The first point to clarify is that not all types of investment work the same , so the selection of a certain style or field will depend on the capabilities and profile of the investor. Some types of investment have a minimal level of risk, others take on much more challenges and need more preparation to enter them. And as in many aspects, the key is in the variety so that each person selects the type of investment with which he best identifies.
There are many types of investments, but we will focus on the main ones from the point of view of the financial markets: Types of Investments – Fixed Income Investments
Fixed income investments are very common since they are what people who want to learn about this business but do not have enough knowledge to take a risk.
You can contract fixed income instruments at banks, financial institutions, investment fund managers or at the stock market. In this type of investment the risk is minimal since the person knows exactly how much money his money is going to generate in the established time since it is previously given by an interest rate. Its only disadvantage is that the profit margin is very little, and if inflation exceeds the interest rate, at most you will have capitalized your money and still it will not compensate for inflation.
Fixed income instruments are based on a remunerated savings scheme in which an investor puts in the hands of an issuer a capital that he promises to return within a specified period, adding an interest rate of profit. For his part, the investor can proceed in two ways with these instruments:
- Maintain the term: To obtain the promised profitability it is necessary for the investor to maintain the capital for the established time. Saving the money early not only cancels the interest rate but also in many cases a penalty is imposed for it.