Financial Products

A range of financial products are on offer in Jamaica. The main ones fall under the following categories:

  • Deposit Accounts
  • Investments

Deposit Accounts: typically refer to accounts in which monies (savings) are placed at a deposit taking institutions, and on which interest is usually earned.

Investments: typically refer to monies placed in a financial institution (usually an investment company) with the potential for greater returns, which are not always guaranteed. Investments are usually suited for the longer term.

Main Types of Deposit Accounts:

  • Saving deposits
  • Demand deposits
  • Time deposits

Saving deposits: These are regular deposits in accounts at commercial banks, trust and merchant banks and building societies.

Demand deposits: These are deposits in accounts at financial institutions, from which a withdrawal can be made at any time without prior notice. Most regular savings and chequing accounts are demand deposits.

Time deposits: These are deposits in accounts at financial institutions, which cannot be withdrawn for a specified period of time.

Main types of Investment products:

  • Stock/ Equity
  • Bond
  • Mutual Fund
  • Unit Trust
  • Insurance
  • GOJ Debt Issues
  • Alternative investments

Stock/ Equity: This is a financial instrument whereby the holder of a stock (shareholder) is part owner of a company that raise capital by issuing shares. The level of ownership in the company depends on the number of shares a shareholder owns. More shares means greater ownership.

The public can purchase shares in companies listed on the Jamaica Stock Exchange (JSE).

Bond: This refers to a debt instrument which is a contract issued by a corporate or government entity (the borrower) to borrow money/ funds for a set period and specified interest rate. The investor (the lender) loans money to the issuer in exchange for the contract, which is used to receive the loan amount at the end of the set period or maturity date.

Mutual Fund: This is a financial instrument that comprises the pooled funds/ money of many investors (shareholders) who purchase shares or units in the Fund. The pooled funds are then invested in bonds, stocks, money market instruments, real estate or a combination of assets. The Fund is managed by professional fund managers, who seek to maximize returns on the portfolio of securities for the shareholders.

Unit Trust: This financial instrument is synonymous with mutual funds in Jamaica (they operate similarly). The difference is that whereas, a mutual fund is incorporated by a company, the vehicle of incorporation for a unit trust is a trust deed.

Insurance: This is a policy or contract provided by an insurance company (the insurer) to an individual or entity (the insured) for protection against a range of financial losses such as life and property. Some insurance policies (investment-linked insurance) in Jamaica also provide the opportunity to invest in stocks and other securities.

Government of Jamaica (GOJ) Debt Issues: These are other financial products specifically offered the the GOJ as debt (bond) issues to the public. See description under the “Bridge Gap” menu.

Alternative Investments: These are other financial instruments sometimes offered by investment companies, including derivatives and hedge funds. See description under the “Bridge Gap” menu.