WHEN people hear words such as investing, stock and asset management, many may imagine well-dressed stockbrokers making major, multi-million-dollar deals with wealthy customers and businesses.

But asset management, the practice of increasing wealth over time through the acquisition, maintenance, and trade of investments, can be done by people from all walks of life.

From official and well-known options such as company stock, mutual funds and government bonds to home and community-based investments such as the neighbourhood sou-sou, people can use their financial resources and invest them in a network that would allow them to receive dividends on their initial investment.

However, all investments are gambles, and in one way or another, each investment comes with its own risks and rewards.

Guardian Asset Management president Miguel Martinez, although at the helm of Guardian Asset Management for only four months, has made a financial journey that has spanned two decades, working in the banking and finance sectors in TT and Jamaica.

In a conversation with Business Day, he said there are three key things people need to do to properly balance the rewards of investing assets and all its associated risks.

Know the risks

When investing, it is important to be in the know. If you are thinking of investing, one of the first things you must do to protect yourself is to understand the risks involved in making those investments.

Asset managers such as those who work at Guardian Asset Management help people understand the risks that come with investing and make the right decisions, based on the level of risk they can take.

“It starts with a conversation,” Martinez said. “We have a team of investment advisers and wealth managers that interact and speak with clients daily to understand where our clients are at in their financial journey – what are their resources? do you have a goal or a timeline in mind for your finances? whether it's saving for a house or planning for your retirement.”

Depending on that conversation, asset managers can design a portfolio that would suit you. While historically there have been three main types of assets – equities (stocks), fixed income (bonds) and cash equivalent or money-market options – in recent years professionals have included commodities – real estate, futures and even cryptocurrency – on the list of assets.

Martinez said the traditional way to build a portfolio is with a 60:40 ratio. Sixty per cent of your capital would go into fixed-income assets and 40 per cent into equities.

“Typically, one is supposed to offset the other. If you invest in equities, you are taking a stake in the company. There is no guarantee that you will get any returns, but you are investing for the long run and working with that company as a shareholder.

“Bonds are fixed-income instruments so you know for certain that, if you are investing for a 20-year horizon, you are going to get a certain rate of interest, and you will expect these payments on a scheduled basis.”

The more conservativ

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