The history of a safe return does not end when you take the decision to invest in financial assets. It’s just the first step. That’s when it comes time to ask: What should I invest? The first thing that will happen will be to analyze the data of recent years on the profitability of the assets on which you plan to invest. However, profitability is not the only factor at play in the field of investment.
The profitability of asset with respect to another passes into the background when you perform are the following questions:
- Why I’m investing that money?
- When is the deadline for that investment?
- What is the historical volatility of the financial asset?
Once you have defined your investment horizon, you can just look closely at the historical performance of different investment assets. For example, if he has been raised to pursue a master’s degree or specialization within two or three years, the correct thing would be to save in an account of fixed-term deposit or to invest in public or private bonds. These tools allow obtaining average or low profitability, but with the assurance that in that short period of time, we will have more capital at the initial invested.
But if you think of the future, maybe buy an apartment in ten or fifteen years or perhaps save for retirement on their own, it would be wiser to invest in stocks. These assets allow obtaining long-term higher returns compared to bonds and term deposits.
There is an issue on which we want to influence, that of the aforementioned risk in investments. Can a term deposit be more risky than an investment in shares? Of course you do. Take the following case has decided to put money in a term deposit for five years in a bank at 4% interest. However, during those years, the inflation rate is around 4%. Will won something? Have more money, but you can buy the same quantity of goods than four years ago. All financial assets incurs a risk, it is something that should take.
Two final tips on investing in assets:
- Do not invest all your money in one asset. Diversify your investment portfolio, and thus prevent volatility to play against it.
- Settled once and for all their consumer debts. How do you intend to gain from your investment if interest rates on their debts exceed consumer profitability given by its assets? If you want benefits, start by removing such debts.