Investing for beginners: what to do with money?

Inflation is accelerating in Spain and threatens to eat up the value of maximum savings . Putting that money to work, investing it, is almost mandatory, according to experts. But it must be adapted to each heritage and, above all, do not forget the keys to avoid unpleasantness. Because excessive risk or betting everything on one front can make it vanish. The least desired scenario.

“Leaving money in liquidity, in deposits or fixed terms that pay zero or even charge, in the long term is the worst investment. The CPI ends up being like a tax”, says Ignacio Fuertes, director of investments at Rentamarkets. Not only for the short term, but because in the long term “it is important to think about complementing public pensions.”

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It’s a great argument for jumping into investing, he thinks.

Reach retirement with income that supports Social Security pay. “With as little as you can and the sooner you start building that cushion, it will allow you to get the margin for retirement much sooner,” she continues. With the “as soon as possible” compound interest will come into play, the reinvestment of what is being earned, which makes profits grow.

Setting sights five or eight years ahead and knowing

How to diversify are some of the keys when starting

Is there a fixed figure to boot? It depends on the “personal financial picture”, they point out in Schroders. The exercise involves covering unpaid bills and debts, setting aside a “reserve” in cash for unforeseen events, about three months’ salary, and choosing what amount to invest with whatever remains. “More than a fixed percentage, we must do it as much as possible and start,” says Fuertes.

With the allocated money, it’s time to set goals.

“It is essential to be very clear about your investment objectives, what level of risk you are willing to assume and the investment horizon”, explains Nabila El-Asmara, head of Vontobel clct stock AM in the Iberia region. Beat inflation, 5% per year, 20%… “Risk and return are two sides of the same coin. The greater the potential for profitability, the greater the risk that we must assume”, they remember from Schroders. The European average of performance expectation is 9.4%, according to studies by the firm, with the Spanish somewhat more launched, with 10%. “A priori they are too optimistic, especially in an environment of low rates, low growth and tight valuations.”