How to Invest in Other Products

It’s time to make plans for next year. Get back to working out, adopt a healthy diet, learn a new language… Do you have any goals for 2023? If you got lazy just thinking about it, how about making a promise that won’t be difficult to keep? Get out of savings. If this is a plan you’ve been putting off, it’s time to make your money really work.

The first step is to assess where and how much to invest. The possibilities are divided into two large groups. In fixed income, there are investments in which the returns are lower, but more predictable when you can wait until maturity. In variable income, there are investments that, as the name implies, fluctuate every day, thus representing greater risk, however with the potential to make your money yield much more.

The ideal, then, is to combine different assets from these two great universes to pursue high gains without so much ups and downs. The first question is how much you want to take from the security of savings to assume the risk of variable income. Stock exchange instability can scare, but in order not to put your assets at risk, you can start with a small part of the money that is in savings.

A tip from financial advisers is not to put all the money in the stock market at once. That is, you can evolve in the contributions as you learn about how the investment works and discover what your risk tolerance is. Other than that, this is a valid strategy as it allows investments to be made at different times, which may mean the opportunity to get lower asset prices.

So, instead of putting 30% of the money in your savings account in the Stock Exchange, it’s better to start with, say, 10% and work your way up to 30% as you feel more secure. As it is the first step, starting with a small allocation will bring more comfort”, says Flávio de Lima, manager of the FoF (Funds of Funds) strategy at Somma Investimentos.

Start with the simplest investments

ETFs - NicoElNino/Getty Images/iStockphoto - NicoElNino/Getty Images/iStockphoto
Image: NicoElNino/Getty Images/iStockphoto

In addition to how much, you need to think about where to invest. As Alexandre Brito, partner and manager of Finacap Investimentos explains, the most important thing, even before making the first investments, is to define the allocation plan. “Investors should think about getting on the roller coaster while their feet are on the ground. Once they get on, it’s hard to get off”, says the expert.

For those who have no experience outside of savings, the ideal is to start with the simplest investments. Buying shares directly on the Exchange is an easy operation. But it won’t be the best path if you don’t know what the most promising stocks are, don’t follow the market to know the best moment to buy and sell, and don’t have enough money to enter several companies and sectors, thus reducing the risk.

If this is your case, the recommendation is to take the first step through funds, in which all this work is transferred to market professionals, who charge fees for the service.

Ever heard of Exchange Traded Funds? Or simply ETFs, an acronym in English for funds with shares traded on the Exchange. They represent an easy gateway to the world of investing because they involve low initial values ​​and cheaper management fees.

As negotiations take place in an environment where there are many investors, there is usually no difficulty in buying and selling shares in these funds. In other words, just as it’s easy to get in, it’s easy to get out when it’s time to pocket the profit or even give up on the investment.

Buying a single ETF quota is the same as entering dozens of assets of the same investment class, as these funds replicate indices such as the Ibovespa, where the most traded shares on the Exchange are located.

The difference compared to buying each stock individually is that entering and managing ETFs is much easier and cheaper. And since ETFs are not positioned in one but many assets, it is a type of investment that represents diversification. Therefore, it is usually less risky than investing in a few stocks.

Why are ETFs recommended for beginners? According to manager Flávio de Lima, from Somma Investimentos, novice investors often have a greater affinity with ETFs because the indices replicated by them, such as the Ibovespa, are the ones that appear most in the news. So even the most lay investor has some idea where the return comes from.

“After acquiring knowledge and familiarity with the class, access to other types of funds can be considered a second step”, says Lima.

How to have shares, dollar and fixed income in a single investment

Dollar - Denis_Vermenko/iStock - Denis_Vermenko/iStock
Image: Denis_Vermenko/iStock

Entering only a single asset class, even with the diversification of ETFs, will not ensure balance for your investments in periods of thunderstorms in the financial market. To protect yourself in the days of nervousness on the Stock Exchange, it is important to also have gold or the dollar, which can be via assets traded in New York, in addition to lower-risk fixed-income securities.

In this case, multimarket funds solve the problem of novice investors, who may have difficulty getting into so many assets. As multimarket managers are free to invest the shareholders’ money in various assets, these funds, not always, but in many cases, represent a middle ground between the security of fixed income and the dangers of variable income.

Even so, it is recommended to enter more than one fund so as not to be exposed to a single strategy. Alexandre Alvarenga, an investment analyst at Empiricus, suggests starting with at least three funds. “Diversifying in funds with different strategies among themselves and little correlated —that is, if one is gaining the other may be losing, and vice versa—is the best way out”, he declares.

What are the cons of multimarkets? Fees are more expensive, there is a minimum investment to participate and investors need to spend some time reading the fund’s regulations to find out if the strategies are in line with their objectives.

It is necessary to check, for example, if the manager is free to carry out leveraged operations, those that, when they work, boost the fund’s equity, but which, when they go wrong, cause great losses. Despite the need for some study, it is easier than evaluating and managing a bunch of investments.

Multimarket fund entries and exits may not be as fast either, as good funds are not always open to new investments and, when the time comes to leave the fund, redemption can take days, in some cases months.

So why are multimarkets suitable for beginners? Unlike an ETF, which will simply mirror the variations of a reference index (whether it is rising or falling), the manager of a multimarket is free to exchange assets in the portfolio, in addition to making other decisions, to take advantage of better market positive moments or protect investors’ money in periods of stress on the Stock Exchange.

Thus, while the ETF investor wants to follow the market, those who enter a multimarket want to exceed the average return of the market, relying on professionals who have expertise and time, requirements that the beginner usually does not have.

According to Alexandre Brito, a partner at Finacap Investimentos, multimarket funds are a good option for those who want to diversify investments between various asset classes with a single investment. “However, the category is quite broad, and the investor may come across very different strategies and allocations. Just as there are funds with greater volatility and sudden change in strategies, there are also those that follow a defined allocation and with less volatility.”

If the investor is in a learning period, my suggestion is to choose two or three funds and stay with them until they feel comfortable to evolve. It is also interesting to note that funds should be analyzed in broader horizons, as a long-term investment.
Arthur Mesnik, partner and director of operations at Trígono Capital

How to get out of savings without losing security

Savings - Getty Images/iStockphoto - Getty Images/iStockphoto
Image: Getty Images/iStockphoto

You’re thinking about getting out of savings, but you don’t want to give up security either, right? So, most of your money will have to be invested in fixed income, but don’t consider this a recommendation to continue with savings.

According to Marina Renosto, head of allocation at Blackbird Investimentos, investors who position themselves both in variable income funds, such as ETFs and multimarkets, and in fixed income securities, manage to pursue gains in different classes by limiting risks.

“The allocation weight in each one will depend on the investor’s profile. Generally, beginner investors start with a slightly more conservative profile and will insert positions of greater volatility in the portfolio over time”, says the expert.

When planning where to invest in fixed income, the first point is to consider when you might need the money. For day-to-day needs, it must be invested in investments that, although they may yield more or less, allow redemption at any time without risk of loss. Included in this list are National Treasury securities that follow changes in reference interest rates, the Selic Treasury, in addition to DI funds, which invest in these low-risk securities, and CDBs with immediate liquidity from large banks.

Just like savings, these applications allow you to withdraw money whenever you want, with the advantage of a higher return, even considering the Income Tax charge. Cash for future investments may be applied to these securities, that is, that money that will be available there for you to take advantage of market opportunities.

For that money you won’t need to use anytime soon, evaluate bonds with more distant maturities. The tip is to diversify between Treasury bonds, which are safer but with lower remuneration, and those issued by large banks or companies, in this case increasing the degree of risk in search of greater returns.

Diversification should also involve indexers, combining inflation-indexed bonds, which preserve purchasing power over time, with post-fixed rates, which follow interest rate movements, and prefixed ones, in which money will not yield less if interest rates fall again.

Just be sure to pay attention to whether the maturity dates are within your goals, because there is a risk of losing money if you need to withdraw money from prefixed applications ahead of time. For example, if you know you have an important financial commitment one year from now, the money cannot be allocated in bonds that will mature in five years, even if the longer term represents higher remuneration.

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