Buy and hold; Finizens and passive investment
It must be understood that markets have a behavior that, although it is determined by human behavior, it is not like a person; but like a conglomerate and therefore It does not act as it thinks. Wanting to predict by using human tools, such as sociological and behavioral sciences leaves users in a predicament, and even if you hire an expert, there’s room for human mistakes.
I’m going to introduce you to 3 types of investors who are perfect for illustrating how certain attitudes may or may not be the best when choosing how to act in the marketplace:
1) Buy-and-hold investors are those who hold on to their investment even if the market falls and wait for it to recover.
2) The midpoint; Emotional investor, is the one who sells once the market falls, a contraction of approximately 20% and then buys when the market re-spots.
3) Frustrated investor, is the one who holds out until a 40% drop and sells to reinvest when the market has recovered.
In these 3 scenarios, there’s only one type of investor that has less losses. Since it does not suffer the sale and purchase contractions, without being affected by those percentages (20% and 40% depending on each case). Therefore, there is no doubt that it is the “Buy-and-Hold” investor who maintains the highest profit and the lowest risk.
How should I make my investment?
Fininzens works with this type of investment, guaranteeing each investor the advantages of being “Buy-and-Hold” and the security of working with market experts. A return of more than 3.5% per year compared to other investment styles is one of the group’s greatest attractions and projections indicate that by 2021 they will surpass the active investment market.
Among the various advantages that are fully recognizable from the performance of the “calm buy-and-hold investor” is that their investment can be maintained over a whole period (with both market declines and recoveries) in higher numbers, achieving an additional gain of +68% over the “emotional investor” and +447% over the “frustrated investor”.
Buy and hold, passive investor
The calm or “Buy-and-hold” investor needs a wide variety of modern tools that allow him not only that corresponding peace of mind, but also to lower costs. In this way, he can keep his investments without having to sell in emotional situations. These tools range from experts to digital algorithms, thus eliminating risk factors.
Therefore, one of the best trends that has been taking presence in recent years digital tools. Through them you can predict the market, its behavior, midpoints and time line. This comprises a series of important rules that gradually make clear what should or should not be done:
Markets always recover, so if you sell when it falls, you can never recover your investment. Even if you buy back later, because there will already be a percentage of your initial investment lost
What is known as passive behavior implies that there is an algorithm always in search. This algorithm is in charge of understanding and analyzing, so it is a cheaper tool that does not imply any additional human cost.
The security of the transactions by not selling using magic formulas that try to predict the best moments. This implies not affecting negatively your investment, maintaining a constant growth.
You eliminate as much as possible the risk of the unpredictable factor, generating a long term profitability
You stay on a long term investment, guaranteeing that you will not be affected by the volatility of your emotions.
Lessons to remember
In all circumstances, every investor must always be clear that he should not gamble with his money, no matter when or by whom the action is taken (advisor or investor). We have an idea of the markets where the protagonists are like the “Lobo of Wall Street” that risk the investments and even play with them having fictitious and impossible gains in the real life, while those who really manage to enjoy good positive percentages are those who understand the value of this rule.
One of the last lessons is that “Markets always recover,” so a passive investment is perfect to ensure that you will have your investment protected. Fininzens guarantees you to participate in a portfolio of indexed funds, where globally diversified by all classes of assets and geographical areas, managed in an automated way by means of algorithms, additionally each investment is personalized according to the profile of each client, with an offer of five different Portfolios that go from the most conservative to the most daring