I enjoy budgeting and managing how much I spend and save. I have no training in financial matters but with so many resources online, I have been dabbling in financial literacy content and learning about investing. Knowledge really is power and with professionals, as well as, those with experience sharing what they know in this area, I have been learning and becoming more literate.
It really isn’t about how much we save because we also need to have our savings work well for us and ideally earn compound interest. I really wish I was as inquisitive about this even 5 years ago and had started investing then. It is never too late to start something worthwhile and to gain new knowledge. I was also very risk averse, so not mentally ready for risky investments.
One important lesson I am learning, on my financial literacy journey, is to know my appetite for risk when choosing investment instruments. This essentially means talking with financial advisors at designated institutions to get advice. It is worth paying for good guidance, from those with experience and professional knowledge. Since I was not open to making risky investments for many years, I went for secured investments which would produce some return but nothing exponential.
I started getting more interested in investing in stocks, specifically in Jamaica, since that’s home and I know the companies on the market. I also knew where to start in terms of speaking to financial advisors and there is an active community on Twitter, where learnt Jamaicans in this field share their knowledge generously. I spent months reading what was shared, looking on the financials of the companies on the Jamaican Stock exchange and reading what I could on the website as well. My level of financial literacy in this area started growing by tiny baby steps and I found myself thirsting for more knowledge.
Another important lesson for me where investing in stocks was concerned, was to invest money for the long term ( a few years). With this in mind, I decided on an amount I wanted to put away and started adding to the account bit by bit over time. The market dipped because of the pandemic and it was a bear market for much of 2020. I found myself buying companies to average down and just being patient, as well as, not panicking to sell stocks because the value of my portfolio was decreasing. I therefore spent some time reading investment advice on what to do during a bear market. There is much on the internet to dabble in and learn in this regard. Again, investing money I didn’t need for a long time allowed me to be patient and let the process take its course. Year one of investing in stocks was a bit nerve-racking at times.
Here we are in 2021 and the market is becoming bullish again. Investing in stocks is one of the best ways of compounding one’s money. It does take much knowledge to know what companies to buy, which is why I stick with the Jamaican market. I mostly go for tried and true companies and look at the products they sell that Jamaicans know and love. Those who export products abroad are also ones I like. I am learning how to read the quarterly reports from the companies and seeing what their ‘fundamentals’ look like.
It is quite a pleasant feeling to see a stock I had invested in, go from being stuck at one price range in 2020, to adding 30% in a week. I also have to be disciplined to not sell at this point. I remind myself of my goal which is long term and I wait.
So, I will continue to dabble in financial literacy and learn more about investing and how to make what I save, work more efficiently for me over time.
Is financial literacy important to you? How literate would you say you are in this area?