Some investment analysts report that DIY or own account investing is on the rise in Jamaica. DIY investing is where individual investors choose to build and manage their own portfolios. Financial analyst Marc Gayle says there has been a spike in these investment accounts in recent years, both in the number of retail investors actively investing and in the amount of money they invest. He believes that this increase is proof that more people have taken charge of improving their own financial health.
“There are many ways for people to learn for themselves: from Twitter, a variety of YouTube shows created for our local context, to joining communities via Telegram, to attending gatherings where like-minded people ideas come together to talk about all things finance,” Gayle told the financial gleaner in an interview.
He notes that retail investors have been neglected for too long, even as the investment market has grown.
At the same time, Gayle cautions that before jumping in head first, DIY investors need to be educated about the areas and products they are venturing into.
“I recommend that you invest in your own education. As the old saying goes “invest in what you know”. So before you invest, make sure you know what you’re investing in,” Gayle warned.
NEW ENTRANTS
Many do-it-yourself investors are believed to be among the new entrants into shareholding. Information provided by the Jamaica Central Securities Depository, JCSD, the subsidiary of the Jamaica Stock Exchange, JSE, which provides depository and settlement services to investors in securities such as electronically traded stocks, indicates that there are has had a steady year-over-year growth in the number of investor accounts on its system. At the end of 2014, the number of accounts was 117,237, with 3,412 accounts added in 2015; and that figure more than doubled in 2016. There were 48,167 accounts added in 2019, and a total of 46,483 new accounts in 2020 and 2021, bringing the total number of accounts at the end of last year to 254,644 .
JSE Group Business Development Manager André Gooden shared with the financial gleaner that the recovery seen in 2019 was boosted by several large IPOs, which attracted new investors. Notable among these are the state assets of Wigton Windfarm Limited, with 31,200 shareholders, and 12,000 investors who purchased TransJamaican Highway Limited.
The dynamism of the market has led to many technological advances, which encourage DIY investments. For example, investors can trade using online platforms to buy and sell securities such as stocks, bonds, and mutual funds. Brokerage firms, however, offer professional services to anyone who wants to buy and sell stocks on their own.
Toni-Ann Neita-Elliott, vice president of sales and marketing at Sterling Asset Management, is among industry experts urging caution.
“Buying stocks, bonds, mutual funds and any other financial instrument without expert advice is risky. It requires a lot of research, monitoring the local and international market for trends; and if you are a busy person, you just won’t have time to properly weigh the options and execute a decision,” she told the financial gleaner, adding that DIY investing could be cheaper in terms of transaction costs or trading fees, but could lead to costly mistakes.
According to Neita-Elliot, financial planning is not just about playing the financial markets. She suggests a long-term investment approach to building wealth and cushioning downturns, such as in a recession or personal crisis.
Recently, the National Foundation of Jamaica organized its BeWi$e summer camp for young people aged 12 to 17, to tap into their growing interest in investments and digital currencies. The company says it wants to cultivate a good investment habit among those who are the employees and investors of the future.
neville.graham@gleanerjm.com
