EACH time I think of this topic, I am drawn to the parable of talents from Matthew Chapter 5: 14-30.
For those unfamiliar with the parable it is about three servants who were left with different talents ranging from one to three by the master.
According to my research, a talent was a monetary unit worth about 20 years of a Greek labourer.
Two of the three servants doubled their talents through investment, while one decided to hide his until the master returned.
The master was so displeased with this servant and contended that he (servant) could have put the money in the bank to earn interest; does this mean the idea of banks started a long time ago?
While this is a fascinating question, the significance of the passage is the emphasis on investment.
Many times when people think of savings and investment they think that they can best start if they earn or make a lot of money. This is wishful thinking as Zig Ziglar said “nothing shall ever be attempted if all possible objections must first be overcome…”
Scriptures also tell us that if you are unfaithful in little, you will be unfaithful in much.
I am reminded of the old stories of my grandmother who used to save through those traditional pots known as ‘inongo’.
This olden form of saving allowed people to drop money in the pot but could only take it out upon breaking the pot.
It worked for them in those days and it could work nowadays except there are better ways of doing it.
I have heard of many people who keep huge sums under mattresses instead of taking to the bank.
Associated risks such as fire or theft make this type of keeping money unattractive in modern times.
As the scripture above counsels; why not keep the money in a bank so it can earn some interest.
There are many savings or investment vehicles one can consider and today I will begin to disentangle insights into some of these less exposed products and benefits from the Insurance world.
Traditionally, Insurance has been known of providing protection against loss or damage to properties or some kind of life cover in events of loss of life i.e. through lump sums or funeral expenses.
While this is correct there are also hybrid life products that offer a two-fold benefit of life cover and investment.
Put simply the life aspect will cover the person who buys the Insurance against death, meaning that should he or she pass on then the beneficiaries will be paid the selected amount of money as a lump sum.
The other aspect of the product consist the savings/investments component that can bring down one’s jaw.
It will require one to select an amount that one will save every month into an ‘account’.
This money can be paid through various means such as via a standing order, pay roll, DDAC etc.
The money will then start growing as the insurance company will invest it through different investment vehicles riding on the advantage of large numbers which would otherwise not be attainable individually.
These investment vehicles should not worry the one who buys the policy. What he or she needs to concentrate on is building the savings aspect but from time to time he or she can be checking the performance of the funds by obtaining a statement from the insurer.
One outright comfort or encouragement about such investment is that the interest earned is usually higher than conventional bank rates.
Next week I will go into details of how these products operate and their benefits over conventional savings methods.
Comments:
webster@picz.co.zm or webster_tj@hotmail.com or on face book search for Insurance Talk-Zambia page or call/text 0977 857 055
(The author is a Chartered Insurer with ten years industry experience)