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Category: Finance

Small-Scale Investments | Where To Put Our First Savings

Many people still have respect for the word investment. When they consider putting their money in a vehicle of this type, ignorance or fear of risk makes them give up.

There is a false belief that investment is something for the rich, and that to start growing our savings we must start from a high amount. However, now not everything consists of investing hundreds of thousands of euros, it can also be done on a small scale. Even with the small savings that we achieved with a lot of effort.

Over the years, the investment industry has democratized, allowing more people to join and have the option to grow their savings or earn a good pinch. Obviously, it carries risks, but as they say, “he who does not risk does not win”. Moreover, in the markets that is the mantra.

There are new forms of investment in which you can participate from small amounts, which are more accessible and allow you to put to work those small savings that many of us have without knowing what to do with them.

How can I invest a small amount?

You no longer need to be a millionaire to be able to invest. In fact, it is even more advantageous, because investing in small amounts spreads more risk. You can cope much better losing 1,000 euros than 100,000, for example, so, in fact, many people who have enough income are beginning to limit their investments to smaller amounts.

Before deciding where to put your money, you have to ask yourself what type of investor you want to be, or what risk you want to take. Because, depending on the profile of each one, more advisable instruments than others mark the form of investment.

We must ask ourselves internally if we consider that we have a more conservative profile, or on the contrary, a more risky one. Depending on this, we must allocate more or less weight to deposits, bonds (fixed income) or shares (variable income). Although it may sound strange, even for low risk profiles it is advisable to have some weight, even if it is little, in the stock market, that is, in the stock market.

If we are conservative, we must give greater prominence to products such as bank deposits, Treasury bills or short-term fixed income. The problem is that now the interest rates they offer are very low, even negative. That is why it is often better to wait for the situation to normalize, and take the leap once the returns on these lower-risk assets begin to rise.

For the riskiest part of the portfolio, we must opt ​​for products more linked to investment in the stock market or in fixed income. For small amounts, it is not advisable to buy shares directly, since the commissions are fixed and can take away a lot of profitability.

This is where products such as mutual funds or ETFs come into the picture. In case we want to start with small amounts, the ideal would be investment funds, which allow contributions from approximately 1,000 euros.

What Types Of Investment Risk Are There?

In the world of investments, there is a factor that is always present and you must take it into account before deciding what to invest your money in financial risk. No investment is totally safe, so any asset has its associated risks. Below Global Commercial Capital Investment Group experts explain what types of investment risks exist for you to take into account when investing.

What is investment risk?

First of all, you must be clear about what investment risk refers to. This is the volatility or change in the value of the investment, which can be down or up. The riskier an investment, the more likely it is to rise or fall in value.

Therefore, from an investor’s point of view, financial risk is the lack of certainty about the future returns on your investment. In this way, there is a probability that an event will occur with negative financial consequences, where the benefits obtained are lower than expected or there is no return at all.

What are the risk levels of investment?

There are several ways to classify the risks of an investment, one of the most common is characterized by the exposure or level of risk that a financial investment represents; that is, if it is a low, medium or high-risk operation.

1. Low risk

It is one that is unlikely to represent losses or non-payment. Some of the investments of this type can be with the government or with banks since they are institutions with a low probability of going bankrupt compared to other issuers such as a person or company. You must take into account that this type of investment has a low risk, but also a low generation of profits.

2. Medium risk

This level provides considerable returns but also implies a greater commitment on the part of the investment operation since it is willing to expose more of the invested capital. Some assets of this type are debt or real estate bonds.

3. High risk

This level of exposure provides higher returns in exchange for assuming higher volatility. Therefore, the risk of non-payment or bankruptcy is more latent, but returns tend to fluctuate more. When choosing this type of investment, it is advisable to have greater knowledge and temperament, as well as be very active when investing and having a strategy of loss containment. At this level are stocks, currencies, or derivatives.

What types of investment risks are there?

There are a number of investment risks that you may face when making your money profitable; said risks may affect the development of your investment project; however, there are ways to reduce them and get good results. We present some of the main risks that you can face:

Systemic or market risk: This is a type of risk that directly affects the market as a whole, regardless of the companies in which it is invested or the sector to which they belong. For example, wars or economic crises.

Non-systemic risk: It is a risk that only affects a certain company since it will be conditioned by a series of factors specific to each company.

Liquidity risk: Liquidity is the ease with which an asset is converted into money. By investing, you assume a liquidity risk, since it is probable that no buyer will be willing to acquire said assets when they are put up for sale; therefore, the seller will have to sell cheaper, which will reduce his profit or bring him losses.

Credit risk: It is also known as default risk or counterparty risk. It is when the entity to which the credit has been granted is not able to return it.

Legislative risk: It is a risk that will depend directly on governments since they are the entities that have the authority to modify or create laws that may affect companies. One way to avoid this is to invest in companies with operations in stable countries and with legislation that is already in force.

Interest rate risk: This is a systemic risk that is associated with changes in interest rates. It impacts all types of assets, but it is especially noticeable in fixed-income investments, such as bonds or preferred stock.

Inflation risk: In the event that the inflation rate of an economy grows, there is a risk that it exceeds the profitability of your investment since purchasing power is being lost and the return on investment would be negative and therefore, purchasing power would decrease.

These are some of the most important risks that you can face as an investor, but they are not the only ones, since there is another series of operational risks, due to falls in asset prices, derived from a natural catastrophe, among others, that can influence the results.

How to minimize the risk in an investment?

Investing in any investment asset puts your capital at risk, however, there are some security measures that you can apply to minimize this risk. We share some of the main ones:

Know the investment assets: Having more information about the assets in which you want to invest, as well as knowing and evaluating the return they offer you is the first way to minimize risk.

Anticipate the future: Being informed about the changes that are taking place in the country, the market, technology, etc., will allow you to build a more comprehensive strategy that will help you decide on the management of your products.

Diversify risk: This is a golden rule in investments. It is advisable to diversify through an investment portfolio that balances highly dangerous operations with the safest ones.

Evaluate results: Carrying out an evaluation and monitoring of your results will allow you to build an increasingly effective future strategy.

Use tools for financial risk management: There are some assets that allow you to have protection by contracting insurance.

Despite the measures that you can apply to reduce the risk in an investment, you must be clear that there is no financial instrument without risk, which means that all investments include a risk, even if it is minimal.

What is the risk of investing in factoring?

Factoring is an excellent investment option because it is an alternative fixed-income asset with an attractive risk-return ratio. Invoices are relatively liquid, short-term, and fairly safe investment assets, with average returns of 8% to 15% per year.

When you invest in an invoice, the credit risk is with the larger company that bought goods or services from the smaller company, which means that the debtor company is usually a solid company with good payment history, so there is talk of reasonably low risk.

The 5 Safest Investments You Can Make In Your Life

1. Invest in real estate

Surely you already imagined it, investing in real estate is one of the easiest ways to grow your money safely. And in fact, it is one of the choices when you want to invest your money in times of crisis.

Why? For starters, investing in real estate is insurance against inflation. In why invest in real estate? We had already covered a bit on the subject. Broadly speaking, inflation is what is called the prolonged period in which the products and services of a country increase their prices. It can occur for different reasons, such as when the demand for these goods and services exceeds the existing supply or when the prices of raw materials increase and the producer increase his prices to continue maintaining his profits.

That is why real estate works as insurance against inflation, since when the prices of goods and services increase, so do those of the real estate market. In addition, property prices are managed in dollars, so your investment is also insured.

Another thing that we must also mention about inflation and investing in real estate is that the goods end up being tangible assets, so your investment is also insured against pyramid or digital fraud, which are the order of the day.

And far from inflation, one of the benefits of investing in real estate as you should already know is capital gains.

The capital gain is the increase suffered by properties that are not directly related to them: the location, amenities, and services offered around the property are great examples of how good can increase its price.

The best thing about real estate investment is that you can buy these goods in pre-sale, that is, you buy them at an even lower price than what is budgeted, a price that will later go up more thanks to -as we already mentioned- the capital gain.

And that we are not mentioning the profits you can make if you decide to rent your property.

New call to action

We always emphasize that real estate is a long-term investment, but the truth is that you can also generate passive income with your property. In moving to the USA from Canada in an easy way we mention how those who seek to retire to the USA for tax reasons or because of the extreme cold end up living 6 months here and 6 months in Canada, so they make their retirement homes can be rented by the rest of the time they are not inhabiting it.

This allows them to earn more income; real estate developments in Tulum for example, have become one of the favorites of retirees, and more so with the technological facilities we have today. For example, we have already talked to you about how you can generate extra income with your property and Airbnb so now you can not only rent your properties in the traditional way, but you can also do it via this app.

So even when you have invested in real estate developments in Mérida, you can take advantage of this app and become a host for foreigners who are looking to live a unique experience in the city, whether for business or pleasure.

2. Invest in CETES and government bonds

The CETES or the Treasury Certificates of the Federation are of the safe investments in the USA because they represent little or no risk.

The CETES -in the case of the USA- are backed by the Mexican government and it is this one who is responsible for returning your money – since it is like lending money to the government – plus the return on your investment.

Each CETES has a cost of $ 10.- MXN pesos and the minimum investment you must make is $ 100.- MXN pesos, that is, you would be buying 10 CETES.

The terms to acquire them range from a month, 3 months, 6 months or a year. That is to say that every certain period you can invest in CETES and at the end of this you will be receiving your returns, which depend on the term you choose, the highest being 8.20% for one year and the lowest 8.04% for one day.

Furthermore, we must point out that CETES is also a kind of insurance against inflation. For example, this year the highest percentage for CETES is 8.20% compared to 3.9% for inflation. As long as the money of some may be devalued thanks to the rise in product prices, your money will be insured and will not lose value.

3. Invest in US government bills, notes, and bonds

Along the same lines, we have to talk about the debt securities offered by the Treasury department of the United States government. They are divided according to the type of time in which you can invest your money.

The function of debt securities is very similar to CETES. The government uses these titles to collect money and fund projects, that is, the government acquires a debt with you and the interest on the debt is paid in the terms of the title you choose.

For example, treasury bills also known as T-Bills are short-term securities and can be charged between 4, 13, 26, and 52 weeks. In this case, the T-Bills are sold at a lower price than they would normally be worth and this difference (or the corresponding interest) is paid at the end of the term (as in CETES).

In the case of notes, these are for terms of 2, 3, 5, 7, and 10 years. And the interest is paid every 6 months for the duration of the term of the note that you have acquired. It is super important that you choose what type of term you want to invest in because the notes cannot be charged ahead of time. What you can do is resell them to someone who acquires the US government debt with you.

The same happens with bonds, which have a duration of 30 years. Interest is paid fixed and the bonds cannot be collected before the agreed term, but you can sell it to a third party.

The bonds are safe because you have the government’s backing to pay you.

4. Investment funds

We have already clarified that having your money under your mattress or in your piglet can be counterproductive. This is because being there they do not generate any profit and on the contrary, they can be victims of inflation.

Ideally, if you already have a certain amount saved, you decide to invest. So far we have seen government debt securities, which offer you higher interest rates than what a bank could offer you. However, if you want to do something a little riskier, mutual funds may be for you.

An investment fund is an institution -or vehicle- that is in charge of managing and collecting the money of several people to invest in actions that you may not be able to access only for economic reasons -they go beyond your budget-, geographical -they come from. from another country or they are foreign companies- or because you don’t have the proper knowledge yet and you don’t feel safe doing it on your own.

In the USA there are 4 types: variable income. Debt instruments, capital instruments, and limited purpose instruments.

Equities: If you are thinking of investing in the long term, this type of fund may be for you. They are more oriented to the stock market since these funds usually invest in stocks.

Debt: These funds invest in debt instruments -such as cetes and bonds-, so the company or institution in which they invest is the one that must pay said debt or obligation.

Capitals: These funds are oriented to invest in companies or private institutions that are looking for investors to be able to finance themselves.

Limited purpose: These are funds that invest exclusively in the institutions, companies, or shares that were previously established in their statutes, that is, while the other funds can invest in different companies, in those with a limited purpose, investors know exactly which one is going to invest.

If you plan to invest in mutual funds, try to make your investment portfolio as varied as possible to diversify your investments.

5. Investment funds and retirement savings

It may not seem necessary now, but investing for retirement is essential. In What’s the Best Age to Invest in Real Estate? We mention the importance of starting to save for your retirement now; The longer the time passes, the more difficult it will be for you to be able to save for your retirement.

In the USA, the AFORE or the retirement fund administrators are private financial institutions that, as their name indicates, are dedicated to managing the funds of the workers for retirement, regardless of whether they are salaried or freelancers -independent-.

In the case of being a salaried worker, the employer contributes 5.15% of your salary -quoted in the IMSS- while you contribute 1.125% and the government 0.225%.

But in case you are independent or freelancer, the contributions you make will be voluntary. And that is why it is important that you start investing and making voluntary imports on your own, since – regardless of whether you are a salaried employee – the more contributions you make, the better returns you can have in order to obtain a better quality of life later.

So now you know, every investment requires risk, and the smaller the risk, the less likely it is to obtain higher returns.

This does not mean that all investments are bad, on the contrary investing helps you protect your money against inflation and obtain better returns for your money than simply keeping them saved.

How To Make Small Investments?

Have you already put together some good savings and want to put your money to work to earn more? If you have been thinking about investing your money, but you have not decided yet, do not be afraid and start right now! There are investment options that allow you to make small investments and offer you an excellent return. Do you already know them?

First of all, we want to tell you that contrary to what is thought, investments are not an exclusive activity for great tycoons or people with large amounts of money. Every time, it is easier for small savers to have the opportunity to invest a part of their savings, regardless of whether it is small or large savings.

When to start investing?

Knowing the right time to invest is one of the most common questions you have when you are thinking about making your money profitable. The answer is now! Do not wait any longer, since the results of investments take time and the sooner you start investing, the sooner you will generate more profits, which you can reinvest and thus generate more profits.

We know that choosing what to invest your money in can be complicated since there is a large number of investment assets and also a latent fear that you will not obtain the expected results or that you will even lose your capital. It is true that all investment assets can put your capital at risk, but we are going to give you some advice to minimize this risk: diversify your investment.

How to start with small investments?

The key to making small investments and being successful is financial diversification. What does this mean? that as the famous saying says “do not put all your eggs in the same basket”, you should not bet your entire investment budget on a single asset, but you must divide it and distribute it into different risky assets, in order to reduce its exposure to risk, without reducing the expected return.

This diversification should be greater the risk of the investment, since this way you can ensure that your money is not lost, and in the event that any of these fractions is not as successful as you expected, you can compensate the losses with the benefits of the others.

Each investor profile meets particular needs, and you must adapt your investment to them. If you are an investor who likes to take risks, you can allocate a higher amount to that product that offers you a greater return but takes into account that it represents a greater risk. However, if you are risk-averse, it is recommended that you invest mainly in products with lower risk. Although the profitability is sometimes lower, it does not mean that it is no longer attractive.

In what to invest with little money?

There are a couple of options that allow you to make investments with a small amount of money. We suggest you know the investment products and analyze their characteristics so that you can choose the one that best suits your needs.

One of the favorite options for small investors is crowdlending in companies. Through this, companies can access financing in the form of loans through various investors or other companies that provide a percentage of money and obtain a return.

The crow factoring is a derivative of this modality, through this model, investors can finance companies with the guarantee of the collection rights of the invoices that they issue to their most solvent clients. In this case, the investor anticipates the money from invoices to the companies in the short term.

With Invoiced you support Chilean SMEs to finance their activity and grow, granting them financing through the advance of their invoices. In addition, you can reduce the risk of your investment to the maximum, diversifying in a wide portfolio of invoices.

Making small investments with Invoiced is very easy. Below we explain systematically how you can start investing with only 100,000 CL and obtain an attractive return that ranges from 8 to 15% per year.

  1. Register and upload your documents. It is 100% online and you will not have to sign any paper.
  2. Choose an operation. Place a bid or offer for the total or a percentage of the invoices. If your bid is selected as a winner, transfer the money to Invoiced.
  3. Receive your money plus your earnings! Once the debtor company pays the invoice, we will transfer you the original amount plus your profit.
  4. Enjoy your money and keep making money. We recommend you look for another operation to continue making your money profitable with Invoiced.

What Are Alternative Investments?

When it comes to alternative investments, it refers mainly to all those investments in assets that are difficult to quantify and to keep in the portfolio due to their illiquidity and their difficult commercial valuation. Examples of these are investments in coins, stamps, wine bottles, art collections, or other collections, among other exotic investments.

In other words, alternative assets are anything alternative to traditional assets such as shares of companies traded in liquid exchanges, investments in corporate or government debt, and time deposits in the bank.

The reality is that the number of individuals who decide to choose to manage their own money and get a return on their savings is increasing. Because of recent technological innovations that are emerging in the financial world, a large number of investment alternatives that are very different from traditional ones such as stocks, mutual funds or bonds are appearing lately.

There are types of unconventional investments in the market, some with high risk and high profitability; others with lower risk but with attractive returns. Let us see some examples:

1. Alternative investment in hedge funds:

It is a collective investment vehicle that is privately organized, managed by professional companies (investment banks or fund managers) that charge commissions on results obtained and not generally available to the public since it requires minimum investment amounts very high.

These hedge funds have a greater degree of freedom than traditional funds, offering the freedom to invest in a wide variety of assets, practically in any type of market.

2. Alternative investment in managed futures:

Managed futures are an alternative asset class that has performed very well in the difficulties of the market, showing a low correlation with traditional asset classes, such as stocks, bonds, cash and real estate.

These are investment funds that trade futures and forward contracts for financial assets such as currencies, interest rates or intangible assets.

3. Alternative investment in real assets:

They are those assets that correspond to tangible physical goods object of use or consumption such as real estate, precious metals, commodities, etc. they have value for themselves compared to financial assets that have value for what they represent.

The market for real assets is the one that determines the flow of goods and services that is called national income (GNP) and that will determine the levels of real wealth and demand for financial assets. The real or tangible assets are machines, land, and structures owned by corporations and durable consumer goods (cars, washing machines, sound equipment, etc.) and residences owned by households.

These real assets incorporate securities that represent the ownership of these assets. Real assets can provide great income by taking advantage of periods of inflation.

4. Alternative investment in crowdlending:

It is about financing via loans to companies or individuals that are funded by individuals. It is done through platforms that offer loans to companies, whether they are SMEs, freelancers or entrepreneurs.

The financing requested by the company is covered thanks to small contributions from individuals who lend their money. These investors receive in exchange a monetary consideration, that is, the interest rate paid by the SME or company, and the intermediary platform keeps a small commission.

Without a doubt, this is one of the most democratic and attractive investment options today due to the number of services appearing on the market and the increasing use of technology to improve investor conditions.

In addition, these platforms allow investments with relatively low amounts, helping diversification and with different levels of profitability and risk.

In Invoiced, for example, an investor can invest online in accounts receivable with short maturities (15 to 120 days), little risk, and a return that ranges from 8% to 15% annualized, depending on the operation. Discover the benefits of alternative investments!

6 Habits To Improve Your Personal Finances And Invest Better

There are a series of habits that are essential to have good financial health that will help you cover expenses, generate savings, and grow your money. Global Commercial Capital Investment Group guides you about some of the main habits that will help you improve your personal finances and thus plan, support your savings and improve your investment.
What is personal finance?
Personal finances are in our daily lives, it is about the application of the principles of finance in the management of resources in a family circle or an individual. Therefore, it refers to the management of capital and assets that include income, expenses, savings funds, credits, insurance, and investments.
By having knowledge about personal finances, you can be aware of the impact on your quality of life that the decisions you make regarding the management of your money will have, whether they are an expense or an investment.
Why maintain good management of your personal finances?
Understanding how personal finances work is essential to know how to manage your money; allows you to be aware that each decision you make regarding the management of your capital, can benefit or harm your quality of life and your future, and even the intelligent management of your financial resources can contribute to the generation of more wealth in the long run term.
Maintaining good financial habits allows you to keep an intelligent control and management of your resources to plan; in addition to helping you spend only what is necessary to save and in this way work to achieve your financial goals.
6 habits to improve your personal finances
In order to build a habit, it is important that you are willing to maintain order and discipline. To keep control of your financial operations, it is not necessary to carry it in an obsessive way, but in such a way that it allows you to save, invest and project in the long term. We recommend that you follow the following tips that will help you had better manage your resources and that will allow you to grow your money and improve your investments:
Keep track of expenses: To begin, you must carry out a complete analysis of your financial status where you identify the expenses and income that you have regularly. Take into account that your expenses should never exceed your income.
Make a budget: You need to create a budget based on the monthly income you receive. We recommend you break down each of the fixed expenses that you have monthly (transportation, food, rent, health, education, entertainment, etc.).
Establish a financial plan and goals: It is important that you have a financial plan that will be useful to meet your financial needs in the future. We suggest you start from the small goals that you can achieve more easily and thus motivate yourself to move forward with the larger goals.

How to Invest In Lean Startup Companies

There are many ways to invest in order to get a return on your savings. But if what you really want is to invest in companies, without intermediaries and without another destination for your funds, the number of possibilities is considerably reduced. Next, Global Commercial Capital Investment Group explain how to invest in Lean Startup companies, do not miss it!

Startups are small companies focused on achieving rapid growth based on innovation. Many of these projects have become millionaire businesses, such as Airbnb. If at the time we had invested in a startup of this type, today, we would have done a good business.

Invest in Lean Startup companies

The more traditional investments made by individuals are not used to finance “directly” companies. However, several movements have emerged today with the aim of creating social investments . In them, in addition to obtaining a return, the investor manages to give real meaning to their savings and helps companies to improve their businesses.

Investing in Lean Startup companies for the first time can be complex, but that is not why you should not try. Today, this type of investment has become a popular and very tempting alternative.

However, the characteristics are different. To be able to invest in Lean Startup companies you need to have good management, a strong founding team, creativity, and good human capital. However, most importantly, be clear that it is a high-risk investment. The growth of that company may be rapid but its decline is the same. On the other hand, being a scalable business, the possibilities of return can be multiplied a lot as well.

5 Practical Tips For Investing In Companies Through Crowd Lending

Next, we leave you 5 tips to keep in mind when lending your money through crowdlending :

# 1 Study The Platform

It is very important to know the platform through which to lend the money. Law 5/2015 on the promotion of business financing, dictates the obligation on the part of crowdlending platforms to have a Participatory Financing Platform License granted by the CNMV. It will be a seal of trust to verify that the chosen platform has the necessary licenses to operate.

# 2 Diversification

Consider diversification. How much money do you plan to invest through crowdlending? Divide that amount as much as possible in different operations, between different loans and companies. In this way, you will be able to diversify your portfolio as much as possible. Also, offset some operations with others that may be delayed and achieve the maximum possible profitability.

# 3 Study of Additional Guarantees

When investing in loans to businesses through crowd lending you will see the information on each application. The guarantees provided by the borrower for the good end of the loan will also be available. These loans usually have the personal endorsement of the partners or other additional guarantees. It is important to assess this information when deciding whether to invest or not. This endorsement or guarantee will cover the loan in case of non-payment of the company.

The guaranteed investments have the endorsement of Reciprocal Guarantee Corporation. They have the obligation to return the capital and interests agreed to date. The refund will be made to investors who have participated in a loan that has this guarantee once they have defaulted on 3 consecutive installments without paying.

# 4 Invest in secured loans

By investing in this type of loan, the investor will achieve an attractive return on his money without sacrificing security. A Reciprocal Guarantee Company guarantees all its invested capital and the agreed interests. These companies have been working with banks for more than 30 years and have 0% bad loans, therefore, in all those operations that had this guarantee and failed to comply with 3 consecutive installments, the guarantee was executed and the Guarantee Company returned all principal plus interest to the lender. Now private investors through crowdlending can also enjoy this guarantee.

# 5 Value Accreditation

The aforementioned Law 5/2015 on the promotion of business financing differentiates two types of crowdlending investors: accredited and non-accredited investors. Any investor who registers on a platform, by default, is considered a non-accredited investor but can request to be accredited.

Request to be considered as accredited investors in advance, and expressly renounce their treatment as a non-accredited client.

Have the accreditation of the contracting of the financial advisory service on the platform’s financing instruments by an authorized investment company.

What are the benefits of the investment?

Review this information so that you know what the benefits of the investment are, the associated returns and you can grow your money safely.

The investment concept is not always associated with a safe activity that is to everyone’s taste. Global Commercial Capital Investment Group will not tell you to make investments unless you have a risky profile. Rather, any personal finance advisor will argue that investments are essential in the pursuit of financial solvency.

In reality, it all depends on your short, medium, or long-term goals and your profile as an investor, as there are different plans designed for all types of investment that adapt to almost any financial situation or preference.

Know what the benefits of the investment are

It is important that you know what the difference is between investing and saving. In the case of financial health, saving is only the first step, since the money that is not put to work loses value over time.

The reality is that it is true due to a macroeconomic factor called inflation, which detracts from your savings due to the increase in the cost of goods or services. Your savings cannot compete with that increase in price and therefore lose purchasing power over time.

Investments are responsible for making that money begin to generate returns that help your savings keep up with inflation and even exceed it. To know specifically what the benefits of the investment are, you must first decide what investment you are talking about according to the investor profile you have.

Those who do not want a lot of risks and therefore little profit are known as “conservatives.” The “moderate” are those who seek better returns, but with a little more controlled risks and, finally, the most “risky” profiles are those who are not afraid to invest considering a higher risk knowing that they can obtain better returns than the rest.

Benefits according to the type of investment

  1. There are fixed-income investments such as Cetus or time deposits that give you a lot of security.
  2. You have the option to invest conservatively, variable or risky depending on your lifestyle.
  3. You can diversify your investments in different types and sizes of companies.
  4. There is the possibility of investing in variable, fixed or mixed-income instruments
  5. It is possible to define for how long you want to have your money invested.
  6. You can invest in large companies in conjunction with other investors.
  7. There is the alternative of investing in companies or instruments from different countries of the world.

What Types Of Investment Can You Make As A Small Business Owner?

As an entrepreneur, you know that you must take certain risks when investing in your business. But you also know that every penny counts. Therefore, it is key that the money you invest in your company (and with so much effort!) Is as productive as possible.

The better we know how to invest, the more productive and competitive we will be, we will obtain the highest possible profit and we will grow our business in a sustainable way.

In this post, we explain in a simple way the main alternatives and the types of investment that you can make as a business owner.

What are the most common types of investment for small entrepreneurs?

If you intend to invest in your business for its long-term growth, you have many options and you must weigh them carefully. These are the most common types of investment:

1. Actions

Companies divide ownership into a number of shares, sell them, and get money in return (you can see how the stock market works here). When you buy a stock, you are investing in a small part of the earnings and assets of a specific company.


As an investor, you can buy and sell shares of different companies. If the value of the stock goes up, you can sell them and make a profit. In some cases, companies distribute dividends (a part of the profits that some companies periodically pay to their investors).


You can get big profits but do not forget that it carries a risk (here you can consider the risks of the stock market): if the economic activity of the company in which you have shares falls, those shares lose value. And if that company goes bankrupt, you will lose all your investment.

2. Bonds

A bond is a fixed-income investment. It consists of a loan that you make to the issuer of that bond (a company or the government) in exchange for regular payments in the form of interest. The invested capital is amortized on the maturity date of the bond.


They are usually considered lower risk than stocks. Similarly, state or city bonds are often considered safer than corporate bonds and therefore offer less interest for your money.


They have less return than stocks.

3. Funds

Funds are common pools of money that are established for a specific purpose. They are usually managed and invested by professionals.

As an investor, the business owner can put money into the funds to earn a return. They have the advantage of accessing a large number of investments through a single money transaction.

These are the main types of funds:

Mutual funds: They gather money from investors and invest it in a diversified portfolio of stocks, bonds, or other assets. If the fund makes money, you can distribute a portion of that money to investors. If the fund increases in value, you can sell your stake in the fund and earn money. To invest, you pay an annual rate of expenses.

Indexed funds: It is a type of investment fund that follows a benchmark stock index (the Standard & Poor’s 500 indexes): instead of paying a manager to decide the investments, you have a portfolio of stocks of the companies of the aforementioned index. These funds can rise in value when benchmark indices increase in value. They have fewer expenses than an investment fund.

Exchange-traded funds (ETF): This is a type of index fund. The difference between an ETF and an index fund is that throughout the day you can buy and sell ETFs like stocks. In other words, the price of the ETF varies throughout the day (whereas investment funds or indexes are traded only once at the end of the day, regardless of the time the investor buys). It can be very useful for small investors because it allows them to diversify at a low cost.


Your investment is managed by an expert with the knowledge to give you a great return on investment. The diversification of these funds translates into a reduction in risk.


The earnings you receive will be taxable, and the fund will charge you administration and withdrawal fees.

4. Banking products

Certificates of deposit: They are issued by banks and credit unions, offering an interest if the investor leaves the money without touching it for a certain time, and with penalties in case of withdrawing it before the end of the term. There is a great variety, with different interest rates, durations, and temporary offers in traditional and online banks.

Savings accounts: There are high yield savings accounts (above inflation), designed for future emergencies or a planned high purchase also thinking about the future. They are usually offered by institutions other than banks with physical branches, which bear higher expenses.


Unlike stocks and bonds, they are a safer investment (guaranteed rate of return) and offer interest rates above inflation.


If you need the money, there are penalties for early withdrawal and you have to pay attention to the commissions, charges, and requirements. Depending on them, you could even lose money.

Smart Investments for Small Businesses

Wondering how to raise your investment game in 2021? Check out the following smart investment advice for small businesses. The sudden economic pandemic that swept across the nation last fall has turned lives upside down financially. While most all industries and sectors were reeling from this sudden change in the economic landscape, businesses around the board were certainly not all hit the same. As a result, many companies are still growing while others have shut down operations altogether.
For those small businesses still on the go, there is hope. In fact, as long as you are willing to put forth the effort and put some smart money behind your company, you can ride out this storm and emerge stronger than ever. This does not mean you will be able to invest your money into any one specific business. In fact, if you own multiple corporations, you can use smart investment techniques to spread your risk over a much larger area.

Many business owners are hesitant about putting their money into business investment options, largely due to the hefty fees that are often associated with such ventures. However, index funds are generally known as great long-term investment vehicles. That is because the fees associated with such funds do not grow with the value of the business but rather remain steady. Also, unlike business bonds and other forms of traditional debt, there is virtually no limit as to how much money you can invest into an index fund. Business owners can utilize several smart investment strategies when investing in an index fund.

One of the best ways for business owners to take advantage of index funds is to buy a portion of each company’s stock and hold on to it. Businesses can choose to reinvest the profits from that stock into additional shares of stock or different companies altogether. A smart investor does his or her homework well to determine which companies will perform well and which will fail, but the result is that the business owner ends up with money in his or her pocket that can be used to benefit the business in question. Another smart investment idea for startups is to look to small-cap stocks.

These are the stocks of companies that are just beginning to manufacture products. Small-cap stocks are usually considered high-risk investments by venture capitalists because of this risk. That is why most startups fail. On the bright side, however, small-cap stocks often pay high dividends which provides a business owner with a nice profit margin. The third strategy for smart investments for startups is to seek out growth companies. Growth companies represent well-known companies that are on the verge of achieving success. Startups need to pick a business that has a lot of room for future growth.

Growth businesses offer a business owner many benefits; they often boast the best management teams, the most promising business plans, and the greatest capital available. One more smart investment idea for startups is to seek out business owners who are willing to sell their companies for a large sum of money. Business owners will often be willing to sell to receive a large check from an interested buyer. The downside, of course, is that business owners have to know that they will receive a large check and that they will have to provide the buyer with all of their future profits to receive that large check.

A final strategy for smart investments for startups is to purchase business assets from a business with many potentials. Examples of business assets that a business owner could purchase are a real estate property or a piece of hardware. Both of these types of assets come with a lot of room for growth, and they offer long-term value. The downside, of course, is that these types of investments usually require a large amount of money upfront. If the business owner does not have the money upfront, they may have to wait years before they can receive any type of income from their asset.