Whenever a company or investor decides to invest money, it sets a goal that can be long or short term. In general, a short-term investment should produce lower returns. While long-term investments require higher returns, this is due to the fact that the longer the term. In these cases the risks or uncertainties are greater.
For some investors, short-term investments are very attractive because they offer a very quick return on investment and are therefore more secure. On the other hand, the main disadvantage is that, generally, because the periods are so short, the profitability of investing money will not be as high as we expect. Therefore, our idea of building a large capital will not be possible if we invest in the short term. Given the concept of compound interest.
1. Invest money intelligently in the short term
Here are four types of short-term investments and their pros and cons:
1.1 Bank savings deposits
Term Certificates of Deposit (CDT) are securities issued by banks to customers in exchange for investing money in them. This year, on average, they are offering an effective annual rate of return of 5%. If we discount the inflation that is estimated to be around 3, we will have a real return on investment of 2 annual cash.
These products are generally not the ones that ensure us the most profitability, but they handle a very low risk profile with deadlines ranging from 3.6.9 to 12 months. That is, with this product you can have a savings not very profitable but safe over time.
Shares are products that represent a value title issued by a company to capitalize on and/or solve financing problems. The actions symbolize a part of the assets of a company or company. It is a participation title, i.e., when you buy a company’s shares, you become a partner. By their nature, they are always long-term investments, however, if the action is listed on the stock exchange and trades with sufficient liquidity, it is considered an option for short-term investments. Shares are equities because their price is subject to market conditions, so if the company goes through a good time, they are also. Similarly, if the company is going through a financial crisis, these securities will lose value from their immediately preceding price. For this reason, they are called high-risk investments. Its value is affected by general market conditions: changes in interest rates, the variation in prices of the economy, among others.
This means that the profitability of the shares are generally very variable because they depend on the business of the company. There the fluctuations are generated, as they depend on the expectations regarding the future profits of the company.
Usually, investing in such securities can represent large returns if done in the long term, but it must be clear that by its nature, you also run the risk of losing a lot of money.
Commodities or commodities are goods that can be traded on the stock market. There are different types of commodities that can be energy, metal and/or food or input.
This type of investment has the following characteristics:
1. They can be easily negotiated as they are vital inputs for the production of goods and services.
2. When investing money in this type of instruments, one must be aware that they are highly risky investments and the return on investment does not have a clear pattern since it can be affected by climatic, economic, market factors or by natural or political phenomena.
3. The average time of return on investment may vary depending on the type of product in which the investment has been made.
4. Investment amounts are usually very high and usually do companies with great purchasing power.
Factoring is a relatively new term that began to expand thanks to the existence of the internet. The idea behind this concept is to connect SMEs that need cash flow with a group of investors willing to finance or sponsor the company’s economic needs in exchange for profitability or a new product. Thanks to this solution many people can turn to a very valuable investment product that was previously controlled by banks and other financial companies.
The points to highlight of this type of investment are as follows:
- Profitability: Generally, this type of investments rent at a higher rate than traditional investments and can reach up to 11 A.D., depending on the transaction to be processed.
- Liquidity: the return on investment varies between 30 and 120 days, i.e. they are short-term and very fast income is received.
- Security: Very precise and selective methods are used for the selection of the different invoices receivable in order to always have a very low risk and ensure the client’s investment.
- Transparency: all the information is transparent both to the company that sells your receivables invoice and to the investor who buys it. The entire operation can be reviewed using the platform.
- Decision power: you can invest in different invoices receivable from different companies and with different amounts. There is no limit to investments and you can start from approximately 1’000,000 COP.
2. Invest money intelligently in the medium and long term
Once the short-term investment alternatives have been analyzed, then the main long-term investment options are presented.
Funds investment products by which the resources of several people are gathered to make investments. They are managed by expert managers to invest money in a specialized way, which vary according to their specialty:
- Real estate: to finance the planning, construction and delivery of buildings, which may vary according to their purpose: low-income housing, business buildings or warehouses, among others.
- Ventures Capital. to finance ventures or startup with high potential and high-scale business development. Mainly covers: Seed capital or starting capital
- Private Equity. It refers to investment in consolidated or growth-based companies, on which there is already a turnover and the risk is lower. It can be of the following types: Expansion capital, leveraged purchases, membership replacement or reorientation (transformation)
They generate a profit by investing money, which is distributed among the people who participate in the portfolio or fund. Among the advantages that can be highlighted to invest in this type of products, is the fact that it gives you the possibility to access investments that you could not have made individually due to the profile of them.
They are also constituted through voluntary contributions to your individual account, with the purpose of the administrator making investments and obtaining a return to meet your investment plans.
In an investment fund you can strengthen your capital, making it available to our expert team. In harmony with what you want, your resources will be invested following parameters designed to boost your capital, according to what your risk profile suggests.
The goal of the funds is to contact people who have the same investment interests, with whom they can boost your money and vice versa. With this tool you grow together with the people you share dreams with.
Investment funds have proven to be the ideal mechanism for foreign investors interested in investing in Colombia.
Contact us and we’ll help you find investment opportunities for your organization.