One of the main dilemmas for small and medium investors is to detect which management is best for their investments. If on the one hand, it activates it or on the other hand it activates it. Because depending on the real scenario of the financial markets, it will be necessary to choose one or another management model. They are neither better nor worse, but will depend fundamentally on market conditions. The key will lie in knowing them apply in every moment. So that in this way, you are in the best of conditions to optimize your savings.
At the moment the situation of the international stock exchanges is clearly bullish, as you can see in the updated graphics. Not surprisingly, this year will be the eighth anniversary of the bull market. After the crisis that affected the stock market with very vertical falls in 2007. To the point that it is the second longest streak in the history of continuous increases in stock markets. This is precisely one of the scenarios where passive management can be more efficient. With an increase in profitability on invested savings. But the question that is debated is whether it will continue like this from now on.
On the contrary, when there is more instability in the equity markets, active management is most profitable. Even to weather the worst moments. As can be expected, if we follow the indications of some of the most famous analysts of the financial markets. Either way, it will be very interesting that from now on know what both procedures consist of, the active and the passive. So you can quickly apply them when conditions are better. It is a valid option, both for the purchase and sale of shares on the stock market, as well as for certain financial products, among which investment funds stand out.
Active management: when to apply?
This kind of management is especially beneficial in periods of greatest instability. Where the bags tend to fall with great virulence and with very sharp declines in their prices. For a very simple reason to understand and that is based on the fact that the investment is managed according to the real state of the financial markets. Not only to vary the selected values, but even opting for another class of financial products. With alternatives from the variable income, fixed or alternative models. Because it will be one of the most effective ways to adapt to all scenarios. It will also be a very practical way to protect your savings from the beginning.
Active management, on the other hand, gives you the opportunity to go rotating investments every so often. With the renewal of the securities portfolios in the event of any change in the stock market or even economic cycle. In this way, you should be more attentive to what is happening in the different financial markets. Not only the products linked to the bag, but also others that are completely opposed in their treatments. In any case, it will help you in preventing possible losses when the equity markets turn bearish. Something that at some point will happen. Safely.
Take advantage of buying opportunities
Another of the most notable advantages that this unique investment strategy generates is that you can more easily find the business opportunities generated by the financial markets. Among other reasons, because you will be more predisposed to change financial assets. You can go from the stock market to German bonds and vice versa. There are no limits to building a portfolio of securities. Neither in terms of content nor in investment formats. These are authentic reviews that you have to formalize every year. Under the periodicities that are most suitable for the profile you present as a small and medium investor: aggressive, conservative or intermediate.
Active management is also very reliable to develop investments in the medium and long term. Because in these spaces of time it's always easier and feasible to change the investment model. To the point that you can easily go from an aggressive management to a clearly defensive one. And absolutely nothing will happen to you for a variation as radical as this. Of course, you must be more open to a new class of investments, in which some really innovative ones can be included. Are you willing to assume this change in your relationships with the always complicated world of money?
Active management, when everything is going well
On the other hand, you always have the alternative of passive management. It is the most comfortable of all since practically everything will be done for you, as it is popularly said. From this scenario, profitability may be higher than in active management. As we discussed earlier, it is the one that applies in bullish scenarios like the current one. Where there will be no need to change anything, or at least very little. Because at the end of the day all your investments go smoothly, which is the goal of your aspirations.
Nor can you forget at any time that it is in the shortest terms where this strategy becomes more profitable. If everything goes well it is logical that you do not have to make any decisions about the status of your investments. Generally, its application will depend on the projections made about the state of the international economy. Perhaps it is the most desirable scenario to defend your interests as a small and medium investor. Although do not confuse it, it has nothing to do with defensive or conservative approaches. Because they really have nothing to do, but rather with the strategy used at all times.
Investment managed by professionals
One of the most relevant characteristics of this class of procedures is that they can be carried out by professionals or experts in the financial markets. Mainly in which it refers to active management since it must contemplate a comprehensive analysis of all financial markets. Not surprisingly, speed will be one of the keys so that you can make the savings more efficient. In addition, it may be time to save the assets available in one of the main banking products (time deposits, promissory notes or high-income accounts) at some point or other. Its profitability will not be spectacular at any time, but in return it will provide you with greater stability.
Active management, on the other hand, you can take it with you from your usual bank. Without any kind of disbursements in the formalization of operations. Although it is true that in order for you to reach these levels you have to have a very competitive balance in your checking account. That is, to become a preferred client that gives access to this kind of banking services. So that in this way, you do not have to worry about anything or the values in which you are committed. Also in another class of entities linked to the money sector they also provide this professional benefit.
What is the best management?
As we said before, it is neither better nor worse than the other. It is the conditions themselves that will determine where the savings should be located at all times. However, if you do not know what to do, it is preferable that consult with professionals that almost all financial institutions have. Not surprisingly, it will help you get out of more than one trouble, as it usually happens with some frequency. For all these reasons you should not ask yourself at any time which is the best of the efforts. But on the contrary, the one that best adapts to the reality of the financial markets.
In any case, it is a debate that can be very interesting to make all your positions profitable. Whatever the financial asset chosen to improve your wealth. On the other hand, you can't forget that you can combine both management models. Lower the percentages that you consider most appropriate for each occasion. To the point that it becomes another formula to diversify investments. From a different perspective and in a way original with respect to other forms of investment planning.
Tips for choosing the best investment
It will always be highly recommended that you set some minimum objectives about the goals you want to achieve. Because they will be of great help to improve your positions in your checking account. Do you want to know some of the most important ones? Well pay attention because they can develop them are many complications.
- If there is no change in economic cycles there will be no reason to vary the management of your investments.
- The change from active to passive management or vice versa must be motivated by a compelling reason, not for a short evolution that is not to your liking.
- Prospects in the economy it will be a piece of information of special interest to choose one or another management model.
- The passive is always more comfortable for your interests, among other things because you will have to do almost nothing.
- Differences in the application of a management model may represent a lot of money in operations carried out until then. From this perspective, don't try to force your investments for anything in the world.