Sit back and

Finance

Sit back and take stock

By Sophie Foster Hildebrand

Have you ever wanted to invest in the stock mar ket but didn’t know how to go about it or didn’t have enough money to make an impact? This dilemma, for Fijian investors at least, has been eased with the arrival of Prudential, an internationally renowned investment trust fund, to the region.

What Prudential have done is make investment in international stocks and fixed interest a lot easier for people in Fiji.

Backed up by the wide range of financial services offered by Prudential(NZ), investors in Fiji have now got access to a wider range of investment opportunities in the international market. The service in Fiji is run through Investments and Security Advisors Limited headed by Lawrence Sami who is one of two locals licensed as investment advisors (issued by the Capital

Market Development Authority).

The Prudential scheme, which will soon become available in other Pacific Island countries, including Samoa, Vanuatu and PNG, offers the opportunity to earn returns from stocks, bonds, property and fixed interest rates in the UK, Europe, North America, Asia, Japan and New Zealand.

What happens is that your money, whether it is SNZIOO per month or SNZIOOO per month, is added to every other Prudential member’s funds and used to create huge buying power and earn bet ter interest. “It stands to reason,” said Sami during the Fiji Money Expo, “the more money you have to invest, the more impact your investment makes”

“With any unit trust, your money is pooled with that of other investors and invested in markets which would otherwise be difficult for you to access as a private investor. As a member of a pooled fund, you benefit from superior buying power, reduced investment costs and even greater potential for increased returns”.

Former Fijian finance minister Josevata

Kamikamica says with the recent withholding tax of 35 per cent on interest in savings in Fiji, it would be wise to consider alternative avenues for investments. And that is what peo ple have started to do with the new Prudential scheme.

In establishing the CMDA in 1996,

Government hoped to promote the development of the capital market in Fiji.

With interest on savings in commercial banks and other non-bank financial institu tions in Fiji quite low - one would be lucky to be earning more than 4 to 5 per cent - is it any wonder that people have turned to other areas to put their hard-earned

cash to work?

In the 1998 budget, the Fiji gov ernment increased the offshore investment limit, which included lifting a $15,000 limit for resident individuals to an overall national ceiling of $lO million. This has proved to be the impetus needed to invest in higher returns which can be gained overseas.

Sami says those who are wor ried about the stability to stock markets, especially since the Asian currency crisis, can balance their risk by spreading their investments.

There are five different investment portfolios that new members of Prudential can choose from. The first, Capital Stable, concentrates on a stable but competitive return, investing mainly in fixed interest, with a small proportion invested in NZ and international shares. This is a low risk investment option which had a return of seven per cent per annum to March this year.

The Balanced Fund, with a broad selection of investments including fixed interest, shares and property, is designed to achieve long term growth and is best suited for those looking for a medium risk investment through diversification.

The third option, International Balanced, is a range of internation al fixed interest and shares. It aims to provide steady growth with a balanced risk profile, and is also a medium risk international invest ment.

For those who want to high risk

portfolios which provide higher

returns, the Entrepreneurial portfo

lio invests in assets giving short

term performance to achieve long term growth. It invests in a range of internation al and New Zealand shares, fixed interest, and property. Another high risk/high return portfolio is International Growth which typically invests 85 per cent in internation al shares and 15 per cent in international fixed interest. Sami says overseas invest ments in stock, property, and fixed interest provide an opportunity to spread risk, not just across various sectors of the economy, but across whole economies.

“That way,” he says, “you don’t have all your eggs in one basket or even one country”. ■