Mon | Feb 26, 2024

Consider mutual funds as part of retirement planning

Published:Friday | March 10, 2023 | 12:07 AM
Marissa Williams, assistant vice-president of sales and client services at JN Fund Managers.
Marissa Williams, assistant vice-president of sales and client services at JN Fund Managers.
Hugh Reid, general manager, JN Life Insurance.
Hugh Reid, general manager, JN Life Insurance.
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INVESTING IN mutual funds as part of retirement planning can be beneficial to an investor in the long term, says Marissa Williams, assistant vice-president of sales and client services at JN Fund Managers.

Williams explained that for persons to enjoy their golden years, proper financial planning is necessary. She noted that with rising inflation, investing in mutual funds could provide an advantage at retirement.

“When we think of retirement, we should think of leisure, comfort, and relaxation. After all, that’s what retirement ought to be. It is highly recommended that persons take the time out to really assess their current financial standing and make the necessary adjustments right now, to have a peaceful and enjoyable retirement,” she said.

“Retiring in fine style takes sound financial planning, and, of course, with the growing concern over inflation, starting a mutual fund will allow you to experience the compounding returns effect on your hard-earned money. The interest or gains on your investment will continuously roll over and, as such, investors will be able to benefit from this long-term wealth creation approach,” she added.

HOW MUTUAL FUNDS WORK

In a mutual fund, investors’ monies are pooled together and invested in a variety of financial assets called securities. These securities include stocks, bonds, and short-term debt. When one invests in a combination of these assets, that ownership is called an investment portfolio. Persons who make an investment in mutual funds become part- owners of the fund and the income it generates.

Williams noted that JN Fund Managers offers six mutual fund products, namely: The Local Money Market Fund, which is a Jamaican-dollar mutual fund; Global Money Market Fund, which is available only in US dollars; Global Fixed Income Fund -- a local Jamaican-dollar fund that invests worldwide; Global Diversified Fund – a Jamaican mutual fund that invests in highyield stocks around the world; Global Equity Fund – a Jamaican-dollar fund that buys stocks locally and around the world; and Global US Fixed Income Fund – a US-dollar fund that invests worldwide.

She affirmed that mutual funds are recommended globally because they allow investors to invest in several products.

“The asset-diversification characteristic of mutual fund investments is one of the many reasons why mutual funds are being recommended globally. Investing in a mutual fund is an exciting and efficient way of becoming a shareholder of multiple assets and securities, just by starting one of these products. In addition, who wouldn’t want the hassle-free process of not having to manage their own investment? With the constant changes and uncertainties in the economy, having a mutual fund will allow you to comfortably enjoy the compounding returns on your hard-earned money while surfing the waves of inflation,” she affirmed.

KEEPING PACE WITH INFLATION

Hugh Reid, general manager, JN Life Insurance, which manages the JN Individual Retirement Scheme, emphasised that persons should consider mutual funds as part of their retirement portfolio.

“When planning for retirement, persons should diversify their portfolios to increase their chances of wealth creation, and mutual funds represent one of the best ways to do this. In fact, the best mutual funds in retirement are those that can keep pace with inflation, while minimising risk and providing returns that increase the chance of your money lasting longer than you. Additionally, pension funds around the world invest in mutual funds because they offer protection against inflation,” he stated.

“Therefore, mutual funds should be considered as part of one’s investment and retirement portfolios. Additionally, I also recommend that persons increase their contributions to their retirement scheme or superannuation fund to the maximum of 20 per cent, where possible. This will increase the income you will receive during retirement,” he explained.

Williams added that to establish a mutual fund account is not difficult. With as little as $5,000, one can start. They need only to contact trusted mutual fund advisers, such as the experts at JN Fund Managers.

“At JN Fund Managers Ltd our mutual funds are professionally managed by our expert team of portfolio managers. Our mutual fund investments are uniquely tailored to match just about any investor risk profile. Therefore, we encourage you to have a conversation with us,” she added.