The demand of the population after the pandemic and the Russian invasion of Ukraine are the factors, according to the World Economic Forum, that have directly affected the finances of all consumers. Given this situation, what can be done with the savings so that they do not lose value?
“Savings must be put to work, always. What I would recommend to young people is to invest something from the first payroll”, says Paula Sampedro, financial analyst at Renta 4 Gestora. “Even if you invest in very safe assets, with lower profitability, you will have greater growth in your savings than if you have it in a bank deposit, especially now that they have been at rate 0.”
Before launching into the world of investment, it is worth taking into account some previous actions. “The first step that I would recommend is to gather basic information on how the financial system, investment and its legal framework works,” explains Miguel San Martín, a financial technician. “Once this is done, it is convenient to go to different investment advisors and compare the options that they offer us, always thinking that we must maintain a balance between risk and return.”
Determining the risk that is willing to assume is essential for an investor. In this case, the current rise in interest rates plays in favor of the most conservative profiles. “Fixed-income assets, which are the safest part, already give more or less decent returns with such a vertical rise in interest rates,” says Paula Sampedro. “We came from an environment where many company bonds were at negative rates or were paying 0. Now you can invest in solid companies, in bonds that give you 4 or 3%, you can even buy treasury bills” . This situation can still be maintained over time, “it is not ruled out that rates will continue to rise, therefore, investing for two, three or four years would already be giving you returns.”
For less conservative profiles, this expert recommends some caution. “For example, on the energy issue, I think it will take four or five years to replace Russia’s supply, so I would get into more or less defensive sectors, in solid companies,” she explains. “Within consumer companies, it is convenient to look at those that are capable of setting prices because they are the ones that are going to best defend themselves against inflation.”
Another important aspect is the time horizon of the investment. According to this expert, “the younger, the more you can get into equities because you have more time and the older, go to more stable options such as bonds or dividend companies.” In all cases, long times and a certain degree of uncertainty must be handled. “Savings through investment always have to be done with a long-term horizon because we can never foresee what is to come.
come”, warns Sampedro. “In 2020 we were surprised by the covid and, this year, the war in Ukraine. We have to see things with a long-term perspective.”
Once the profile and time horizon are clear, the capital remains to be established. “There is a basic principle that any adviser would always give: invest only the amount of money that can be dispensed with,” says Miguel San Martín. “The rest would be to cover basic and committed needs plus a contingency ‘cushion’.”
The last concept that should be clear is diversification. “You shouldn’t put everything in the same basket,” declares San Martín. For this reason, Paula Sampedro recommends “going to the bank itself or a specialized investment bank, where they can help build a portfolio of assets and investment funds.”
