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When making investments, each person assumes a level of risk for them due to market movements, the nature of financial intermediation, the external environment in which the economy develops, and many other aspects that influence when investing in the markets financial This is why it is always necessary to carry out risk management by the investment management company, in which the pros and cons of a certain investment are established before making it. In this next post, we will highlight the importance of an investment management company. Importance of investment management company: Before entering the point it is necessary to emphasize that each investor tolerates a level of risk in their investments according to their profile. In this regard, we can define three basic profiles of investors:
1. Conservative: This type of investor tolerates minimal risk in their investments and values the security and exact knowledge of how much profit their investment will generate. In simple words, he just likes to play it safe and only invests in fixed income. 2. Moderate: These investors tolerate risk a little more, but without exceeding a limit. They like to have most of their capital safe in fixed income instruments, but they bet to earn a little more by placing a percentage, which varies from one investor to another, in equity instruments of very liquid companies to generate greater profitability, but always very cautious. They are the ones who are most concerned with doing a risk management analysis on investments.
3. Aggressive: These types of investors seek the highest profitability, assuming greater risks since they put a large part of their investment capital in variable income instruments. They are usually young people, single and/or without children, and with high-income products of other activities. They also worry about managing the risk of their investments, but in many cases, they pay the advice for this. Bearing this in mind, managing financial intermediation will depend on your profile as an investor and the risk you are willing to tolerate. Let us remember that "risk" implies that the money that has been invested can be lost or that it does not generate the expected profitability, so those who are not affected much by losing the money they have used are the most likely to have an aggressive profile.
Those with a moderate profile are more thorough in their analysis of investment risk management since they are not in a position to lose their capital but also want to obtain better returns. The importance of an investment management company lies in the fact that, depending on the type of financial intermediation in which you invest, the companies in which you buy shares, if you invest in local currency bonds or in dollars, the time of the investment, etc., there is a percentage of uncertainty in which you can lose your money, an unfavorable result even for the most daring of investors.
So taking the time to analyze the risks of the market, by an investment management company and more specifically, of the transaction we wish to carry out, is of vital importance to reduce this level of risk to a minimum. Of course, it does not dissipate 100%, but acting lightly can greatly increase the probability of losing capital, while careful analysis of the risks increases its probability of being successful.
