The Spanish stock market traded a total of 42.011 million euros in the equity markets in September, which represents 4,6% more than in the previous period. In the first semester, the volume of contracts fell by 26,1%. Where the number of negotiations has been 2,8 million, 6,8% less than the previous month and 27,9% less than in June 2018. But what small and medium investors should be very clear about is that they do not need to be invested in the stock market at all times of the year. If not, on the contrary, they can opt for liquidity in their positions.
The liquidity in the stock market entails a series of advantages and disadvantages that should be analyzed to know what this can report to us. alternative in the investment sector. Because in effect, there is no obligation on the part of small and medium investors to be present in their operations on the stock market. In addition, there are other options that can offer occasional returns in the periods of greater instability in the equity markets. For example, through financial products issued by banks. Among them, fixed-term deposits, promissory notes or high-paying accounts. With an interest rate, which in the best of cases can reach 2%.
On the other hand, the fact of not positioning yourself in the stock market can help you so that you do not get the occasional scare from now on. Especially, if the behavior of the financial markets is not really what was expected by investors. Sometimes a timely withdrawal is a victory that can be hailed as a great triumph in the design of investment strategies. Even opting for inverse products that allow you to generate capital gains with falling equity markets. Where the priority objective is the preservation of savings. Above other classes of strategies much more aggressive from all points of view.
What does liquidity bring?
Liquidity means that you are not present in any kind of investments, in both fixed income and equity markets. Although yes in banking products that do not depend on fluctuations in financial markets. This is a system to make profitable the savings that you can use in periods of the year. Well with a longer term of permanence as well as on time in all your operations. To the point that it can be a more profitable way to defend your personal interests, as you will be able to see later. Where the end of the day is about not losing money in your checking account balance.
While on the contrary, being in liquidity indicates a certain fear that you may lose in the operations carried out from now on. Something that is present in the actions of all small and medium investors. Because, in fact, you cannot forget in any way that the bag it can cause you to lose a lot of money from now on. Of course more than through any model or savings plan designed to create a more or less stable savings exchange for the medium or long term. Do not forget about this aspect to know if it suits you or not to be in liquidity at certain times in your life.
The advantages of these positions
Liquidity is a state that can produce enormous and varied advantages for you, as it will become clear from now on. One of its most relevant characteristics derives from the fact that your money will be much safer, although they are able to make it profitable as you would like from the beginning. While on the other hand, you must also assess from now on that the liquidity state implies a much more conservative position where the concept of security prevails over other series of considerations. Where the most important thing is to get out of the scenarios in the equity markets alive.
Another aspect that you should consider from these precise moments is the fact that liquidity in operations derived from equity markets does not contribute stability in your savings account balance. If not, on the contrary, they are a very reliable method to avoid risking your economic position in the face of possible adversities in the always complicated world of money. For the reasons that you yourself consider necessary and that in each case will be completely different. As a very important part of Spanish society does, and why not say it, all over the world.
Seeking savings above all
One of the effects of opting for liquidity in equity markets stems from the fact that you can choose different models or formats for encourage personal savings. Indeed, if this is your most immediate wish, there is no doubt that you will have different options to materialize it. For example, the contracting of a guaranteed fixed-term bank deposit that offers a return of around 1%. It is a more conservative strategy to create a savings exchange in the medium and long term
Another option that is presented to savers is the taxes linked to equities. Minimum and guaranteed interest is guaranteed. With the possibility of improving it if the investment objective is met at the end and in which case a profitability close to 5% can be obtained. Although with the burden that the term of permanence of these financial products is more durable. Between 24 and 36 months approximately and without the possibility of canceling it in advance. As a formula to save money in times of greater instability in the financial markets.
Disadvantages of liquidity
Being in liquidity, on the contrary, generates a series of great inconveniences for the investor. And one of the main ones is the fact that it does not allow you to take advantage of the business opportunities offered by the financial markets. While on the other hand, it prevents them from obtaining large capital gains in a short space of time. Because buying and selling shares on the stock market does not have any period of permanence. But on the contrary, it is the investor himself who conforms it based on his personal interests. And of course that of the evolution of the equity markets themselves.
Not being invested in the stock market also means that you can change your portfolio from time to time to adjust to financial market conditions. With the option of opting for the payment of dividends which is a remuneration to the shareholder with a profitability that ranges between 3% and 8% approximately. Whatever happens in the financial markets and that in all cases you will receive every year on account. Where most of the securities listed in the selective index of Spanish equities have this fixed and guaranteed payment.
Unique profitability option
At this time, equities are the investment in which you can generate the highest return on money. Despite the fact that everything indicates that there may be a stop in the results. After the continuous increases that have occurred since 2013 and that may originate in some fixes of a certain entity. From this point of view, having liquidity in the stock market at the moment can be an advantage to protect against this very negative scenario that is expected for the next few years. Where there is no doubt that we can lose a lot of money in open operations.
On the other hand, liquidity also benefits us in the sense that we can be on alert and enter the markets whenever we want. Especially if there are some buying signals in the securities. Because in this way, we will have the liquidity needed to enter equity markets. Something that of course does not happen when we are invested since the only solution is to get rid of open positions. And this movement may not be formalized in the best conditions, and even from the investment losses.
According to the Schroders Global Investment Study, it is clear that Spanish investors are, in general, more ambitious than their European counterparts. In Europe, the expected APR for the next five years is 9%, although the world average rises to 10,7%. Where, the rates, which will continue to be at 0% or negative, at least until the first half of 2020, do not represent a brake on the high expectations that investors in Spain have, which continue to grow. In 2018, forecasts point to the expected APR at 9,1%. Where there is no doubt that we can lose a lot of money in open operations and this is an aspect to analyze.