December is a month of planning in order to avoid an economic hangover
December is traditionally a month filled with celebrations, which means that there are additional expenses to one’s budget. The extra food, special dates, gifts, and of course, the holiday trips.
Despite receiving extra income, such as bonuses and shareholder returns, it is also a month of planning, because nobody wants, after the final celebration of 2017, to receive 2018 with an economic hangover.
For Mauricio González, financial advisor to several investors and private companies, "the first thing before giving an investment saving recommendation is to evaluate the risk profile of the person, that is, what is the level of exposure that is willing to assume and what are the resources you have to invest?".
"There are three levels of risk profile, conservative, moderate and high risk; the lower the risk, the lower the profitability, so the moderate is willing to assume a some risk while maintaining the level of security of their investment", adds the analyst.
But González warns that "whoever is willing to invest with a higher level of risk so that the return on their investment is greater, must do so with surplus resources, those that are not destined to satisfy basic needs and their fixed costs, such as money destined to the feeding or the payment of the rent, in some cases".
Currently, conservative investments are mainly focused on the CDT and the Collective Investment Funds in sight that in Latin America offer a yield ranging between five and eight percent, depending on the country, the amount of the investment, and the entity recipient of this type of resources destined to investments.
The difference between the profitability offered by one entity or another basically consists of the strength of each of them, while the more solid entities offer lower returns because they are more attractive to investors, smaller banks offer greater profitability for the purpose of attract capital.
In the case of the moderate level of risk, one of the investments where those interested in making money could locate their resources to protect their capital, for example, in real estate; "in the main cities there is a saturation of housing of medium-high strata and high. I would not recommend an investment in this sector, since there is a lot of offer with such high prices, I do not see much room for valorization", affirmed González.
However, he adds with respect to this issue that "this happens in medium and high strata, but in the medium-low stratum in intermediate cities there is still a small space in which it could be a good investment to think of real assets".
In this case, the moderate investment in real estate depends on the investment time, since it is a medium-term investment, the minimum period to generate a considerable return as a result of a valuation, would be no less than five years.
González assured that "[I] do not recommend any high-risk investment, but among them, profitability is huge, the most recognized example is BitCoin, a speculative investment that I would not bet more than the capital that is willing to lose and that, of course, do not need, in such a way that it will not affect my finances”.
But for Mauricio González as a financial analyst, "this is the time to wait with the capital that is destined for investment, to predict the exact moment of making an investment in real estate is very complicated, but there are some studies that indicate that the year 2018 could possibly be a year in which the prices of some buildings for offices and homes of medium stratum decrease and at the moment in which this happens, it could be a moment in which those who have the capital for investment, could generate interesting returns ".
It also refers to the "attractiveness" that could become the US market, "by raising interest rates and having approved the tax reform in which they reduce taxes on businesses to 25%, the American market becomes very interesting for an investor who has the ability to have resource mobility" and explains that "those who have the possibility to choose the place of their investment, whether it is Peru, Colombia, Brazil or the United States, will have to make important decisions, but also, I think it generates upward pressure on the dollar in the entire Latin American region".
Undoubtedly, the investment of the resources for the year that is about to begin must be a decision evaluated and weighed in many variables, the amount to be invested, the expectation in the time of return of the investment and the type of risk that is willing to assume, but above all, a cautious and well-structured decision.
Latin American Post | Alberto Castaño Camacho
Copy edited by Susana Cicchetto