Long-term investments: what you need to know

<>Hay muchos plazos de permanencia pero uno de los más relevantes es el que tiene como target la permanencia más larga. O lo que es lo mismo, a largo plazo. Bueno, este período de inversión está sobre todo dirigido a inversores con conservative or defensive profile. So that from this dynamic they can make their assets profitable without time limitations. At the same time, they can forget about the investment for a few. To the point that in some cases it even becomes a hereditary investment. In other words, it passes from parents to children without any change in the investment portfolio.

When referring to long-term investments, the first aspect to be explained is the years that this type of period considers. There is no target parameter, but stays of more than three or five years can be considered long-term. Where positions will be held statically, without any kind of variations. Sea cual sea el caso, esta inversión es la más alejada que puede hallar de las operaciones especulativas. Y no todos los pequeños y medianos inversores están dispuestos a aceptarlos.

In any case, in these terms of permanence, there are a series of securities that are more likely to be subscribed in exchange operations. Especially those who show a greater stability in the conformation of their prices. With few fluctuations and that in general do not stand out due to their high appreciations or depreciations in the value of the shares. Not all sectors comply with this marked characteristic. Being the defensive ones the most indicated so that you can open positions from now on.

Long term: dividend payment

Anyway, if there is a characteristic that identifies these values, it is that the majority distribute dividends to their shareholders. With a fixed average interest and guaranteed around 5% per year and which is represented by banking and electricity companies listed on the Ibex-35. With a higher profitability than that offered by some of the banking products (time deposits, promissory notes or high-paying accounts). To the extent that many financial intermediaries choose these values when the period of permanence is long term.

Una de los motivos para decantarse por esta strategy especial es que tendrás algunos guaranteed income from that moment on. Without taking into account the evolution of shares in the equity markets. You can do it with a higher level of liquidity in your checking account to cover your daily expenses. Even to face some other unforeseen outlay in your family or personal budget. Do not doubt that you can be in this situation for many years, more than you think from the beginning. Especially if you have the support of a regular income.

Benefits of these operations

There are many contributions that will generate long-term operations on the Stock Exchange. Therefore, it is convenient that you know them in case in the next few days you are going to carry out an operation in equities of these characteristics. Some of the most relevant are the following that we expose you below.

1. In such long periods it is more difficult for you to lose money in each of the operations of this singularity.
2. Will allow you to be disconnected from financial markets for a long time, without the stress of being invested in the stock market that will force you to be aware almost every day.
3. Saving on commissions It will be another of the factors by which you will benefit from these long periods of stay.
4. At the end of the day you can always rescue your money at any time and vary your investment strategy. In the face of a personal need or unexpected expenses.

Analyze your real needs

On the other hand, you should not forget to analyze what your investment prospects are. Because depending on them, the best solution to defend your interests may be long-term investment. For this, it will be completely necessary that the money you are going to invest I don't need it in the next few years. For this, you will have no choice but to have a fixed income or income that will help you cover all the expenses of your national economy. At the same time, it will help you so that you do not have to perform a terrible partial operation in the face of any urgent need in your personal accounts.

It will also be very important that you are not in a hurry to make the savings profitable quickly. But on the contrary, your greatest desire is to create a stable savings bag looking forward to the next few years. Even if you are older, as a complement to your retirement. So that from this dynamic you have a much higher quality of life in the golden years. It should come as no surprise that one of the characteristics of long-term investments is that they are not designed for the most active users of the financial markets. Quite the contrary, due to a very traditional profile in your relationships with the world of money.

Most appropriate values for these terms

As you may well assume, not all stock values will be useful for these types of savings profitability strategies. The less volatile in training their prices. In other words, with deviations in their prices that move under very narrow margins. They won't make you a millionaire anyway, but at least they'll give you a lot more assurance that you won't have any other negative surprises in your price from now on. They are distinguished by the fact that safety prevails over other more aggressive approaches.

At the same time, these values are known as piggy banks because they show a progressive revaluation every year. Even when below some not very striking percentages, between 1% and 3%. But whatever the case, exceeding the interest provided by traditional banking products (time deposits, company promissory notes or high-paying accounts). In which profitability levels around 1% are rarely exceeded. Not in vain are values that do not cause many headaches when hiring them. Where they are very well aimed at the longer terms.

Improves the cost of living

Another goal of long-term investments is that you can improve the price increase every year. In other words, the value of your money does not vanish year after year as a result of the increase in Consumer's price index. To this end, it must be remembered that the CPI today is 1.2%, according to the latest data provided by the National Institute of Statistics (INE). Well, in the long term you will need to beat these profitability margins so as not to lose purchasing power from now on. Therefore, you will need a return greater than 1,50% for this wish to come true.

Not surprisingly, with the usual banking products you will not be able to achieve your desired goals. And you will have no choice but to go to the stock markets. Even though it is true that they run many more risks than up to now. It is the toll that you will have to pay for this strategy to be carried out in short. Without forgetting the saying of many small and medium investors that in the long-term stock market it is very difficult to lose money. Because at the end of the day it is a financial asset that almost always rises in these special periods of permanence.

Disadvantages of these operations

On the contrary, long-term investment also has some drawbacks. Among them that you will be more corseted to carry out any type of strategies. Because the flexibility The realization of movements in equities will be significantly less than in short or medium-term operations. On the other hand, it will prevent you from enjoying a performance every year. If not, on the contrary, there will be no other solution than to wait 4, 5, 6 or 10 years to rescue your financial contributions. Without taking into account the evolution of their prices.

This type of investment, on the other hand, will require a more correct selection in the supply of securities presented by variable markets. They are national or even outside our borders. Because not all serve for this type of well-defined strategies. In addition, it will be necessary to assess that it will not no real benefit for your short and long-term personal accounts. Otherwise, you will have to be more patient with its subsequent resolution. Don't forget to avoid making a mistake that you may regret after a few years of taking office.

In conclusion, it cannot be forgotten that this investment can create a liquidity obstacle at some time or another. Where you will have no choice but to make partial sales to correct the problem. And it may be that at a sale price that is not the one that best suits you at that time. To the point that you can lose money in operations.