WITH the JPS USD bond redemption settling in March, investors will be assessing a wide range of investment options. A common quandary: Bank A is showing me 6.6 per cent Bank B is showing me 7.35 per cent and Bank C is showing me 8.5 per cent. How do I know which to choose?
Do I go with the highest rate? What’s the difference between these investment options?
A return cannot be viewed in isolation. The risk of each investment must be assessed along with the return. Everyone wants the best bang for their buck: the car that drives the most miles per gallon, the exercise that burns the most calories per minute, the highest return for the least risk, etc. The risk adjusted return is the metric that is used to measure the latter. Important questions to start with:
What is the probability that I get my money back? Is it higher for some rates and lower for others?
Is it easy to sell the investment if I need the money?
Can I get a higher return for more safety and liquidity?
There are lots of JMD investment options available: Local companies are taking advantage of record low interest rates by issuing medium to long-term JMD denominated notes.
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