- Know your financial objectives and your risk tolerance well to be able to choose investments with a level of risk, profitability and term appropriate for your profile. Take your time and compare alternatives until you find the one that best suits you. Never invest in products that you don’t understand.
- Seek professional advice for investment decision making, but remember that the ultimate responsibility is yours. To avoid dislikes, keep in touch with your intermediary and determine the scope of your responsibilities and freedom to act, as well as your style and philosophy.
- Only allocate the surplus between your income and your common expenses to the investment. First eliminate the debts for which you pay high interest and heal your current financial situation, before making investment decisions.
- Invest for the long term. Markets rise and fall, but in the long term there are usually more ups than downs. Know how to stay the course and do not get distracted by daily variations.
- Diversify, diversify, diversify.
- Always in a manner consistent with the deadlines of its objectives, it is advisable to maintain a mix of investments with different time horizons to be able to meet different needs as they arise.
- Beware of costs! Compare the rates and commissions of each entity well. They greatly affect the final return on your investment.
Avoid overworking in an attempt to “win the market.” Nowadays it is relatively easy to make speculative investments, buying and selling on a very short term through the Internet and operating in markets previously reserved for experts. However, just because it is easy, it is not recommended.
- Start investing sooner than later. Of all the factors that affect the accumulation of capital by investment – initial amount invested, amount of contributions, profitability, time that the investment is maintained – the most important is the time factor .
Remember the rule of 72: It is an orientation to know the years necessary for an investment with compound interest to double its value. Simply, you have to divide 72 by the interest rate.
72 / Interest rate = Number of years
For example, an investment with compound interest of 6%, will double in value in 12 years.
In the same way, you can know the interest rate necessary for an investment to double its value in a given number of years.
72 / Number of years = Interest rate required
- Avoid fashions and gurus on duty, as well as emotional decision making. Don’t chase yesterday’s successes. Historical performance is no guarantee of future profitability. No one knows what the markets will do. Discipline and patience are important traits for the small investor. Fear and greed are his enemies. We must avoid “buying expensive” when markets live euphoric moments and “sell cheap” in times of crisis.
Regarding discipline, it is recommended to make regular and regular contributions, even if they are small, instead of waiting for what may seem appropriate times to invest larger amounts.
- If someone offers you an investment “too good to be true,” it is most likely not true. Never trust strangers who offer unsolicited investment advice. The CNMV has a publication about the “financial beach bars” that are worth reading. Never compromise your money without understanding the investment and the risks involved, and remember that there is no return without risk.
Investment decisions are very important, since the way you invest your savings will condition your financial situation, present and future.
- Before investing determine your investment profile. This means knowing your current financial situation, your financial goals, your time horizon, your personality and risk tolerance and your financial knowledge.
- When investing, choose an authorized intermediary registered with the CNMV and select the product that best suits your needs and preferences.
- Follow up on the investments made: keep an eye on the information you receive from your intermediary.
- Ask the entity everything you do not understand. If you have any questions, go to the CNMV Investor Service Office.
- Do not sign any contract or make capital contributions without first knowing the conditions. Invest only when you understand the essential characteristics and risks of the chosen product.
- Be wary of extraordinary profitability promises. Profitability and risk are always linked: if the product offers you an expectation of high returns, you will surely be taking high risks.
- Never be in a hurry to put money. Plan, take the time to reflect and never stop asking a question.