The dilemma of opting forsave or investIt is one of those that are frequently presented to those people who want to extract a better return to their economic capital. It is, according to experts, a complex decision, which usuallydoes not support one-way solutions, and in which it is convenient to examine multiple factors, such as the final objective, the time horizon and the necessary external advice.
"Both things are not only compatible, but necessary and even imperative for any client profile, as it is essentialquantify the necessary capitalin order to meet vital objectives or expectations, instead of saving or investing randomly ", emphasizes José Miguel Maté, vice president of EFPA Spain, the national delegation of the European Association for Financial Advice and Planning.
Before a panorama like the current one, marked both by the diversification of products and by the reborn uncertainty around some aspects of the economy, such as the future of pensions, it is necessary to assume that"There is no single solution for everyone", as indicated by David Carrasco, economist and member of the Governing Board of the Institute of Spanish Actuaries, which advocates reviewing the"specific needs" of each client.
From there, and through the advice of an expert, Carrasco is committed to making a decision also based on the objective pursued with the chosen formula, in the time periods handled by the client and, finally, in its greater or Less risk inclination.
Methods adapted to each profile
The differences between savings and investment lie in different components. While saving, usually articulated by term deposits, passbooks and paid accounts, presents alower level of risk, so is its profitability. The investment, on the other hand, is formalized mainly through fixed income products (letters, bonds and obligations), equities (shares) and investment funds, and includes having todeal with the possibility of not achieving the desired revenuesand even lose capital if there is no revaluation of it.
Lucía Veiga, expert of the comparator of financial products iAhorro, defines the basic qualities of each of the two options. "Saving is something we should all do, regardless of income or economic situation. Saving is very important forbe prepared for unforeseen economic, such as breakdowns in the car and the house, and also to assume large expenses such as buying a home, acquiring a car or a renovation. There are several methods to do it and it is important to find the one that works for each profile. "
One of those most recommended methods is"set aside 10% of the income when they arrive at the account",so that they constitute a starting point. For its part, the investment becomes an option to take into account "for those who have savings and can afford to dispense with a certain amount of them for a while," says Lucía Veiga, who nevertheless emphasizes that there is also the risk of "losing" that capital. Thus,"The investment is for that money that one can afford to lose". "While it is true that there are many types of investment products and not all of them have the same degree of risk, in most cases at higher risk, there is a greater chance of obtaining higher interest," summarizes the iAhorro analyst.
Discipline and savings commitment
Time is one of the circumstances that condition the strategy of savers or investors. "The truly relevant factor is to askwhen are we going to need our money and for what, that is, how much. So knowing what amount will be needed at all times throughout life, every person should allocate a portion of their money -invest- that they have previously been able to save, "says José Miguel Mate, vice president of EFPA Spain .
Both a figure and another can be oriented to a more conservative or risky profile. "The recommendation that I would make to any of the two profiles is that before any decision they assess at what time they will need their money and how much they will need to have accumulated or the necessary one," Maté summarizes.
Beyond the chosen formula, savings or investment, there are some guidelines that should be taken into account. "You have to think about the goal that one sets andbe consistent with him, which means committing. It is preferable to keep someperiodic savings ratesinstead of making a unique contribution and playing it all at that moment, "explains David Carrasco, of the Institute of Actuaries.
Carrasco calls to avoid a "frequent" error, that of "investing with the rear-view mirror". "When some products have worked well in the past, people invest in them, butpast returns are not guarantees of success, because circumstances change, "says the member of the Institute of Actuaries, who underlines another of the risks inherent in the investment. A client who, due to a fall in profitability, abandons that investment and tries to re-engage later, when the prices of Entrance have become more expensive.
However, whatever the solution chosen, it is important to keep in mind the economic context, which is currently marked by thelow interest rates. "It is a situation that is difficult to see an end in a near horizon. At present, both assets at risk and free of it are givingnegative returns. Building a savings program in which at least inflation is compensated makes certain risks necessary. There are no magic solutions, "concludes David Carrasco.
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