2/23/2022 - Economy and Finance

The first steps of the investor

By Gustavo Neffa

The first steps of the investor

We will start with the basic concepts, that is, what represents in practice a financial investment. It is a very common economic term related to savings, capital and consumption decline, because investment is the use of money and other resources to achieve some economic benefit in the world of financeAlthough investment in a broad sense covers other concepts that can be political, social, personal satisfaction (beneficiency), among others.

Specifically, savings resulting from the work or income of an asset (such as a department) or money originated in an inheritance in order to obtain income or income over time in the capital market are used. The investment is the employment of a capital with the aim of increasing, i.e. renouncing current consumption in exchange for future and distributed profits in time or leaving them to our children, which may be a very valid investment objective.

The money put to work is placed in securities, values and other financial instruments that are issued by companies or by the government With the basic objective of increasing the money available through the perception of interest, dividends, variation in the market price relative to the purchase price or other concepts.

The investment then turns into this flow of funds that represent the payments and revenues that originates, considering all the concepts by which an investor who has savings and invests it obtains in return an additional return.

The three basic concepts to consider when investing are:

  1. Expected performance: It is the compensation obtained by the investment, that is, its profitability.
  2. Tolerable risk: It is related to the uncertainty about what the real income will be obtained at the end of the investment period. The estimate of the payment capacity enters into play, that is, if the investment can pay the results to the investor.
  3. Temporary investment horizon: refers to the period in which the investment will be maintained. An investor can put your money to work in the short, medium or long term. It will depend on many factors, including the age or time available to see mature your investment, the risk you want to take (the longer the most risky investment) and the existing alternatives that dictate the convenience or not to invest in a given time.
Moreover, the more profitability you want to take the money you invest, the greater the amount of risk you will have to take. That is, The more ambitious the investor will have to be more tolerable at risk or less "at risk".Hay short-term investments that are temporary, i.e. those that become transitory with the aim of maintaining the production of surplus revenues of resources over a period not exceeding one year (i.e., the accounting of companies ranks), which is carried out in high-quality, safety and liquid assets at any time. But there is also long-term investments made to meet different objectives As the use of surplus resources to produce some additional incomes and which are usually carried out over a year.

In the most risky or long-term investments, the investor will always have to know the value of the market capital, because often the fluctuations of an action or a long bonus can "comerle" much of the profitability it promises to give regularly. That is, often, an investment can return a total loss at a certain time of the asset's life, however there are periodic payments in the form of coupons (for bonds) or dividends (for actions).

To carry out the investment, you need to open a Investment account or "comitant account" in any authorized intermediary agent (bag company or "ALyC" in Argentina, in which the investor will electronically transfer his money through bank transfer and later accreditation in that specific investment account, process that will be detailed in another opportunity.

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gustavo neffa

Gustavo Neffa

I'm Gustavo Neffa. Director of Economics and Finance at FinGurú. Partner and director of Research for Traders, leading a team of market analysts. I spent the last 24 years in the financial sector in both domestic and foreign entities, having occupied the post of Senior Research Analyst in Macrosecurities of the Banco Macro and the BBVA Banco Francés, as well as economic analysts with the economist in chief of the BBVA Banco Francés. I am also a professor in Corporate Finance, Investment Portfolio Management, Financial Asset Valuation, Valuation of International Investment and Finance Projects in various MBAs and postgraduate courses in Buenos Aires and in the interior of the country and professor of the MBA of the UNLP and the UNNE of Financial Asset Assessment and the postgraduate degree in the UBA Capital Market in agreement with ByMA. Co-director of the UNLP Advanced Finance Programme.

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