THE IMPORTANCE OF INVESTING
Investing is the act of allocating money to a business with the expectation of obtaining an additional profit (Ortiz, 2015). Investing is good because it represents the creation of well-paid jobs, the opportunity for many people to perform a job to satisfy their needs and, on the other hand, for the person who invests, represents a greater personal development creating a virtuous circle that benefits everyone (Proal de la Isla, 2017), also reflects correct financial management (Ortíz, 2015).
Some people prefer to save in the bank instead of investing, however, when the money is left in a bank account it does not provide any benefit and even loses value due to inflation (Belenguer, 2018), this represents a safe option but at the same Time generates a loss of value money over time (Villa, 2018). The truth is that there is only one way to generate growth in money in the long term and that is investing (Lanzagorta, 2016)
ETYMOLOGY AND USE OF MONEY
Money comes from the Latin denarius, which was the currency of ancient Rome (Invest in Gold and Silver.com, nd). Money serves as a method of exchanging goods and services between people and organizations, it can be tangible, such as: notes, coins, debit and credit cards; or intangible as in the case of: electronic transfers and internet purchases (Quees, sf). It fulfills three basic functions that are: means of payment, that is, accepted to carry out transactions; As a store of value, it means that it maintains the purchasing power and functions as a unit of account, which is why it can establish product prices and quantify debts (Portafolio, 2017).
MONEY HISTORY
At first there was collective property and then barter appeared as a means of exchange as economic surpluses were generated (Méndez, 1996), then some goods appeared that were used as means of exchange, such as: salt, feathers, shells, precious stones and everything that was accepted as money by the community (Mueller, 2012). Subsequently, the Egyptians used silver and gold as a medium of exchange, but due to their different sizes and weights they were not easy to carry out equitable exchanges, however, these precious metals were used because they have unique properties, such as: intrinsic value, ability to store large amounts of value in small pieces, durable, portable, divisible, non-corroding and the value of gold is the same throughout the world,Because the quantity of gold and silver is limited, this has allowed it to maintain its value over thousands of years, however, starting with fiat money, prices increase more and more and money loses value over time of the years (Maloney, 2014).
FIDUCIARY MONEY
Fiat money offers unlimited capacity since the intrinsic value of tangible money is much less than the value it nominally represents, because it is not backed by gold, silver or some other valuable material as it only works because people trust it, but the increase in currency is what causes inflation (Kiyosaki, 2013), that is, inflation is an economic imbalance that is characterized by the increase in prices of goods and services due to excessive issuance of coins and bills in the money supply (Larousse as cited in Méndez, 1996)
INVESTMENT OPTIONS
Once it is understood that money depreciates per se over time, below are 4 smart ways to invest, presenting their advantages and disadvantages of each of the options that adapt to the different investment profiles, in general They can classify into three types: risk aversion, risk neutral and risk lovers (Taberner, 2015). These are the 4 options to invest wisely:
1 CETES
CETES is the abbreviation for Federal Treasury Certificates that are debt instruments through which people loan money to the Mexican government at a fixed rate (Macías, 2017)
HOW TO INVEST IN CETES
You can invest in cetes from the corresponding website from $ 100 pesos, also in BANSEFI and brokerage, but with a larger amount (Marcos, 2017) to invest in terms of 28 days, 91 days, about 6 months and a year (Forbes, 2016)
The process to invest in cetes through the internet is very easy, you just have to go to the page to invest directly in cetes from a Smartphone, device or computer, once there you must enter your personal data, have a bank account with CLABE and a beneficiary, after creating an account, the amount of money to invest, the instrument and the term are selected (Cetes Directo, 2018)
ADVANTAGES OF INVESTING IN CETES
Some advantages of investing in cetes is the liquidity to be able to have the money in short periods according to Alejandro Padilla Santana, Director of Fixed Income Strategy and Exchange Rate at Banorte (as mentioned in Marcos, 2017), it is also the investment safer since there is no perceived risk of non-payment because it is backed by the government (Mendoza, 2011), provides stability and is therefore low risk (Macías, 2017)
DISADVANTAGES OF INVESTING IN CETES
When considering the disadvantages, it is found that it is possible that in reality the money is depreciating due to the low profitability it offers in relation to the inflation rate coupled with a tax of 1.6% of the profits obtained (Marcos, 2017). In addition, it must be taken into account that if the investment is made through a bank or brokerage house, a commission must be paid (Macías, 2017) and therefore they only work as investments in the short term (Lanzagorta, 2012)
TRENDS
In conclusion, it has advantages and disadvantages like any investment instrument, among which it can be summarized as a low profitability option, but at the same time it is the safest way to invest so it will continue to be the best way to invest for those cautious people. risk averse.
2 BITCOIN
Bitcoin is a cryptocurrency or virtual currency that serves as a means of payment based on encrypted mathematical algorithms whose use is due to decentralized communication and exchange technologies using encryption techniques (El Financiero, 2017)
BITCOIN HISTORY
Currently there are more than 900 cryptocurrencies in the world but the most popular is bitcoin (El Financiero, 2017), which appeared in 2009, being the first cryptocurrency (Nieto, 2017), but it began to rise dramatically in value since 2013 (BBC World, 2017).
As a sample of the appreciation that bitcoin has presented, for example, an investment of $ 10,000 US dollars in 2010, for the year 2017 it reached the shocking figure of $ 1,100,000.00 US dollars (Bilello as cited in BBC Mundo, 2017) since The use of Bitcoin has exploded (Nieto, 2017), in 2017 alone its value increase was 1,200%, which is why some consider it as digital gold, but some analysts think that it is only a financial bubble (BBC Mundo, 2017).).
HOW TO INVEST IN BITCOIN
There are many internet pages and apps where you can buy bitcoins through a credit card or with bank transfers (BBC Mundo, 2017), where the process is similar in all: first you must create an account providing personal data and a card to associate it with transactions (BBC Mundo, 2017).
ADVANTAGES OF INVESTING IN BITCOIN
The advantages of bitcoin are the high rates of return that it offers in a short time, you can invest in them 24 hours a day through the internet from a smartphone, or computer (BBC Mundo, 2017), you can buy with Mexican pesos, euros, rubles or any currency, it is not possible to falsify them by its cryptographic system, transactions are made from person to person but it is not required to reveal the identity, it cannot be intervened by anyone and the accounts cannot be frozen (Queesbitcoin, sf).
DISADVANTAGES OF INVESTING IN BITCOIN
Among the main disadvantages is the high risk of investing in them because it is not regulated by any agency or country, and there is a possibility that money will disappear overnight (BBC Mundo, 2017) since money only exists in the blockchain, blockchain, which supports it (CryptoNews, sf) and therefore is not very useful for long-term investment, according to some specialists (BBC World, 2017).
It is also important to take into account as a potential disadvantage that because all the information is saved in software, if for some reason the storage device breaks down or is erased, all the money is lost since the money is found by the blockchain and What the computer or device maintains is only a copy of the key to manage it, so it is recommended to have a backup of the information, that is, a copy of these keys (Nieto, 2017)
TRENDS
Many think that bitcoins can only be used through the internet but the reality is that more and more establishments are accepting payments with bitcoin, some pages show the list of retail stores available in the participating cities (BBC Mundo, 2017). Finally, it should be noted that this type of investment is for people who love risk.
3 STARTING YOUR OWN BUSINESS
Considering that entrepreneurship is in vogue in Mexico coupled with the support provided by the government through the National Institute of the Entrepreneur (INADEM), Nacional Financiera, ProMéxico, programs of the Ministry of the Economy, events such as Entrepreneur Week, the creation of commissions for COPARMEX and CANACINTRA such as: Young Entrepreneurs, which seek to promote the creation of companies from an early age, and taking into account that SMEs generate 7 out of 10 jobs contributing 52% of GDP (García, 2014), all this represents an opportunity in itself to undertake
According to a study by the Global Entrepreneurship Monitor Mexico (2011), 80% of new entrepreneurs undertake because they want to take advantage of a business opportunity and enjoy labor independence (García, 2014), some of the main reasons for undertaking in Mexico are: freedom of time, job security, doing good, becoming an expert, determination, recognition, changing the world and financial freedom (Templeman, nd)
HOW TO EVALUATE A BUSINESS IDEA
For this, it is first necessary to evaluate the project in the following way:
- Consider all the elements necessary to start the business with their respective costs, that is, the amount of the initial investment. Carry out a market study to estimate the sales projected for a minimum of 5 years, calculating the growth rate, the price that the market would be willing to pay. and the expected inflation of the next years Calculate the working capital, that is, the amount of cash sufficient to cover all the expenses of the business during the first 3 months, estimating to start receiving income streams from the third month Determine the number of workers necessary, defining their role and organization chart as well as the salary that each one will receive, including, of course, that of the entrepreneur, adding inflation for the projection of the next few years Establish the financing of the business, that is,decide if the resources will come from the savings of the entrepreneur, loan from family and / or friends or if a partner is going to join determine how much each one is going to invest in the project or bank loan. In the case of borrowing from a bank, compare the rates of each, the terms, the conditions and finally make an amortization calculation in the scheduled term. Finally, it is always recommended to consider a second option or plan B, that is, think In the same amount of investment that would be destined for this undertaking, compare what would happen if invested in that second opportunity. In order to evaluate both projects, it is advisable to estimate the Internal Rate of Return (IRR) and the Net Present Value (NPV) of each one and the one with the highest value, especially the NPV, will be the project that should be chosen as it is the most profitableIt will be the project that should be chosen because it is the most profitable
ADVANTAGE
Among the main advantages of starting a business are the flexibility of working hours, pursuing some personal interest or passion, building a team, meeting new people, helping other people, investing in yourself, making more money, not routine, create an asset get involved with the community, inspire others and achieve the dreams of the entrepreneur (DeMers, 2015)
DISADVANTAGES
Some of the disadvantages of undertaking are: lack of benefits, that is, social security, Infonavit, medical expenses insurance, retirement savings, etc. (Boost your Business, 2016), economic risk because income depends on entrepreneur, risk by not knowing if the business will be successful (ActionCOACH, 2017).
TRENDS
The Do Ex-Star¬tup Founders Make The Best Venture Capitalists? From CBS Insights in its 2017 edition, it placed Mexico as the promised land of high impact entrepreneurship, indicating that Mexico was the nation with the most investments in all of LATAM and for this reason, several global corporations have their sights set on Mexico to open new offices and expanding (Speranza, 2017), on the other hand, the General Director of Endeavor Mexico mentioned for Forbes (2017) that there is an urgent need for a new generation of entrepreneurs to have a local figure as a source of inspiration. Finally, it is important to mention that this type of investment is one of the most risky for all the context that has been previously explained but it is also one of the most satisfactory, therefore this type of investment is for those people who are 100% lovers of risk.
4 FRANCHISES
A franchise is a license, concession or right that a person or Association grants to another person or Association so that they can benefit from the economic activity of a product, service or brand in exchange for royalties (CreceNegocios, 2010)
HOW TO INVEST IN FRANCHISING
According to InfoFranquicias.com (sf), it recommends the following steps:
1 Find franchise alternatives
2 Request the pre-contractual information of the franchises
3 Call and talk on the phone
4 Know the most important factors of the franchises contacted, such as: investment volume, list of items to start the business, profitability per worker or square meter, most important costs for working capital, amortization plan as well as product portfolio and prices
5 Visit the franchises to invest, meeting the Manager, Operations Director, some supervisor and line workers
6 Compare information from at least 3 franchises contacted evaluating the positive and negative aspects
7 Request contracts
8 Ask franchisee contacts, call them and ask how their business is doing
9 Ask the franchisor for the premises they have closed and why
10 Negotiating contracts
11 Find premises
12 Make a Business Plan for each franchise and discuss it with the franchisor
13 Make an Investment Plan for the premises
14 Make the decision choosing the franchise in which to invest
ADVANTAGE
One of the main advantages is the reduction of risk to start a business because it is a system that has already been successfully tested, therefore, it reduces the business's death rate, generates jobs with economic stability, contributes to the country's GDP and represents an excellent opportunity for the creation and growth of heritage (Asociación Mexicana de Franquicias, 2017).
DISADVANTAGES
The main disadvantages of acquiring a franchise are: high acquisition costs, royalty payments, you cannot transfer the property (CreceNegocios, 2009) or innovate because the decisions come only from the franchisor, you do not own the brand (Asociación Mexicana de Franquicias, 2017)
TRENDS
The forecast of the experts for 2018 is that there will continue to be significant growth in this sector of the Mexican economy, so it will continue to have a good boom as a new unit opens every hour with the fastest growing being that of beverages and food (Luna, 2018) and finally this type of investment is for people who love risk but with a dose of aversion because it is similar to starting a business but with less risk since you have the support, the know-how, the experience and everything the support that the franchisor can offer so that it can assist investors at any time.
And you, how are you going to invest?
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