Driven by virtually zero interest on savings at commercial banks, an increasing number of Barbadians are putting their money in long-term investments, according to Chief Investment Officer of Fortress Fund Managers Peter Arender.
“We are definitely seeing that and it brings us hope for the future because we very strongly believe that financial security is a huge and important part of life and you don’t get there by accident or on its own, it takes planning. You have to spend a lot less than you earn and you have to invest the amount you are saving sensibly for the long term,” Arender told journalists on Wednesday during the company’s second annual lunch-and-learn session at the company’s Hinks Street, Bridgetown office.
“We have more young people coming to us apparently by just becoming aware of what the options are and apparently by the fact that the banks are just not paying a lot anymore,” he said, going on to state this was among the reasons the investment firm kept its Barbados funds open “for regular monthly savers up to $2,000 per month”.
Since the removal of the mandatory minimum interest rate of 2.5 per cent by the Central Bank of Barbados back in April 2015, commercial banks have been offering almost zero per cent interest on deposits.
While interests on loans and mortgages have also fallen, the banks have been increasing their fees and charges in several other areas.
This has prompted calls for Barbadians to remove their savings from banks and deposit them in credit unions and other financial institutions that offer more favourable returns.
Last week, Chief Executive Officer of the Small Business Association Lynette Holder encouraged residents to transfer their savings to the credit unions.
“I really would advocate that,” Holder, a Government senator, told reporters on the sidelines of a sustainable development meeting at the Courtyard by Marriott.
Her comments came days after CIBC FirstCaribbean International Bank announced a $3 charge for over-the-counter deposits, a $10 monthly service charge for chequing accounts, and the scrapping of its average balance requirement fee for accounts falling below a minimum amount, replacing it with a “monthly service charge” of $5 across the board.
Vice President and Country Head of Royal Fidelity Jillian Nunes told Barbados TODAY Barbadians were becoming more eager to find lucrative investment options, as they come to terms with the fact that their money was simply not stretching far enough when they save with commercial banks.
She said the increasing change in mindset among residents to search for more investment options was also influenced by Government’s downgrade, and by extension, the economic climate.
“Certainly the climate has changed, we have to recognize that things in the economy has changed and persons’ mindset has changed as well. What we have seen is a major shift with persons coming out from their regular savings accounts from the banks and moving into more investment products. So it is no longer a passive saving but they are actively making their money work for them and so they are looking for different options,” Nunes said.