amounts have not been substantial. Neither have the rates been significant. One of the goals of the Golden Harvest savings account is to enable members to own a home, but the reality is that it requires a fair sum to own a home.
Generally, credit union members are required to save their funds for at least five years in the Golden Harvest account. In some cases, members can save for up to ten years. The rates on this account are not very significant as I have not identified any credit union that pays more than six per cent per annum.
The account comes with some sweeteners like insurance protection of the savings such that the beneficiaries of members can access the full savings goal up to a maximum amount in the event of premature death or payment to the saver in the event of permanent disability. Members may also use their savings as collateral for loans.