In recent times, the economic landscape in Sri Lanka has proven to be quite volatile. Simply depositing funds into a savings account is no longer sufficient for wealth accumulation.
The Colombo Consumer Price Index (CCPI) for May 2026 indicates that inflation has climbed to 5.5%, an increase from 5.4% in April. While food prices saw a modest rise of 0.9% in May, non-food prices surged by 7.8%. This spike can largely be attributed to rising local energy costs amid ongoing geopolitical tensions in the Middle East. However, the crucial point remains that most savings accounts do not yield interest rates that keep pace with the 5.5% inflation rate.
The consequence of rapidly increasing prices is that savers experience a reduction in their purchasing power. For example, essentials such as housing, electricity, gas, and transportation that cost Rs. 1,000 today will be 5.5% more expensive tomorrow, while the interest accrued from a savings account will fall short of offsetting this hike.
Experts predict that inflation will remain above the 5% threshold for the foreseeable future, and even after-tax returns from fixed deposit accounts may not present a viable solution.
This raises the question: what steps should you take? While saving is a prudent initial measure to safeguard your finances, akin to parking a vehicle in a garage—secure but stationary—investing is what propels your financial growth, much like fueling your car to reach your destination.
Effective wealth management involves strategically utilizing funds for varying needs. It is beneficial to categorize your finances into three segments. The first segment should be allocated for immediate needs, such as school fees or emergencies, ensuring safety and quick access. The short-term JB Vantage Money Market Fund is a suitable choice for this purpose.
The second segment pertains to funds required for mid-term objectives, typically spanning over three years, such as a down payment on a home. These funds should be allowed to grow in an Income or Balanced Fund, with the JB Vantage Credit Opportunity Fund serving this requirement well.
The final segment is for long-term needs, spanning seven years or more, such as retirement savings or legacy planning. Investments in a growth-oriented Equity Fund, like JB Vantage’s award-winning Value Equity Fund, would be appropriate for these funds, as they can withstand short-term market fluctuations.
Maintaining a diversified investment portfolio is essential for navigating the ups and downs of capital markets, thereby reducing risk while maximizing returns. However, constructing such a portfolio independently can be time-consuming and requires extensive research.
Christine Dias Bandaranaike, CEO and Portfolio Manager at JB Financial, states, “For busy professionals, Unit Trusts present an accessible and intelligent avenue for wealth generation. They provide professional management for everyday investors, simplifying the investment process. Unit Trusts are collective investment vehicles that allow individuals to transform their savings into investments efficiently.”
“These funds aggregate capital from multiple investors to acquire a diversified portfolio of predetermined asset types. By purchasing a proportional share of the fund’s holdings, investors gain immediate diversification with minimal effort. This approach enables investors to achieve a mix of investments that mitigates risk while enhancing returns, often referred to as a ‘financial smoothie,’ where funds are allocated across government securities, equity growth, corporate income, and market liquidity.”
Furthermore, Unit Trusts are structured as tax pass-through entities, resulting in no additional taxation beyond a 10% withholding tax at the fund level. This characteristic renders them a tax-efficient method for obtaining professional investment management. As inflation persists, transitioning from simple saving to investing in robust, diversified financial products is crucial for long-term wealth preservation.
