Sunday 20th August, 2006


Don’t invest cat-in-bag

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According to the recent International Monetary Fund Mission: “Inflation has accelerated, real estate prices are rising, capacity constraints have become evident” (but) the mission agrees that record high energy prices present the country with a window of opportunity “to achieve high living standards for current and future generations.”

Everywhere there is talk of a growth path, so we must all be able to structure a path to own a house. Right! However, even welfare housing depends on a floor and a ceiling (minimum and maximum) of income, necessary to qualify the applicant.

The hard cold fact is that you must have some money saved up, and you must have income in excess of what you spend.

Beware of any scheme that seems too easy. Popular plans seek to use your petty savings to leverage their own business growth. The consumer must learn to ask relevant questions, and not be misled by the advertisements and scant facts in the brochures.

Make comparisons

Some plans on the market require you to save with them for 12 months, after which you will get a mortgage loan, provided that you then qualify. What you must be informed about is what rate of return you will receive on your savings from month to month. The question to ask is whether you can save elsewhere, for a better rate of return.

There are other plans that require you to purchase shares in the organisation, and then after you’ve accumulated a certain sum, they will entertain your mortgage application. Again you should be informed about what rate of return your savings can earn.

In all cases, understand whether your savings guarantee a return, and know what scale of return is available at other comparable institutions.

In general, you get the better returns from the more established lending institutions, which have an established capital base and a reputation in the market.

If a lending establishment is subsidised by government or charitable intervention, you may get a better deal there, as opposed to what is available from the commercial lenders.

It is useful to note that the power of the dream is a phenomenon that the psychologists have yet to understand.

Remember what the IMF said, only last month. They say things in T&T are getting harder, but the opportunity window is open for all of us to share in the wealth, grow and prosper towards better living standards.


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