The arrival of the coronavirus has led to the collapse in the prices of shares that are traded on the equity markets. To the point that many securities are already trading with discounts that even exceed 50% levels. This is one of the reasons why some small and medium investors are considering their return to these financial assets to make their savings profitable from now on. But with the risk that this decision entails at such a crucial moment in the history of the planet. Especially because of the fear and fear that they may get caught in their positions in the stock market.
From this general approach, it is very important that stock market users now consider how much money it is desirable to invest in the stock market. With the aim of not making old mistakes that you can regret in just a few months due to your lack of liquidity in your savings account. Well, in this sense it should be noted that the amount invested in the variable income will be determined by the income you have each month, available capital, total liquidity status and not assuming problems of indebtedness or delinquency. So those who are going to hire a mortgage or consumer credit During the next few months, if they opt for this option, they should not invest more than 20% of their capital in the best of scenarios.
On the other hand, it is also very important that from this precise moment the period of permanence to which these operations are directed in the world of money is taken into account. That is, if they are going to be a short, medium or long term so that in this way they know what is the amount that these small and medium investors must formalize. Not surprisingly, one that directs its movements to just a few months will be substantially different than to ten years. Because in effect, they will require substantially different investment strategies in each case. In this sense, the key to not making calculation errors is based on customizing each of the scenarios that arise in the investment.
How much money to invest?
It is the question that a good part of the small and medium investors will be asking at the moment and that of course does not have an easy answer. For this there will be no choice but plan expenses and income that we will have in the next few years. But from a realistic point of view and never based on expectations that are not achievable. Because in the latter case, the effects can be devastating for the interests of stock users. To the point that it can generate some other problem in our personal or family accounting. So it is very relevant that not in all cases it will be the same amount, as on the other hand it is logical to understand.
As is the fact that greater control over the balance of the savings account is required. To avoid unwanted situations that you can take us to non-payment of invoices, fees or other kinds of personal expenses. Within this context, no more than 25% of the money deposited should be invested in this class of banking products. That is, through smaller operations that will generate less profit in them. So that in this way, the handicaps cannot affect our movements and can lead to terrible sales, as has happened these days after the brutal fall in equity markets around the world.
Profiles more open to investment
In any case, not all users have the same responsiveness to make their investments in buying and selling on the stock market. Within this general context, there is no doubt that there are some social groups that can afford to risk more money on their equity-based investments. And that therefore they are the ones who can benefit from the rallies in these financial assets. To the point that they can allocate up to 40% or 50% of your capital in this type of purchase operations. And that little by little these positions can be enlarged through additional contributions. They will be the ones that are in the best position to emerge successfully from this new scenario presented by the equity markets.
Of course, there are some profiles among small and medium investors who meet these special expectations. As for example, those that we are going to mention below. One of the most relevant segments is the one that integrates people who have rather high incomes and who do not have to face mortgage or loan payments. That is, those who have a healthy domestic economy that protects them from this kind of operations in the stock markets. To the point that they will not have problems to continue as before and will even be able to take advantage of the business opportunities that this investment model offers us.
Investors with high experience
Another of the social groups that can take risks with these movements are investors who bring a great deal of experience in this type of operation and who choose them as an alternative to the low profitability currently offered by the deposits or other fixed income products. In this specific case, it would be an investment strategy that would be aimed at the shortest term to try to take advantage of the high volatility in the stock markets and that therefore can settle operations in short periods of time. Even through intraday movements or made in the same trading session.
While on the other hand, we cannot forget another very sensitive group to choose this kind of investment from now on. It is basically about the savers who contribute a certain purchasing power that they can face one of these operations without reducing their accounts due to the poor evolution of prices. Not surprisingly, they are the most capable of responding to the possible losses that may be generated from these operations on the stock market. To the point that it can be an option with more risk than the rest and that requires greater discipline in the actions of the investors themselves.
Seek individual advice
In all cases, another of the strategies to protect the money invested in the equity markets is based on this system of facing investments from now on. Because in fact, it cannot be forgotten that large and medium savers who are under the supervision of an investment advisory service are those who are in the best position to face these movements in their capital invested in the stock market. Because it guarantees them a greater protection when making your decisions, to a greater or lesser level depending on their own characteristics in their relationship with the world of money.
Finally, there are also users without any financial problems: debts, late payment, budget deficit, etc. They are more apt to risk their money and try to make it profitable from these moments with greater guarantees of success. Given the opportunities offered by some securities that are listed with discounts between 30% and 40% and that therefore can bring us a substantial improvement in personal or family assets. To the point that they can allocate greater monetary contributions than the other social groups.
Do not get into debt in any case
There are many investors who turn to loans to carry out their buying and selling operations on the stock market and, which are frequently available to banks and credit institutions. But it also poses an undeniable danger for investors' accounts since in most cases when they are requested it is because lack of liquidity to do the operation. And, to the probable losses that can be obtained, we must add the commissions derived from each operation and between 7% and 10% in the interest rates applied by these loans, which makes the operation very difficult since the benefits that would have to provide the purchase of shares will have to cover all the expenses that they entail: commissions, interest rates, tax payments, etc.
Therefore, it would be necessary to obtain a return of no less than 17% for the investment to bring benefits to the pocket of the small and medium investor. Therefore, under no circumstances should you turn to this type of loan, unless you have sufficient liquidity and, for whatever reason, it would be better for you to go to this alternative to pay for the purchase of the shares. Therefore, be very careful with hiring a line of credit to make an investment because in the end the operation can be very expensive and of course more than we think at first.