First we must know that all financial assets have three variables, however, the three can not coexist. How this and what are those variables?
When we decide to take a step and learn to invest our savings, we must know in what type of financial asset we are going to position our strategy.
We must take into account something very important in my opinion, and is the reason for that investment.
The variables are the following:
Security, profitability and liquidity
The security / Risk as the name indicates indicates that our investment is as safe as possible and safeguarded.
Profitability on the other hand means that this saving or investment generates a profit or is profitable and the last and not least is liquidity, perhaps one of the most desired by us, that is, it is available to use it when We want, our money is liquid.
Now I ask you which of these three are the two most important to you? and join me to see what your result would be depending on which one you choose.
Liquidity and security: It is the most chosen and used in the day because it points to what we do most with our savings. Usually we tend to leave them in the bank or keep them under the mattress etc ... So far everything is normal, the issue is what happens with this set of variables. If it is safe and liquid it can not be profitable, and it is almost impossible to arm ourselves with a capital, since liquidity inevitably leads us to fall into the temptation of saving for consumption and if you kept 100 usd in your house it is safe and liquid because you can dispose from him at any time, but it's not profitable, it's not going to multiply. The same happens with financial institutions, if you deposit your salary or part of it to save it the next day there is not one extra dollar, on the contrary there may be less, since these entities stand out precisely by discounting from our account a number of things that if we add them they make an important shtick.
Profitability and liquidity: If you fell into these two, my dear friend, I have to ask you something, are you willing to take your capital and gamble everything in the casino? or the lottery? If your answer is NO, I tell you that these two variables point to that. If you win in the lottery or in the casino it is very profitable and liquid, now if you lose it is not safe, you will not recover .
Security and profitability: These are the two best options if your goal is precisely to build wealth. I want it to be safe, because obviously I do not want to lose it and profitable because I want to win, but for these two variables to work, it is necessary to dispense with liquidity, at least for a while. Since as we mentioned before in other articles, Liquidity leads us to consumption and consumption not to generate capital.
Now, the question is in which of these are you? There are two equations that are NECESSARY: One is security and liquidity, because we need to have liquidity for daily emergencies or expenses, eg change tires, pay rent etc. and the other is safety and profitability, these are essential for build a financial cushion that gives you peace in the medium or long term.
Rarely teach us to generate wealth, on the contrary, in general, consumerism reigns immediately and if you do not have to buy X thing, it does not matter pass the card and go into debt paying for the money, but you get the same. If we look around we will find a number of stores that drive us to this.
Decide in which of all the equations you want your savings to remain, but draw an objective and there choose in which of all the variables of the financial assets you want to position yourself.
There are several financial market tools that will help you reach your goal, but first you have to choose the strategy that most adheres to or approaches it.
Diversification is the protagonist of any investment, since it helps us to minimize the risk and to equate our investment portfolio (do not put all the eggs in the same basket).
Tell me how you did in your self-assessment, build an investment portfolio that is tailored to your goals.