Where and how to invest money

The choice of where and how to invest money will depend on several factors, including your financial goals, how much risk you are willing to take, future projections and knowledge of the financial market.

Today we are going to understand a little more about this subject and how you can start investing.

What is an investment?

An investment is a way of allocating money to an asset with the aim of transforming it into more money.

Often the objective of investing is to generate income or to achieve more specific financial goals, which may be long-term or short term.

Investors expect to receive a financial return on their invested capital. This return can come in a variety of forms, such as asset appreciation, interest or dividend payments, among others.

Understanding what investments are is the easiest way to know where and how to invest money.

Where and how to invest

The choice of where and how to invest money will depend on numerous factors, but before anything else, it is important to understand how to make investments.

How to invest

Investing involves demanding financial resources for some type of asset with the aim of obtaining a financial return, but to do so we need to start somewhere.

Let's look at some important points on how to start investing:

Objective

You should start from the principle that you need to define objectives, think about the purpose of your investment.

Maybe it's just saving money and having an emergency fund, or maybe it's having money for retirement, but either way it's a kind of goal.

Define the type of investment

When talking about investments we can mention three different types: short, medium and long term investment.

Short-term investments can last up to a year, and their liquidity is usually faster than other types of options, with daily liquidity possible. For those who need money faster, this is a great option.

An investment is considered medium-term when it lasts from one to five years, while long-term investments generally last longer than five years. This means that it will take longer to obtain a return and consequently liquidity.

Risk tolerance

Depending on the type of investment you are making, you will end up taking some kind of risk, without guarantees.

Therefore, you need to understand how much volatility you are prepared to face over the life of an investment.

Determine your investor profile

There is a lot of talk about your investor profile, and it has more to do with the type of classification you will fit into, whether conservative, moderate or aggressive.

There are tests that can be done online, but the most reliable option is to seek advice or consultancy from another investor who is an expert in the subject, who will be able to advise you more precisely.

Of course, when we talk about “how” to invest, many other points come into play and can impact your final result. But you learn a lot through day-to-day practice.

Where to invest

Now that you know more about how, we can move on to “where” to invest, that is, where your money goes within the existing types of investments.

Let's look at some of the possible investment choices you may encounter:

Direct Treasury

Tesouro Direto is a Brazilian government program that allows investors to purchase government bonds.

It is one of the safest options for those with low risk tolerance, highly recommended for those with a more conservative investor profile.

In addition to low risk, you can find different maturity dates and different profitability factors in direct treasury bonds.

There are different types of bonds, such as Treasury Selic, Treasury IPCA and Treasury Prefixado, each with different profitability and term characteristics, find out which one is best for you.

Actions

Shares are one of the most common types of investments that exist, they represent a small part of a company's capital. So when you acquire a share, you will become part of the group of partners.

However, shares are one of the most volatile types of investment, therefore, they present much more risk than normal.

Shareholders are entitled to a share of the profits, called dividends, and participate in the appreciation or depreciation of the share price on the capital market.

Investment funds

Investment funds are collective options that bring together resources from several investors in one place. They can be shares, bonds, real estate and others.

There are different funds, which can vary according to type of liquidity, volatility and investor profiles.

These funds are usually managed by a professional manager or administrator, and help people diversify their portfolios.

CDBs

CDBs are bank credit securities, they are fixed income and occur when an investor lends an amount of money to the bank and receives interest over time.

They are considered low-risk investments, as they usually follow the FGC, Credit Guarantee Fund.

LCIs and LCAs

LCIs are real estate credit letters, and LCAs refer to agribusiness credit letters.

These are fixed income securities issued by financial institutions with the aim of financing the real estate or agribusiness sector.

These investments offer income tax exemption for individuals and are considered low risk, perfect for conservatives.

Real estate funds

Real estate funds are options similar to investment funds, but they focus on investing in real estate. They offer a monthly income, ideal for those who want more frequent liquidity.

Depending on the property you invest in, they may also have high appreciation potential.

Each of these investments has its own characteristics and different ways of working. You will find the most diverse types of volatility, return and liquidity in the world of investments.

Now that you know where and how to invest money, you can try to take the first step or continue studying the subject to learn more and more.

Before investing, we recommend doing more detailed research or seeking guidance from a financial professional.