Wednesday, 2 September 2015

Rethinking My Investment Choices

Over the last few month, due to the occurrence of several events such as:
  1. My completion of the fundamental modules in the Certificate in Financial Planning Education Programme.
  2. A short time line in which I was required to assess whether I wanted to further my studies in that field of study or continue working in the industry in which I was currently employed.
I started revisiting the investment choices which I had made in the past. To appreciate the choices which I had made, I had to emotionally review my thinking at the time of making the decisions. Here is a summary of the circumstances surrounding some of my investment choices:

  1. While I was working on a contract for which I was very grateful, I realised that I needed flexibility with regard to my savings. Bearing in mind that in Trinidad, there is a capital gains tax on the disposal of investments which are held for less than a year, the shares which were purchased would have to be held for longer than a year. I could justify the  investment in the shares as continuous professional development as:
  •  I would be learning  about the practical  side of the acquisition of shares which would have been knowledge  gained at another level 
  • This knowledge would have qualified as new knowledge which was acceptable for the purpose of continuous professional development
Luckily for me the local stock  exchange was in a state of transition from a manual approach to an electronic system with online trading. I was happy to have the knowledge that I did, as I had explanations which were provided that allowed me to be satisfied as to the possible fairness of the trades, the holding of stock and to the distribution of dividends.
As to the shares which were acquired? I purchased those so as to:
  • Access the financial statements  of  certain companies as an investor and 
  • To understand the investment decisions made by  companies which operated in sectors different to that which I had limited exposure.  For example there were companies which operated under the In Aid of Industry Act, where there were benefits to the company  based on either the location of the manufacturing site or the type of equipment which was purchased. 
  • To keep up to date with the accounting policy and note disclosures of companies which had defined benefit and defined contribution plans. This was an area where there was room for much discussion.
Over time, I was able to sell many of these investments and purchase others based on the timing of the payment of dividends and capital appreciation and to place my funds in other investments. Would I invest in shares again? Yes, I would!!!
The other types of investments would come with other posts..

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