How to open brokerage account in Trinidad and Tobago
Opening a local brokerage account allows you to invest in the Trinidad and Tobago stock market, purchase mutual funds and bonds.
If you're interested in opening a US brokerage account, check out our article on that here.
Generally, you'll need to provide:
- Two forms of identification (driver's licence, passport, national ID)
- Proof of address (utility bill, tax assessment, bank statement, lease agreement)
- Employment information (job letter)
The requirements for opening a local brokerage account is very similar to opening a bank account.
Read more for information on recommended brokerage accounts, and things to watch out for.
Brokerages
You'll need to select a brokerage firm first.
You have several great options:
There are different requirements, including minimum investment amounts.
What should I invest in?
Generally speaking, mutual funds will provide a higher return, but are more risky.
This means that in the short term you may see your investment decline in value, but over longer time periods (5+ years), you'll see it increase.
The performance of each mutual fund varies, and past performance is not an indicator of future performance.
You'll want to look at the investments inside of the mutual fund you're interested in to make sure that it's a worthwhile investment.
Of course you'll also be able to speak to someone at the brokerage and seek advice, but you'll have to take what they say with a grain of salt as it's in their best interest to get you to invest.
Distributions from mutual funds established by a locally licensed trust are exempt from taxation by resident individuals.
If you're interested in something that's more stable that provides a lower return, you can purchase bonds.
Treasury bills (also known as T-bills) are a type of zero coupon bond.
T-bills are debt securities issued by the government of Trinidad and Tobago and are a solid investment.
Trinidad and Tobago has a BBB- rating with a stable outlook per Standard and Poor's.
By comparison, the U.S. government holds a AA+ with a stable outlook per Standard and Poor's.
Finally, you could invest in stocks in the Trinidad and Tobago stock exchange.
Stock prices are affected by:
- Market sentiment
- Economic factors
- Industry trends
- Inflation
- Fundamental analysis
- Expected and unexpected company news
- Earnings
- Share buybacks
- Exchange rates
- Liquidity
- Global events
There are a limited number of companies listed on the Trinidad and Tobago stock exchange (33 at the time of writing).
Deciding on which company to invest in can be a difficult choice, as you'll need to consider all of the above factors, and most importantly look at the company's previous annual reports to see if they are performing well.
Dividends from resident companies in Trinidad and Tobago are exempt from taxation by resident individuals.
Recommendations
Investing is a great step in securing your future, but you'll want to ensure that you're diversified.
Diversification means you spread your investment across different regions and demographics.
Investing in only one country will likely result in lower returns, especially if the economy of Trinidad and Tobago does not substantially improve in the coming years.
Mutual funds are most likely a better fit for long term investments, as you'll get a better return and your investment will be diversified across the U.S., Trinidad and Tobago and many other countries.
Is it better to invest in TTD or USD?
If you're lucky enough to have foreign currency that you can invest, ideally you should open a U.S. brokerage account.
This will give you many more options to purchase stocks, exchange traded funds (ETFs) and U.S. bonds that can't be accessed by a local brokerage.
Some brokerages (e.g. Charles Schwab) even provide a U.S. issued debit card so you can access any uninvested cash that you might have in the account.
Once you've opened up a U.S. brokerage account, you can decide on what to invest in.
There are several ETFs which track the S&P 500 that are a great investment.
The S&P 500 offers diversification across 500 of the largest publicly traded companies in the United States, spanning various sectors such as technology, healthcare, finance, and consumer goods.
This diversification helps spread risk, as individual company performance fluctuations may be offset by the broader index.
There are also ETFs that track the rest of the world (i.e. excluding the U.S.), so investing in both of these would provide additional diversification.
Disclaimer
Information provided here is for general information purposes only and does not constitute accounting, legal, tax, or other professional advice.
Visitors should not act upon the content or information found here without first seeking appropriate advice from an accountant, financial planner, lawyer or other professional.