Seven tips to achieve the highest profitability during 2020

To make your investments profitable it is necessary to take risks, within an environment of downward growth and without inflation. Today we are going to give you seven practical tips from managers, so that you can achieve success during this coming year.

The opinion of the managers

This year has been the most positive in terms of investment profitability, more than what was expected at the beginning of 2019, because the environment was complicated with declining growth and no inflation. Through these seven tips, from specialized managers consulted by the newspaper Expansión, your profitability can grow and be very beneficial during the next year 2020.

  • Invest with a long-term purpose. It is most advisable for moderate and conservative investors to plan their investments taking into account the zero percent interest rate environment, which will be maintained for a long period assuming some level of risk. The saver must become a conservative investor to be able to make their money profitable, being willing to accept a small sense of risk, to extend their investment term, since the longer this term is, the greater the return on their portfolio may be, which may include small variable income.
  • Do not take more risks than necessary. Although it is necessary to open the horizon of assets to be able to obtain greater profitability, it is not advisable to lose sight of the real possibilities and the investment profile in which we fit. This means that if we work in an environment of low interest rates, it is normal for returns to also be low, but it does not mean that we should risk more than necessary to obtain higher returns, since it can backfire.
  • Select well and take advantage of key moments. If you have decided to invest in the stock market, you should know that the equity market is very polarized in valuation and you should avoid companies or sectors with high valuations, that are motivated by low interest rates or that have overly optimistic expectations. What managers recommend is to maintain investment in equities and take advantage of declines to increase exposure.
  • Dangers of fixed income. Many managers are inclined to avoid or reduce fixed income, because the profitability is negative or zero and, if the interest rate changes, the capital may be lost. It is better to limit yourself to fixed income that invests in liquid and low duration assets.
  • Avoid illiquid assets. They are investments that are difficult to sell in processes of high volatility and in many new models of high-growth companies, of which it is not yet known exactly what their viability and profitability will be.
  • Have patience. Patience will be key to obtaining profitability, because the markets give opportunities at specific times, but you have to wait. Investing for the long term is a good practice, since if the investor is patient and invests at the right time and has the ability to manage his investment with a long time objective and isolates himself from rumors, you will obtain great returns.

And the last tip is to invest through funds to diversify; fixed-income funds that invest in liquid and low-duration assets, variable-income funds that are prudently diversified and mixed funds that have good discipline in risk management.

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