Table of Contents
What should you consider before investing safely?
Learn to diversify your investments
Don't just stick to safe investments in your country
The deadline is also important
The commissions
The hidden risks of guaranteed products
Inflation: the invisible enemy
Where to invest safely through inbestMe?
What should you consider before investing safely?
The main theory that you should keep in mind to invest safely is that profitability is directly related to risk. That is, if you opt for more conservative products, you will most likely obtain less profitability.
However, this theory sometimes breaks down, causing fixed income to not provide optimal results for the conservative investor. Therefore, it is important to consider other important factors in order to invest safely.
Learn to diversify your investments
Diversification is one of the most important elements of any chinese overseas british phone number data investment, even those that are considered safer a priori. Thanks to diversification, it is possible to reduce portfolio risk by introducing different types of assets, with different time horizons, geographical areas, sectors or categories.
In this way, even by introducing variable income, a portfolio reduces its risk, to the point of being considered a safe investment. This is precisely what absolute return funds try to achieve: to obtain a positive return regardless of market conditions.
Don't just stick to safe investments in your country
Most investors focus solely on assets from their own country, and miss an important opportunity to make their savings more profitable. In the case of fixed-term deposits, for example, the profitability of deposits barely reaches 0.5%, according to data from the Bank of Spain, while in the rest of Europe, they can reach profitability of more than 1%.
The same is true for other fixed-income investments. In addition to being able to access a wide range of different assets, you can diversify your investments to achieve the best combination of risk and return.
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The deadline is also important
Without a doubt, one of the fundamental aspects when it comes to investing safely, and at the same time one of those that is given the least importance, is the time horizon of the investment.
In the case of fixed income, the general rule is that the longer the term, the higher the required return. It is not the same to owe money in a period of 6 months than in a period of ten years. Obviously, if you give up using that money for a longer period, the debtor will have to compensate you more.
However, long-term investments are less liquid, which means that capital is not so easy to recover, at least at the desired time, and without incurring a loss.
The commissions
Commissions are one of the most damaging elements for any investor . Not in vain, they reduce the profitability of a portfolio, to the point of reaching negative returns if they are very high. This causes a portfolio that is initially made up of safe assets to end up causing a significant loss of the investor's initial capital.
It is therefore essential to choose products with the lowest possible fees. In the long term, these costs can make the difference between a product that guarantees your capital and one that can actually end up making you lose money.
The hidden risks of guaranteed products
One of the most popular products among conservative investors is guaranteed funds . Essentially, this type of instrument guarantees the saver's capital, using insurance for which participants pay a premium based on their contribution to the fund.
However, the name can be misleading, as they do not always guarantee the entire assets of their participants. In addition, they tend to have higher than usual commissions, especially in the case of subscription and redemption before the maturity date. For this reason, this type of product must be studied properly to avoid surprises.
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Inflation: the invisible enemy
The goal of any investment is (or at least should be) to preserve your assets, which requires overcoming inflation. This is certainly an ambitious goal, given the current level of widespread price increases and the poor profitability of the most conservative products.
So even if you think you're investing safely, inflation can actually erode your purchasing power.
Where to invest safely through inbestMe?
inbestMe offers a range of investment products that fit the risk profile and profitability objectives of any investor. Increase your profitability with our Index Funds, Pension Plans or ETFs with up to 85% less commissions.
