If this question has made you curious, it is probably because you have savings that you want to make the most of. However, if you are one of the few who, despite not having money, continue reading these lines, you will be happy, because the first thing to say is that to invest you do not have to have money. This may surprise you, but what is stopping you from going to a bank, borrowing and investing in the stock market?
This is the philosophy of hedge funds (Fund Administrators or investment funds), so current these days. Contrary to what their names seem to indicate, these hedge mutual funds (literal translation) leverage themselves by borrowing the money and placing it in high-risk investments
Under normal conditions, these investments will offer returns higher than the cost of bank loans, so as to compensate for the greater risk assumed, paying off debts and generating interesting levels of profit.
Returning to the question, we will say that the answer depends on its time horizon. If you want to invest in the long term, for example, pay for your children's studies when they go to college, or to live better when retirement comes, you should invest in the stock market.
Again, this may come as a surprise to you, as you probably think that your children's future or retirement are too important to "risk" in the bag.
To convince you otherwise I invite you to do some numbers. Focusing on the North American market and using data from the Ibbotson Associates company, if in 1925 you had invested $ 1 in US Treasury Bills, 63 years later (in 1988) you would have earned $ 6.72. However, taking into account the inflation accumulated in that period, this money would evaporate.
If, on the contrary, you had invested in State Bonds, you would have come to 1988 with a little more money: $ 14.64. ($ 5.74 in real terms).
The thing takes a different look when you invest in the stock market. If he had invested in the Standard & Poors 500 Index in 1925, he would have reached 1988 with $ 406.45. Finally, if you had invested in a portfolio comprised of high risk small business stocks, you would have ended up with no less than $ 1,478.14.
To understand what this means, if you assume that you invest two hundred thousand dollars in 1925 instead of one dollar, after 63 years it would become almost 2,956,280 dollars. Think about the retirement you could have with that money!
If your investment horizon is short-term, for example one day, we can carry out repurchase operations without any risk and that assure us a performance similar to that of the market that day, although if we have little money, investment companies are a excellent option, since they pay us higher returns than bank notes with attractive liquidity conditions.
The purpose of this series of business ideas is to show you the different investment mechanisms offered by the Mexican stock market, its instruments, the differences with traditional banking instruments and the risks that each of these instruments generates.
But most importantly, give you alternatives to get the most for your money.
