Is there a difference between investing and saving? Or is it just another of those fancy words the rich use to satisfy their vane desire to separate them selves from the rest of humanity?

Well, there is. First let me confuse you with some “economathics” (our word).

S= Yd-E that is Savings = Disposable Income- Expenditure

Simply put, savings refer to any proportion of your income or earnings after tax that is not spent. If you earn JMD$20,000.00 monthly after tax and your monthly expenditure is JMD$11,000.00 this not only indicates that you should find another job, but also that your total monthly savings is $9,000.

Investing on the other hand, is that portion of your money that works for you. It is the portion of your savings that you put aside, usually for the long run, with a view of this money increasing in value based on the products that you chose to place it on. This could be money that you had placed in Cash Plus, Mayberry Investments Limited or money that you used to purchase a property.

Invested funds also include a higher level of risk than funds that are simply part of your saving would attract. This therefore means that the returns on your investment are expected to be greater in the long run.

Why Should I Invest?

Having differentiated the two, you must now have the “Ah” moment. This is where you realise that simply putting aside a portion of your income, is not going to assist you in generating wealth. If you are saving, rather than investing, then you are merely retaining the value of your money at best. Don’t believe me? OK, how much of us started saving at primary school daily by ‘banking” what back then was a humongous proportion of our ‘lunch money’? And over the years of faithfully not touching it, we one day go to the bank, at the age of 23, and realize that what’s in this junior account, can only buy shirt (same thing is could buy back then).

Sure, all of this was in the name of safety, but how safe was it really? We invested at a interest rate of 10% back then, inflation was probably 11% and bank charges amounted to about 1.5% of our principal(not factually numbers, the truth is worst). This means, instead of earning interest you were paying the bank for holding your funds.

Investments on the other hand, paints a different picture. As mentioned in the article on R-I-S-K, by doing proper risk assessments and proper planing, you stay ahead of the game when you invest. How much of us have ever asked our parents how much they paid for their homes when the initially bought it? My father bought his land back before the 1980’s for approximately JMD$2,000.00 this was 1/4 acres. In 1993, my uncle bought a similar plot of land for just under JMD$700,000.00. If my father were to sell the land now, he would get at least JMD$5,000,000.00. And if you belive this no longer happens, a co-worker of mine paid JMD$5mil for his house in 2005 the property is currently valued at MIL$7.5mil in 2007 (fact).

You don’t need a lot of money to do your own investments. There are a plethora of options available through stocks, bonds on government securities and offer ever better returns due to their liquidity. Lets look at one stock option, in 1999 NCB was trading for about 0.99. Today NCB, in a market that is considered to be bear, is tarding at 23.00. Now if you took $10,000.00 In 1999 to buy NCB, that would today have been about $232,323.23 (did not calculate the cost of the transaction nor the dividends you would have earned)

Of course you might today end you with 50% of your initial principal if you had made bad investment decisions. But lets say your had walked in to an Investment advisor, the picture would have been way different. With diversification and proper analysis, over the long run, your investment would have yielded you a higher return than the saving accounts.

Hind sight is 20/20, however, what’s true is that the rich stay wealthy by investing, the poor gain wealth by deciding to invest, the poor who stay poor, they only saving and those who don’t…well they can’t even afford to read my article.

No matter how you put it, it just doesn’t add up. How can a company guarantee 10% or more per month. Many assume that companies such as Cash Plus are able to promise those huge returns on one’s investment by great business prowess and insight. That is, all the companies they own, manage and operate are able to give every investor 10% on their investment.

In business it is said that in order for you to make back your initial investment (in any business venture) it will take 5 years, yes there are exceptions to the rule but nowhere close to 10 months (10% per month at 10 months = initial investment). By using the Pareto principle that means each year you should be making 20% on your initial investment. So, what are these investment clubs doing? Do they have a magic lamp? A money tree? I hypothesize that they are involved in Forex Trading.

The long and short of it is that they buy and sell foreign currency, making huge profits without deterrents such as commission. The benefits of foreign exchange trading is its superior liquidity, its a 24 hour business and the leverage is 100:1. This may not mean much to you, but to them its the difference between 20% year and 120%+ a year. I’m sure this isn’t the only business venture they are into but it would account for majority of the huge returns they MUST be having in order to guarantee such high exorbitant interests.

For the past few months, there has been a new “fad” that is taking over Jamaica. Indeed this is a VERY profitable fad for many people, as you are guaranteed to make a profit. A lot of questions are yet to be answered though, a lot of rumors are going around and a lot of money has been appearing literally out of nowhere.

First thought, what is an investment club?

* An investment club a group of retail investors who pool some of their money and make joint investments. Investment clubs attempt to enable individuals to become individual investors by pooling their funds in small groups and collectively deciding how to invest the money.

For a more detailed definition see here

Great, now that we have an idea of what I’m talking about i can share with you what i found out. Desperately trying to learn all i can about these investment clubs popping up all over corporate Jamaica, i turned to my best friend (google) to find answers before i offer up my piece of cake to the pot.

Cash Plus is a well known investment club with great offers and a terrific interest rate. People have been asking how is cash plus able to guarantee 10% interest per month. Well this is what i have heard so far:

They are in:

* Buyouts
* Expanding Companies
* Telecommunications (Megaphone, Freepaid Limited)
* Real Estate
* Executive Hotels in Kingston, Montego Bay and Ocho Rios
* Owners of Jack’s Hall Estate
* Owners of Golden Seas hotel in Oracabesa
* Farms