In times of crisis and financial turmoileconomic and also political like the ones we are experiencing today, added to an unfavorable local context with a world on alert due to war and inflation, it is important to pause, and think with perspective, to analyze the use of financial tools and try to beat inflation or at least not lose out.
The Argentine economy, the fluctuations of the dollar and the inflation rates do not make the task easy, but there are important resources that can make a difference.
At times like these, of abrupt and rapid price changes, it is essential not to keep pesos in cash or at sight, since the result will be that they will lose value with each passing day. Here the suggestion is to either buy raw materials, anticipate future consumption of goods that may have price increases, or invest in assets that have returns. What clearly does not make any sense is to leave the pesos in a savings or safety deposit box in a context where we have rising inflation rates.
The point is: what strategy to adopt in such changing times and make decisions that do not make us lose our capital? Despite the foregoing, a very widespread financial instrument is loansSo, how do we analyze the convenience of borrowing?
The answer is simple: the decision to take out a loan cannot and should not be determined by a specific moment of political or economic crisis, but rather one should take out a loan when there is an object or destination for the funds that is profitable enough for it is worth taking the responsibility of facing the payment of a fee that includes principal and interest.
In this sense, the key is to evaluate what type of instrument or type of loan they are offering. For example, the possibility of taking out a loan in pesos at a logical fixed rate (close to inflation) can be a great deal. Much more if with the capital an asset is acquired that is exposed to inflation or devaluation, I clearly earn above the interest rate. Even if I buy a loan to buy an asset.
However, I cannot lose sight of what the impact of the fee will be with respect to income, in order to analyze the ability to pay. It is imperative to ask yourself if you are going to be able to cover it, or if you eventually have savings to be able to face them.
Here it is important to note: the term is subject to the duration or enjoyment that is going to be given to what is acquired with the capital received for that loan. It’s not worth taking 18 month loan to pay for the supermarket because the following week you will have to take another one, and have small debts sustained over time.
We may have a surplus funds It can be permanent or short term. For these cases, assets that perform above inflation should be sought. However, to develop investment strategies it is necessary to know and know what the profile is or will be regarding the use of financial tools.
Among the alternatives that exist in Argentina, the UVA fixed installments they are adjusted for inflation plus an interest rate paid by the financial institution; on the other hand are the Mutual funds denominated t + 1 (by their settlement term once the redemption is requested) or savings funds, which generally have as underlying public or private instruments denominated in pesos with adjustment for CER plus a certain interest rate.
These assets also have a protection against inflation. There are also the dollarized assets that has the capacity to generate coverage with respect to the devaluation that in the long term ends up accompanying inflation plus additional income. Contemplating the different scenarios in which one can move is key to making the right decisions.
The capital market has too many instruments to to be able to frame them as something generic and it is important to understand the different tools we have.
The instruments are classified as: fixed income, in the case of keeping them until their full maturity we do not assume a price risk; Y equities or listed assets. In this case, not only do we not have a certain income, but we must assume the price risk of the value of the asset, some assets that have fixed part and variable partfor example a Negotiable Obligation or Note convertible into shares and finally the derivatives that are the most complex and the most volatile within these families.
Although the fixed income of a company or a government does not have price risk, it is necessary to read the prospectus of the security, the bond or the Negotiable Obligation. In the case of variable incomeAnd, like an action, it is also imperative to analyze what is going to be bought, understand the financial statements of that company, the flow of funds, the alternatives and the risks and the market where that company operates. If, on the contrary, we think of the acquisition of more complex instruments, such as financial derivatives, here a more qualified profile is required, otherwise, it is not advisable to invest.
In conclusion, at this time, the only thing we should not do it is to paralyze us and stay with weights in our hands. Rethinking the way we manage our money will be key to having better behaviors in the future.
*CFO of the Marketplace of financial products Alprestamo.
by Pablo Blanco
