The belief that immobilized money is synonymous with security is one of the most costly mistakes in personal finances. We look at how inflation silently erodes capital, even in dollars, and why consistent investment is the only real defense to protect ourselves.
I often hear clients tell me that they have had money tied up in a safe deposit box, under the mattress, or uninvested for more than three, five, or ten years, and they feel “insurance“This is the statement most false of all. Money, even dollarized, loses purchasing power over time. The accumulated inflation of the dollar in the last 10 years is estimated at 30%, which implies that today approximately USD 130 to buy the same thing that was purchased with USD 100 a decade ago. In the long term the damage is very high.
Why do so many people associate the immobilization of capital with ‘security’?
There are many generations without financial education, no one explained to us what to do with the money and saving it always seemed like an option approved by the majority, but today, with the reach and technology that we have two clicks away, we can access the global market with ease and generate real returns.
How can we reverse this situation?
In the capital market we can invest in different instruments, with greater or lesser risk depending on the profile of each investor. Return and risk are co-related, meaning that lower risk lower return and higher risk higher return on capital.
Security, in the financial contextit is not about avoiding movement, but about manage riskaccording to the profile of each investor.
If what we want is not to lose capital, we can achieve it with low-risk instruments, but if what we want is to grow our assets gradually over the years, we must put together a diversified strategy, in currency, sector, geographic region, and types of profitability. While this may seem complicated, it is not if you have an advisor who can understand you and guide you based on your expectations and deadlines.
How does the time factor influence the performance of an investment portfolio?
Time is very important, the longer the time the better the result, due to the variable of compound interest, where your returns generated are added to the working capital and generate exponential returns in the long term. However, for shorter investment horizons or for specific liquidity objectives, instruments that generate income or dividend payments can be prioritized, adjusting the strategy for better short-term capital management.
For those who don’t understand anything about finances, how do you recommend they start?
First, stop postponing the issue, what I mean by this is many times they wait for the best market moment, or to have certain capital, or to know in detail what they are going to do, and along the way they waste time and money.
Today you can open a client account easily and quickly, and invest the capital you have, even if you think it is little, everything generates returns. Having it stopped is the worst scenario. While we talk about inflation in the last 10 years being 30%, the US capital market returned +133% accumulated.
What would be the steps to follow to invest the capital?
First, contact a licensed advisor that you trust, and have a talk to learn about all the market risks and how to control them according to each one’s investment profile. Then open a client account and that’s it! Start putting together the portfolio and let it work in the medium term.
The premise is clear: the money we save in our active stage must be always investedwhether with greater or lesser risk, but it cannot be stopped. Not making a decision is, in itself, making the costly decision of losing value.
Maria Jose Martinez Waldner
Producer Agent CNV 1933
Instagram: @mariajose.mw
E-mail: [email protected]
Whatsapp: 11 4070 9932
ph.: @maluniglia
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