Did you know that only 7% of Trinidadians invest in local markets, compared to 58% of Americans? Did you know there’s also a way to directly grow the Caribbean economy to match the strengths of our American Neighbours? It involves you! Here’s why boosting local investment is key to both your wealth and our economy.
This blog is a 15 minute read.
Did you know that across Trinidad and Tobago and the wider CARICOM region, only a small fraction of people invest in local markets?
Whilst an unsurprising statistic to many who live in the Caribbean, this untapped potential is way more than a simple missed opportunity for personal wealth. In this blog, we’re going to explore how local bonds and investing locally could be the key to unlocking the Caribbean’s full economic power – while multiplying your own personal wealth in the process.
According to the Central Bank of Trinidad & Tobago, only 7% of Trinidadians actively invest in local equities or bonds. Compare this to the United States, where 58% of Americans participate in the stock market—a significant driver of economic growth and wealth-building (CBTT Report, 2023; Gallup Poll, 2022).
The difference becomes even starker when we look at trading volumes as a measure of economic participation. In 2022, the TT Stock Exchange reported trading volumes of just $1.2 billion TTD—a small fraction of the country’s GDP. In contrast, stock trading volumes in the U.S. exceeded 100% of GDP annually, highlighting the robust role active investing plays in fuelling the U.S. economy (TTSE Annual Report, 2023; SIFMA Report, 2023).
This disparity isn’t unique to Trinidad and Tobago. In Jamaica, while the Jamaica Stock Exchange (JSE) is one of the more active markets in the region, trading activity reflects broader economic challenges, such as a market index drop of 11% in 2021 (JSE Market Report, 2022). Similarly, the Barbados Stock Exchange (BSE) reported trading volumes amounting to only $6.4 million BBD in 2022—an extremely modest fraction of their GDP (BSE Annual Report, 2022). These trends highlight a common challenge across the Caribbean: low investor participation limits market growth.
Now yes, we understand that the U.S. has a much larger and more developed economy, with established financial literacy programs, tax-advantaged investment vehicles and employer-sponsored stock plans that encourage participation. Additionally, Caribbean people often favour real estate and savings over equities for generational wealth-building—choices deeply rooted in our history and traditions. But this isn’t a critique—it’s an opportunity.
You see, this disparity underscores an important opportunity for Trinidad and Tobago, Jamaica, Barbados and the wider Caribbean: greater local investor participation could not only unlock personal wealth but also drive broader economic growth. Investing locally helps strengthen businesses, improves market liquidity, and creates a virtuous cycle of development that benefits everyone.
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I know you might be thinking, ‘But the local markets are small and illiquid. Isn’t it better for me to focus on global opportunities instead?‘ It’s a fair question, and yes, a balanced portfolio absolutely includes global opportunities. But here’s the thing: small markets only remain small when participation stays low. The power of active investing lies in its ability to transform economies.
Take South Korea as an example. Between 2000 and 2022, the percentage of active investors surged from 10% to 35%, and the results were transformative. Their stock market capitalisation grew by over 200% during the same period (World Bank, 2023). This wasn’t a fluke—South Korea implemented targeted policies, such as financial education campaigns, tax incentives for stock ownership, and technology-driven platforms that made investing more accessible. These efforts demonstrate how an engaged population of investors can reshape an economy, creating long-term growth and resilience.
Now imagine what Trinbagonian—and Caribbean—investors could achieve by reinvesting wealth locally. Wouldn’t it be incredible if our economies were thriving, with opportunities so diverse and rewarding that you didn’t feel the need to look elsewhere? Think about it: a strong, varied economy that builds wealth for generations, offering local legacies just as robust as those in international markets. By participating, you’re not just growing your wealth—you’re shaping a future where the benefits of a vibrant economy are right here, at home.
Investing locally doesn’t just grow your wealth—it powers broader economic growth. In Trinidad & Tobago, increased investor participation has the potential to boost GDP growth by up to 2% annually. By funding local businesses through bonds or equities, investors create a ripple effect: more jobs, greater innovation, and wealth distributed across the economy.
This also reduces reliance on external debt, as businesses gain access to affordable domestic capital, strengthening financial independence and ensuring that wealth remains within the local economy. Additionally, higher participation enhances market liquidity, making local markets more attractive to both regional and international investors.
This isn’t just theory—it’s happening elsewhere.
In the U.S., high domestic investor activity provides businesses with affordable capital, contributing to a staggering 20% of GDP growth annually through market-driven financing (IMF Report on Financial Markets, 2023). Meanwhile, in South Africa, a 15% increase in local investment participation from 2010 to 2020 led to a 23% rise in SME financing, driving job creation and strengthening the economy (World Economic Forum, 2021). Even in Mauritius, they transformed their small economy by fostering public-private collaborations and policies that boosted investor participation, driving sustained GDP growth of 5-6% annually and creating a diversified, resilient economy (World Bank, 2023).
Incredible right? While achieving this level of growth in the Caribbean is very possible, it will also require complementary efforts, such as improving financial literacy, creating investor-friendly policies, and enhancing access to investment tools across the region.
Now, you may be thinking: ‘Fixing economies is the government’s problem. Local investments have limited returns compared to global markets. I’m here to grow my wealth, not save the world.’ And that’s fair. But here’s the thing—investing locally doesn’t just help the economy; it helps you, too.
While global returns may sometimes outshine local ones, local investments offer something unique: stability and sustainable, long-term growth. For instance, Trinidad’s corporate bonds yield 4-7% annually, delivering consistent income while directly contributing to regional development (CBTT Bond Market Insights, 2023). By reinvesting in local opportunities, you’re not just protecting your portfolio; you’re building a foundation for a stronger, more prosperous homegrown economy. And that’s a win-win.
Local bonds—whether government or corporate—are the backbone of a stable, diversified portfolio. They provide predictable income, which makes them especially appealing to investors who prioritize stability. For Caribbean investors, bonds issued by energy or financial companies stand out as attractive options due to their consistent yields and alignment with key economic drivers in the region.
For example, Trinidad and Tobago government bonds yield 4-6% annually, offering a safe haven for risk-averse investors seeking steady returns (CBTT Report, 2023). Meanwhile, corporate bonds in sectors like energy and telecommunications deliver even higher yields of 5-7%, all while maintaining relatively low default risks (Bloomberg Caribbean Insights, 2023).
However, it’s important to acknowledge the risks: economies like Trinidad & Tobago are heavily reliant on energy exports, which can make bonds vulnerable to fluctuations in global oil prices. That’s where diversification comes in. By blending local bonds with other assets, investors can mitigate these risks while still enjoying the steady returns local bonds offer.”
You might be wondering, ‘Don’t bonds provide lower returns compared to equities or other growth assets?’ And you’re not wrong—bonds typically don’t match the growth potential of equities. But here’s the key: bonds aren’t meant to replace equities—they’re designed to balance them.
Think of bonds as the stabilising force in your portfolio. During market downturns, they protect wealth and ensure you have a foundation to rebuild from. Take the 2008 financial crisis, for instance: bond-heavy portfolios lost 50% less value compared to equity-heavy portfolios, allowing investors to recover faster when markets rebounded (Vanguard Research, 2023).
In short, bonds are the unsung heroes of diversification. They don’t just preserve wealth—they provide the stability that allows you to take strategic risks elsewhere. By incorporating them into your portfolio, you’re setting yourself up for both security and growth
While we’re on the topic of diversification, let’s talk balance. Local investments are critical for building a strong foundation, but global opportunities are what help your portfolio truly thrive. Diversifying with global assets ensures balanced growth by giving you access to high-growth sectors like technology, healthcare, and renewables—industries that are less represented in Caribbean economies. This approach doesn’t just spread risk; it enhances long-term returns.
The numbers speak for themselves. Portfolios combining local and global assets outperformed local-only portfolios by 3.2% annually, with 30% lower volatility—a clear win for diversified investors (Morningstar Diversification Study, 2023). Take the iShares MSCI World ETF, for example, which returned an average of 10.5% annually over the past five years, compared to lower returns from regional indices (BlackRock, 2023). And if you’re looking for even higher growth, ETFs tracking U.S. technology stocks, like the Invesco QQQ ETF, delivered a remarkable 15% annually over the past decade, fuelled by the meteoric rise of companies like Apple and Microsoft (Morningstar, 2023).
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If you’re asking, ‘Won’t prioritizing global markets over local ones limit the impact on regional economies?’ It’s a valid concern, but here’s the truth: you don’t have to choose one over the other. A balanced portfolio combines the stability of local assets with the growth potential of global markets. For example, allocating 60% to local bonds and 40% to global ETFs allows you to support regional development while still benefiting from international growth.
And what about the logistics? ‘Global ETFs seem complicated to access for Caribbean investors. Isn’t it easier to stick with local assets?’ That’s where we come in. At Firstline Securities, we simplify global access through our Boutique Portfolio Management service. We help you seamlessly include ETFs in your portfolio, so you can diversify globally without navigating the complexities of international markets alone.
In short, global diversification isn’t just smart—it’s essential. And with the right guidance, it’s easier than you think.
The power of investment lies in its incredible multiplier effect. When investors pool their resources into regional markets, they ignite innovation, enhance market liquidity, and attract foreign interest. This ripple effect doesn’t just grow individual wealth—it strengthens the entire economy. Increased participation also reduces reliance on external financing, making Caribbean economies more resilient to global shocks.
The numbers are compelling. In Japan, individual investors now account for 24% of market trading, up from just 10% in 2000. This surge in local participation has fuelled remarkable economic expansion, turning Japan into a global financial powerhouse (Japan Stock Exchange Report, 2023). Closer to home, a Caribbean Development Bank (CDB) analysis estimates that if Caribbean investor participation doubled, regional GDP could see a boost of up to 2% annually. That’s no small feat—it’s transformative.
Now, you might be wondering, ‘Isn’t the Caribbean too small to have a significant economic impact from increased investment?’ It’s a fair question, but history shows that small economies can achieve big things. Let’s look at Singapore and New Zealand—two nations that have achieved high growth by fostering active investor ecosystems. With the right policies and opportunities, Trinidad and Tobago can replicate this success by making local investments more accessible and attractive to everyday investors.
Achieving transformative growth in the Caribbean requires active collaboration between investors, financial institutions, and governments. Policymakers play a vital role by introducing tax incentives for local investments, reducing barriers to market access, and fostering a supportive regulatory environment. But every transformation starts somewhere—and that starting point is with us, the investors.
We already live in a paradise. The Caribbean is where the world dreams of retiring, drawn by its unmatched beauty. But imagine a region where our economic growth matches—if not exceeds—the splendour of our physical landscape. A place where opportunities flourish, wealth stays local, and there’s no reason to leave to achieve financial security. The Caribbean would truly become a gem in every sense: a haven not just for its beauty, but for its boundless economic potential.
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