What to do with the money we save? This is a question that for many people is not easy to answer. Given that inflation has begun the path of return to normalized rates (the inflation target of the European Central Bank are levels around 2%), choosing to save the money without more would not lead us to anything other than gradually impoverish us, given that inflation will gradually diminish the purchasing power of our money.
Term of the investment
If the savings target is temporarily close to the time of making the investment, we must avoid opting for risky assets, volatile in short terms and also opt for highly liquid vehicles. In this case, products such as deposits or investment funds are recommended.
If, on the other hand, we plan to invest in the long term or in the very long term, such as for the purpose of planning retirement, we can opt for products that incur higher risks but opt for higher yields. In addition, in this case, liquidity is a less critical variable, since the forecast is not to have capital in a long period of time. In this case we can opt for savings insurance, pension plans, insurance plans insured or direct investment in the stock market.
The risk profile is closely related to the time horizon of the investment, but it also has a more subjective component that is important to consider: There are individuals with greater risk aversion than others in the same circumstances. There is a maxim in the investment process and that aspiring to higher returns always means exposing yourself to greater risks. We can define three risk profiles:
- Conservative investor : Prima preserves capital even assuming modest returns. They invest in deposits, Treasury bills and investment funds or fixed income pension plans.
- Moderate investor : Is able to assume controlled risks for trying to beat the return on risk-free assets. They invest in funds and mixed pension plans and accept moderately direct investment in the stock market.
- Determined investor : Seeks to maximize profitability and does not mind accepting potential losses, especially in short terms. They invest in equity funds and pension plans, stocks, ETFs and derivative products.
Financial-fiscal profitability refers to the final profitability of an investment once all the fiscal obligations implicit in such investment have been fulfilled. This can lead to two investments with the same financial return leading to a very different net result due to the fiscal advantages or disadvantages of one with respect to the other.
Each product has its peculiarities that it is important to take into account. Between them:
Pension plans and insured pension plans are tax incentives at the time of the contribution. They allow to reduce the taxable income of the IRPF for the contributions made up to a maximum of 8,000 euros per year and reduce the tax bill.
The transfers between mutual funds do not have any fiscal impact, this being deferred at the time when the redemption of the shares is made. In this way it is possible to change strategy indefinitely without having to pay for capital gains.
Life annuity insurances are very favored fiscally at the time of rescue. Depending on the age of the insured at the time of redemption, and provided that they have been at least 5 years since their incorporation, the return on movable capital will be taxed as a percentage of the income received. In the case of insured persons over 70 years of age, only 8% of said income is taxed.
Two investment tips that apply in any case:
- Diversification : It is the maxim of “not putting all the eggs in the same basket”. Diversification reduces the risk exponentially by diluting the investment in different assets and minimizing the impact of the hypothetical negative behavior of one of them.
- Investing periodically : It is another way to reduce risk. Do you contribute to a pension plan or investment fund? Do it with small contributions month by month instead of a single annual contribution. In this way you will avoid the risk of buying shares at a single price that may be short-term high and you will enter the average price of the 12 monthly contributions. losses.