Long-term profitability

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Inside of strategy buy and hold, one of the aspects most valued by small investors is how to achieve long-term profitability. ¿Cómo lo conseguiste? ¿Qué tipo de valores debería seleccionar? ¿O están en riesgo sus intereses? Estos son solo algunos de los enfoques que se les ocurren a los minoristas. De todos modos, este tipo de objetivos requieren una serie de enfoques que se deben cumplir y que te mostraremos a través de este post.

In general, savers who go to this period of permanence have a very well defined profile. These are conservative investors, who they seek security rather than profitability itself. Se centran en valores muy líquidos, que se incluyen dentro de los principales índices bursátiles, no solo nacionales, sino además en otras áreas geográficas. Y be cual sea el caso huyen de las propuestas más arriesgadas que están representadas por valores especulativos.

Once you have analyzed how investors seek long-term returns, it is time to focus on what classes of securities make up your investment portfolio. Blue chips are one of your favorite options, and that are present in most of his performances. In this regard, it must be remembered that these values represent the ones with the greatest specific weight of the national selective index, the one known as Ibex 35. BBVA, Santander, Iberdrola, Endesa and Repsol are its members.

Very defensive values

The securities that are recipients of their operations do not present large fluctuations in their prices. Not in vain between the maximum and minimum price of their prices in the same trading session do not offer great differences. Another of his contributions is that it consists of a compilation of actions that offer a high dividend yield. With a fixed and annual profitability that ranges between 3% and 8%, through one or more payments per year. This remuneration to the shareholder makes the investor constitute a fixed income within the variable.

The reason for this investment strategy in long-term profitability is due to the fact that it exceeds the weak profit margins offered today by the main savings products (deposits, bank promissory notes, public debt, etc.). And that in any case, do not exceed more than 0.50%. As a result of the monetary policy of the European Central Bank (ECB) to lower the price of money. And that has led to him being at 0%. Something that had never happened in community economic policy.

Other conservative values that these investors choose are those of very stable sectors, both in their business lines and in their prices. Among them, the electricity supply, roads and especially electricity companies stand out.. Exactly the latter with a broad and diversified representation: Gas Natural, Endesa, Iberdrola, Enagás and Red Eléctrica Española, among others. They are not lacking in a temporary portfolio of these characteristics. It should not be surprising that they provide greater stability to the savings of small and medium investors.

What are the objectives?

Developing and maintaining a long-term profitability strategy requires very well-defined characteristics, which you should not overlook when developing your strategy. Undoubtedly, you will have to establish permanence in the stock markets. With a maximum term that ranges between 5 and 10 years approximately., in which securities with increasing interest may be chosen, under a minimum capital that will be based on the equity contributed to these operations in the securities markets.

La fórmula más común para canalizar este tipo de inversión es dejarse llevar por la realidad de los precios. De modo que a medida que los plazos son más largos, la rentabilidad se torna más atractiva, aún cuando en porcentajes no muy llamativos como para realizar grandes operaciones. Y de todos modos, siempre que no ocurra ningún event que haga tambalear las bolsas, como sucedió al inicio de la última crisis económica, en 2007.

In long-term investments you will not find revaluations of any importance, much less that will make you a millionaire. Not surprisingly, most cases involve insure all invested capital. Achieve a return higher than that of fixed income, and in any case, without taking on excessive risks. It does not matter because you go through processes in which you will lose part of your contributions. There will be more years to recover it, and even increase it.

What psychology should you have in these operations?

The recent fall in interest rates had the main consequence of a notable decline in the profitability of bank deposits. And one of its consequences is diversion of a large part of savings to equities, and especially to the stock market. But you must maintain a series of actions that are not usual in short-term operations, and that require special attention on your part.

It should not focus on the specific movements of the financial markets, since it is not a purpose. It may even be wise to neglect their operations, since they have such high retention periods. It is very important that you do not subscribe for very erratic shares of the company, and that they may even disappear as a result of your administration. The more stable the companies, the better it will be for their interests. Stability is the main factor to look for when choosing the components of your choice.

Characteristics of these terms

In the same way as other investment strategies, this option in equities has a series of advantages and disadvantages that you should know. And that in most cases will depend on the profile you present as an average investor. Faced with this scenario, which reflects the long-term permanence in the stock markets, you will have no choice but to analyze their benefits. And where its advantages will first be reflected.

• They offer growing interestIn such a way that as you look at more years, the profitability of the portfolios created will increase, but without reaching disproportionate levels.
• They do not guarantee the invested capital, but in exchange for granting good performance prospects, which can be enhanced with the dividend remuneration that originate most of these proposals.
• There are different hiring strategies, depending on the profile you present, and where it is most favorable to your interests diversify investmentand not focus on a single value. This is a very useful way to protect savings over such a long period of time.
• Long-term investment enables you select from a wide range of values, both domestic and foreign variable income. Always trying to find the greatest potential for profitability, even opting for the purchase possibilities that certainly arise every year.

Disadvantages of long-term trading

These dense terms also carry certain risks that you must examine to make the investment. And that in the first place it can suppose a lack of liquidity to meet certain expenses in your personal life (tax obligations, mortgage payment, children's school, or basically some unforeseen disbursement in your family budget). But they are the only problems you can find in this situation. There are other factors that you should also think about. And among which the following stand out.

• Suppose you have a immobilized capital for a relatively long time, even though partial sales can be made to obtain the necessary liquidity. Even when with the obvious risk that the prices of your shares are in those moments below the purchase.
• The minimum capital that you dedicate to invest in equities is generally higher than that of other financial instruments, which will affect the real state of your personal accounts and what it can lead you to do. punctual rescues of other financial instruments (time deposits, investment funds, warrants or derivatives, among others).
• The return offered by the investment in the end may not be so attractive as to maintain them for so many years, being able look for other financial instruments with better benefits. And even with a guaranteed return, even when the normal thing is that it is very small and does not satisfy your plans as a long-term saver.
• These high permanence classes are aimed at a too conservative type of savings profile that seeks security and clarity instead of risk and greater profitability. The first thing you should do is establish if you meet these characteristics and follow their investment models. You may even be confused and truly fit another not so long-lived profile.

Is it important to highlight extending the deadlines?

Five, ten or even more years is a very long period to hold positions in the equity markets. They are not very young users, yes, retirees should follow this long-term approach anyway. Only in the middle ages will it make any senseand as long as there are savings that will not be necessary for many. If your intention in the next few years is to buy a house, forget about these investment strategies. Because it is not the most suitable for your interests, and it can even seriously harm your interests.

Whatever the case, it is a strategy to invest a small part of your savings, and with the intention of creating a savings bag for the next few years. And that can be combined with the contracting of other banking products, and why not, of different financial assets that can make your savings profitable from now on.