Buying and selling shares on the stock market is the preferred option for investors to make their savings profitable. But it has reached a point where there is some concern about what might happen in these financial markets. Despite the fact that in recent weeks there have been significant rises in share prices. In particular, in the securities that are integrated into the banking sector and cyclical movements. And that have led to the selective index of equities, the Ibex 35, to have recovered again the 9.000 point levels.
According to the latest data provided by BME, the Spanish stock market traded a total of 28.019 million euros in equities in August, 14,2% less than the same month of the previous year and 31,5% less than in July. The number of negotiations in August was 3,1 million, which represents an increase of 5,8% compared to August 2018 and a decrease of 8,4% compared to the previous month. These are data that may indicate a certain lack of interest on the part of small and medium investors to open positions in one of the most important financial markets.
In any case, there are already many users who wonder where they can direct their savings without having to go through the stock market. Fearing that international financial markets could generate a significant downtrend that can leave them hooked in their positions. Of course the alternatives are very high, but at least it offers the possibility that they can contract other financial products. To show that there is also life beyond the bag.
Defensive Investors: Funds
One of the best proposals at the moment may be investment funds that combine equities with other financial assets, such as derivatives of fixed income. In this way it is possible to diversify the investment in the face of periods of instability in the stock markets around the world as a result of a possible economic recession. While on the other hand, it provides greater protection to open positions in the investment fund. To the point that this can be one of the solutions for the most conservative or defensive profiles on the part of small and medium investors.
On the other hand, in this class of investment funds, returns are not as high as in the rest. But at least, it is possible to reduce losses in the face of a rather complex situation in the equity markets. It's about a self defense mechanism that you can use at this time to get rid of possible falls in the stock market. With the advantage that you can undo the positions at the time you consider most appropriate. Good to go to another investment fund or to another financial product with different characteristics.
ETF with less exposure to the stock market
ETFs or exchange-traded funds is another of the options that you have on hand to satisfy your investment desires. Not surprisingly, it is a mix between mutual funds and the purchase and sale of shares on the stock market. But in any case, it presents much more competitive commissions than in previous investment models. While on the other hand, its term of permanence is not for periods as high as in investment funds. If not, on the contrary, it is highly recommended for terms between 6 and 12 months.
In this sense, ETFs or exchange-traded funds are another tool to escape, with greater or lesser success, a very downward trend in the equity markets. Although in this case it is very important to know its mechanics and therefore know how to operate in this financial product. Because if it is not this way, you may have more than one upset in your checking account balance. That is, you have to opt for the so-called exchange-traded funds if you have already gained experience in the operations carried out in recent years.
Create a defensive portfolio
This is another of the options that you have at the moment, although in this case without leaving the equity markets. In this case, the investment strategy is based on opting for a basket of various titles publicly traded. Instead of doing it on a single one and that carries greater risks in operations. However, the originality of this system to make the savings profitable lies in the fact that the securities have to come from the most defensive or conservative sectors of the stock market. As for example, electricity companies, food and in general almost all securities that are not cyclical.
One of the main effects you can achieve is that you will never lose so much money in the most adverse scenarios for the equity markets. It can even happen that in a more or less reasonable period of stay you have benefits in your operations which is after all what is involved in the always complicated world of money. While on the other hand, you cannot forget that the application of this strategy in investment is very positive in the recessive periods in the economy. Among other reasons because you give greater protection to your money and your positions.
There are three options, but all very valid, to emerge from a period of enormous instability that can develop at any time. Where the most important thing is not to risk and instead look for safer alternatives. Because as small and medium investors often say, there are always business opportunities, even in the most adverse scenarios for financial markets. And you have to learn this lesson so that what happened in other years does not happen to you, but instead you have to take advantage of the experience accumulated over many years. With the ultimate goal of the results being the best possible from now on, even in the least favorable times.