These are three important factors that must be taken into account when making an investment..
Term
The deadline, is an important variable to consider, since it determines the period during which the investor gets rid of his money and, in principle, you will not be able to dispose of it, in exchange for a expected profitability or benefit.
There are short and long term investment options.
Short term: These are investments whose expiration is less than or equal to one year. In Costa Rica, In this category are commercial paper emissions and investment funds of the money or short term market.
Long term: As the name implies, They are investments with maturities greater than one year. These investments have the peculiarity that the investor must expect a greater deadline to recover the main interest or returns, In the case of investment funds. In this category are found, among others, The actions, bond emissions and others.
Profitability
The income generated by an investment, understood as interests (In debt titles), yields or benefits (In investment funds) and dividends (In the case of actions), can be classified in:
Fixed income: When a fixed interest rate agreed from the beginning of the investment is known, that does not depend on the financial results of the issuer or the market conditions.
In the specific case of debt titles, These represent loans that the issuing entities receive from investors, which gives them the right to receive the agreed interests and the return -on a given date- of the totality or part of the capital invested (which must be established within the conditions of the issuance).
Renta variable: is linked to profits, utilities or yields obtained by the company (For actions) or the investment fund in which you invested, or for the existing supply and demand conditions in the market.
Given those characteristics, The profitability that will be obtained in an investment of this type is not known in advance (except for preferred actions with defined performance, in which case what is not known in advance is whether or not to be paid). Nevertheless, It is likely that the performance of this type of value is greater than the performance that would be obtained in a fixed income investment, as compensation to the risk you assume by accepting the variability of income.
Risk
Every human decision has a certain degree of risk associated, so it is common that prior to this, An analysis is done that allows the interested party to assess as many associated factors as possible.
Financial decisions, such as buying a house, a car, a land, They have associates different levels of risk.
For its part, Investment decisions are not exempt from risk, All have some degree of risk.
The level of risk of financial products depends on different factors.
Mostly it has to do with the issuer's ability to deal with his obligations, With the possibility of variation of interest rates, There are legal and variation risks in the economic situation of the issuer, among others.
In the case of central government values, such as the titles issued through the Central Bank of Costa Rica, of the Ministry of Finance and some other state entities, While they have a state guarantee that minimizes credit risk, They could be affected by other types of risks associated with economic factors, such as, The interest rate variation.
In the case of private emissions, The risk associated with these is linked to the issuer's ability to pay, product of its development as a company and within its production or service sector.
Since every investment has some degree of risk, It should be noted that the investor must analyze the specific risks of each option, Before making any decision. In short, The most important thing is that the investor is able to identify each of the risks associated with the investment he makes and that he is aware that he is able to assume them.
In Costa Rica, the management of investment funds is authorized exclusively to investment fund managers, which must be properly constituted as corporations, governed by what commercial laws establish for this type of entities.
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