Variable Income: a quick way to understand the investment

Do you know what variable income is? You've certainly heard about the stock market and real estate funds, and how investing in variable income can be very profitable.

When the conversation is about investment, the subject that usually ends up coming up is variable income.

Many people like to discuss the stock market, for example, and many films and series nowadays revolve around investors in this market.

But do you know exactly what variable income investments are?

It is very important for any investor to maintain a well-diversified investment portfolio.

And for that, it is necessary to invest in variable income, and not just in income investments (such as direct treasury bonds, for example).

This diversification is essential, because fixed income investments can be more stable and have less risk, but variable income investments are those that yield more, and in a shorter term.

The difference between fixed income and variable income is that with fixed income you can already know exactly how much you will receive at the end of your investment.

In variable income, it is not possible to know how much the invested money will yield. But we need to go further to know what variable income investments are.

So, keep reading and find out exactly:

• What are variable income investments;
• What are the types of variable income;
• How much to invest in variable income;
• Essential information you need to know before starting your investment;
• What are the most popular types of variable income;
• How variable income works for beginners.

What are variable income investments?

Basically, an investment in variable income It is that investment where you have no way of knowing the final result of what was invested.

In other words, the return on the amount invested in variable income securities is only revealed at the end of the investment.

But there is also the chance that in the end it was all a failure, a loss that causes harm and frustration.

That's why variable income returns are so attractive to investors who like to take risks.

If you know very well what you are investing in, the risks may be lower. But the risks will always be present.

This risk and such large variation in returns are a result of the volatile nature of the company's assets. variable income.

They are very sensitive to changes in the economy, political events, market influences and even natural events.

We will talk more about the different assets and types of variable income, but let's use a stock, the most common asset in this category, as an example to explain the volatility of investments. variable income.

Imagine that you buy shares in an agribusiness company, specialized in the production of beans.

We expect demand for beans to remain constant, so you can expect to see good returns if the company's stock goes up as it sells more beans.

Now imagine how many factors can hinder or help the returns on these shares: a drought that hits the farms, causing the plantation to fail, can mean a huge loss for the company, and so the shares depreciate and you lose money.

Or in the opposite case, the harvest was very good and demand grew more than expected, the company grows a lot and its shares increase in value, and thus its income from this asset also increases.

It's a basic example, but it gives you an idea of how variable income can fluctuate a lot according to market fluctuations.

When you hear in the newspaper that the stock market has risen or fallen, they are talking about variable income investments.

What are the types of variable income?

There are several types of variable income that exist on the market, but unlike what many people may think, they are not simply the opposite of fixed income.

Some are simple and easy to understand, and others require a lot more study to really feel safe when investing.

So let's talk about the main types of variable income:

Actions

Let's start with the most well-known type of variable income.

One action is a title that represents a “piece” of a company.

So, depending on the characteristics of the action, we become partners in a company when we buy shares.

The investment yields returns when the shares increase in value, and their value may fall or rise depending on market conditions and the company's own figures.

They are traded on the Stock Exchange, and there the idea with this asset is to buy low to sell high.

Equity funds

They are investment funds with the focus of applications on shares.

We invest in funds by purchasing shares in the fund, not the shares directly.

In funds, there is a manager who decides which shares to invest in.

Multimarket funds

Since we are talking about funds, multimarket funds may want to invest most of their assets in stocks, but they can also invest in several other assets. variable income.

Gold

The value of gold is always fluctuating over time, and that is why it is considered variable income.

The precious metal can be purchased as a physical asset, measured in grams, but it also works with contracts traded on the Exchange.

Exchange

Investing in foreign currencies or in foreign currency investment funds is investing in variable income.

Derivatives

These are contracts that have their value derived (hence the name) from another asset.

They are traded on the Stock Exchange and their value depends largely on the asset on which the securities are dependent.

This option is for those who want to speculate or hedge.

Real estate funds

Unlike investing directly in a property, trading shares real estate funds in the bag there is the variable income.

These funds bring together people interested in investing in the real estate market.

Profitability depends on the market, the economic situation and trading on the Stock Exchange.

How much to invest in variable income?

This question must be asked by each person individually.

Each case is different, and if for a person who doesn't mind taking risks the value is X, for someone who doesn't want to take that many risks, the value could be Y.

Generally, younger people are more risk-tolerant and live longer so they can take advantage of market fluctuations over the long term.

Older people do not have this luxury. This greatly influences the amount to be invested in variable income.

What we can do here is give you an idea and teach you a way to help you in your search for the ideal amount of money to invest in variable income.

If you want to find out for yourself, the best way is to start by investing a little money and over time investing more until you find that point of greatest comfort.

Experience is the best way to find out how much to invest in variable income.

But not just experience with the market and investments, but the experience you gain about your own limits, your finances, your reactions to risk and when things go wrong.

So, let's say you only have 10 thousand reais to invest this month.

Invest a thousand in variable income, see how it works, how you feel about the risks, and go up or down accordingly.

If you are still young, this is without a doubt the best method. Whether with 10 thousand or 100 reais.

But if you're still not convinced, there's still the rule of 80 that we can use to find out more or less how much of our investment should be in variable income.

Many people are suspicious of this method, but it is a good tool to get a general idea of the thing.

The rule of 80 works like this: take your age and subtract it from 80. If you are 30 years old, then by the rule of 80, you should invest 50% of the equity investment amount.

To go further with this idea, imagine that you set aside the same 10 thousand reais to invest.

When calculating the rule of 80 above, the result would be 5 thousand reais, to be invested in variable income.

 The premise of this rule is that the younger the investor is, the more he can handle risks.

Age alone should not define how much you should invest in variable income, there are many factors specific to each investor that must be taken into account.

As we said, each case is different.

The important thing is to invest in variable income, whether it is a high or low value in relation to the amount invested.

Essential information you need to know before starting your investment

Before any action is taken, there are a few things that are very good to know.

Some information about the variable income are very important and you should pay close attention to them to avoid confusion later.

Profitability of variable income

This is the most difficult topic to talk about, and the most discussed among investors in the variable income.

When someone wants to buy a share in a company, for example, this investor makes a very “rough” calculation of what is expected of the shares, and can either get it right or get it wrong.

The issue is that with variable income the yield is not known at the time of investment.

All fluctuations in the market, the economy and the Stock Exchange can affect income.

So tell me exactly when it yields variable income it is practically impossible.

But whoever made that calculation, whoever bet on the right company or the most promising asset, made a lot of money.

This is because the profitability of variable income, in general, is very high when assets gain value.

On the other hand, many people lost money betting on companies that went bankrupt or speculating on assets whose value fell dramatically overnight.

But if assets are very cheap, it could be an opportunity for high returns if they appreciate in value later.

A good metric to measure the profitability of an asset variable income is how much risk there is involved.

The greater the risk, the greater the profitability.

So if you intend to make bigger gains, be aware of the risks involved and know exactly where you are investing.

Advantages

The main advantage of variable income is the highest profitability it provides in relation to fixed income investments.

When comparing variable and fixed investments, we can clearly see that the returns are much higher in variable income.

Another great advantage that many investors find very important is the range of opportunities and diversity of investments that variable income it has.

Furthermore, investing in variable income is very easy nowadays, and the entry barrier almost no longer exists, due to the internet and new technologies in the sector.

Disadvantages

If the main advantage is profitability, the biggest disadvantage of variable income is the great exposure to the risk involved.

While fixed income investments have guarantees such as the FGC (credit guarantee fund) for many securities, variable income investments often have no guarantee at all.

Another disadvantage is the need to know the market very well. variable income, as the complexity of these investments can confuse the novice investor and thus eliminate any security of a return on investment.

What are the most popular equity securities?

The most popular titles of variable income currently are:

• actions,
• multimarket funds e
• derivatives.

Stocks need no introduction, we've all heard about them even if we've never invested in this market.

Now, multimarket funds are gaining strength among investors who want to diversify their range of investments in variable income, and derivatives have certain functions in the financial market that go beyond mere investments.

How does variable income work for beginners?

After all due care, and finding out how much value the beginning investor wants to put into variable income, the next step is to actually enter the market.

What couldn't be simpler these days, especially for beginners, all you need is a smartphone or computer, internet access and the investment money.

Investing in variable income products can be done directly through your bank, but investors generally prefer to open an account with a stockbroker and invest directly in shares.

Conclusion

Finally, the market for variable income It can be very good for those who have a good nose for opportunities.

In this market, even when assets lose value it is possible to make money, or when they gain value it is possible to lose money.

Yes, it is a market that requires a lot of knowledge and experience is one of the easiest ways to learn more about it. variable income.

But now that you know what variable income investments are, the first step has already been taken.

However, always be aware of the risks involved with this market, be very careful not to lose money with the very dynamic volatility of the assets. variable income.

Take advantage and also read↪️ “How to invest in stocks step by step”