Finance Roll

The growth of alternative investments in the Jamaican financial market was a godsend for many. With schemes that paid six, ten and up to 20 per cent returns every month, consumers felt they had finally found a way to make their money work for them.

Many consumers looked at these alternative schemes as desperately needed sources of extra income to boost their budgets. They used the returns to fund school fees, car payments, mortgages and other expenditure that would otherwise be impossible to afford. Others simply rolled interest over into their principal amount, hoping to attain a large enough lump sum to deposit on a house or to start their own business.

Despite their good intentions, however, many persons who put money in these funds took on risks they really could not afford. Some didn't even have the basic starting amount, so they pooled together with friends and family in order to get a piece of the high-yield pie. Even more disturbing are the cases where people sold cars and property or took out loans against their homes to get a large amount to invest.

Today, it's pretty clear that it's the end of the road for most of these high-return investment plans. The shut down of Cash Plus, Olint and the various other schemes will be financially stressful for those who took a chance with money that wasn't theirs, or sums that they couldn't afford to lose. Those who borrowed to finance their investments are now facing loan payments without the income to pay. Some could even lose the homes or cars that they offered up for collateral.

So what can you do if you're one of those investors who are now suffering from the fallout in the alternative financial world? Here are some suggestions that can help you get back on sound financial footing:

1. Don't give up all hope, but be willing to accept the possible loss of your investment.

The reality is that most people knew that some of these schemes were very risky. When you take a gamble you should be prepared to live with the good and bad consequences.

2. If you've put your property at risk, find an alternate source to pay down your debt.

It doesn't make sense to wait in hope for these stalled schemes to re-start. It's crucial to find some source of income to pay your loan every month. If you have little hope of getting back your money, you may be forced to sell your property if the income is just not there.

3. Don't try to recover by jumping into another risky scheme.

Gamblers on a losing streak think that if they keep going, they'll eventually win back what they lost. The reality is they usually lose it all. Don't throw caution to the wind in your desperation to re-coup your losses. Make sure that you understand how the investment works, and that you can really afford the risks involved.

4. Create another plan to earn extra income to meet your needs.

What if the alternative schemes had never existed? Would you have given up all hope of buying your own home or starting your own business? In the past others have built wealth, not through get-rich-quick schemes, but by cutting back on spending and saving more, or by working hard and consistently in a business of their own. Get help from a financial advisor who can help you to create a workable plan to achieve your financial dreams.