The generalized increase in prices, the loss of purchasing power and the need to increase income can awaken interest in investments. In this article, we show you some strategies and advice to start investing and we identified some of the solutions available.
Advice to start investing
Before applying your savings to any financial product, there are a number of steps you must take. We have listed below everything you should take into account.
Identify your risk profile
Firstly, it is essential identify your investor profile🇧🇷 That is, what is your risk tolerance level, objectives and way how deals with situations.
They exist conservative investorswho do not want to lose what they invest and bet on assets with guaranteed capital, and the moderates, which both invest in assets with guaranteed capital and in products with some risk. There are still investors aggressive, what invest in products with high profitability and, at the same time, a high risk of capital loss.
Set your goals
Before taking any decision, you should, above all, reflect and define your goals. For example, you can aim to increase your income for retirement, or acquire something in the short or medium term.
In other words, with your objectives previously established, you will have a clearer view of the type of investment that makes the most sense for you.
Know that there are no “best investments”
What do we mean by this? People don’t make the same type of investment: there are people who only invest in stocks, unlike others who don’t even take risks. Ie, each person has their own investment strategy, objectives and available amounts.
Logo, There are no investments that are considered the best, as they depend on many factors. The important thing is to focus on researching information and gaining knowledge about the different ways of investing in order to achieve your goals.
Sometimes, the mistake of many people who start investing is to aspire to make a profit quickly. Although, investments need some time to achieve good results.
Diversify your portfolio
A very important strategy for any investor is to diversification🇧🇷 This is because assets do not all behave in the same way at all times. With a diversified portfolio, a loss in one of them can be offset by gains in the others.
bet on knowledge
In an increasingly digital world, where everyone can share their stories, information and ideas, having a filter is essential. That is, it must search for information from reliable sources that will allow you to increase your knowledge about this area.
In the same way, this continuous search for information also keeps you informed about updates in the markets and the economy in general.
Also read: Start investing: Step-by-step and precautions to be taken
Investments: some of the options available
To minimize the effects of inflation or simply increase your assets, there are several investment types. Some with greater and others with less risk.
Suitable for conservative investorsterm deposits are safe and they can be used, for example, to start an emergency fund or to save up to buy something. In this type of investment there is no risk of losing capital but the return is also low.
They are investments of low risk marketed by insurers, who do not, however, have a guarantee fund such as term deposits.
How to subscribe to these insurances that allow you to increase your savings in the long term? It applies its capital by paying a premium at the beginning of the insurance contract or pays that premium periodically.
Retirement Savings Plans (PPR)
This is a financial product suitable for long-term savingsto allow you to have some money during your retirement or redeem money in specific situations of need. Anyone can invest in different PPR types for example:
- PPR Funds: have no guaranteed capital and are managed by investment fund management entities;
- PPR Insurance: estes guarantee capital and a minimum incomebeing managed by insurers.
PPRs have benefits, at the tax level, and can be transferred with some ease.
Savings Certificates are public debt products issued by the State. In practice, lends money to the state and the state pays interest on the loan🇧🇷 are products with guaranteed capital, a minimum subscription of 100 eurosand a maximum term of 10 years.
Also read: How to subscribe to savings certificates?
Like Savings Certificates, they are public debt products with guaranteed capital. However, in this case, the minimum subscription is 1,000 euros with a maximum term of 7 years.
contrary to Savings Certificates, which have a variable rate and that allow you to redeem your money 3 months after subscribing, Treasury Bills have a fixed rate and only manages to redeem at the end of the first year.
Bonds are government or company debt securities. Which means that, when investing in this type of asset, you are, in practice, lending money to these entities, in exchange for the payment of interest, which can be fixed or variable.
In this type of investment there is no guarantee of capital, which means that you can lose part of the money you invested.
Actions are a share of the capital of a companywhich means that, by investing in these assets, is becoming one of its shareholders.
With the investment in stocks, you can benefit from the company’s growth and its profitability, through the appreciation of its participation and, in some cases, obtain periodic income, through the distribution of dividends.
However, we are talking about a risky asset, which implies the risk of losing part or all of the invested capital.
Also read: 12 golden rules for investing in the stock market
also with some risk involved there are investment funds, which capture money from several investors to apply it to a set of assets.
We find, not market, various types of investment fundsto, which are distinguished by the composition of the portfolios, that is, by the type of assets in which they invest the money. We thus have the securities investment funds, who invest primarily in assets such as stocks, bonds or other securities, and real estate investment fundswhich invest mainly in real estate.
Also read: Investment funds: Is it worth investing?
Exchange Traded Fund (ETF)
One ETF (Exchange Traded Fund) is an exchange-traded investment fund, passively managed and following a certain basket of assets. Investing in an ETF allows a high degree of diversification, in a simple way and at lower costs, when compared to a conventional investment fund.
There are the Accumulation ETFs and Distribution ETFswhich are basically distinguished by the use they give to the income obtained, be they dividends, interest or capital gains. An Accumulation ETF reinvests the income in the fund, while a Distribution ETF delivers returns to investors.
Like investment funds, these are products that involve the risk of loss of invested capital.
Also read: ETF: What they are and how they work as an investment option