How to invest your money before 30: basic guide for beginners

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When entering the world of work, many young people wonder where to allocate their income: from a trip to buying a car or directly saving. But when it comes to managing our money we must not overlook investment.

Investing in funds or stocks is a concept that is intimidating for many, either due to a lack of information, interest or both. But at a time like the present, when inflation is at its highest in almost 30 years, allocating a part of your monthly payroll to investment is a way to maximize your income and ensure greater economic stability in the future if you do so. correctly.

Next, we review some types of investment and the basic concepts that you should know in order to start managing your money.

The first commandment you must fulfill is to have some financial security. To do this, make sure you follow this series of steps:

Pay your debts

Before thinking about allocating your income to any type of purpose, it is important that you make the payments that you have pending. From larger amounts like school fees or bank loans to small amounts like fines or bills. If you can't afford to cover the one-time payments, make a plan to pay the money back a little at a time each month.

Create an emergency fund

There's always the possibility of the unforeseen. That is why it is important that you have a reserve mattress where you can save some savings. Ideally, you should start with the equivalent of one month of expenses, and from there, gradually increase the number.

Open a pension plan

A pension plan is a savings product designed to cover certain contingencies, although the main one is retirement. Since it is not a replacement, but a supplement, it will mean an extra income the day you retire, regardless of your public pension. These plans are managed by professional companies, are formed by the contributions of their participants and generate long-term returns.

It is a safe investment, since, in the event that the manager in charge dissolves, the entity is replaced by another, without affecting the fund. In addition, contributions can be made at any time and can be of any amount.

Once we have secured that part of our income, we can choose to make investments with higher or lower risk. It is essential to keep in mind that the higher the risk, the more return you can get, although there are also more chances of losing money.

Safer or lower risk investments

Bonds

Bonds (fixed income) are a kind of loan made by the investor (an individual, a fund, a bank. ..) to a private company or a State. It establishes the interest that the company must pay when returning it and when the capital and interest will be returned. There are several types of bonds, depending on how you want to invest or receive interest. And they can also be of different terms.

Investment funds

The investment fund is made up of a group of people who contribute money through shares, so it is a collective investment. The entire capital is then invested in different financial instruments (stocks, bonds, etc.). In this way, the risk is lower, since it allows you to diversify your capital in different financial products and also in different markets. In addition, the members of an investment fund only pay taxes to the Treasury when they redeem the shares.

This is a very attractive instrument at the fiscal level, since taxes are only paid at the time of sale. Therefore, we can have more than one fund and make transfers from one to another without paying extra money. At the time of reimbursement, the capital gain is included in the tax base, paying between 19% and 23%, depending on the capital gain obtained.

There are many types of funds according to their type of investment (fixed income, variable income, mixed, global...), although if we look at how they are managed, these two stand out:

High-risk investments

If, on the other hand, you want to make a riskier investment, but with more immediate benefits, you can opt for equities. That is, by actions.

They are direct shares in a company that is listed on the stock market and it is necessary to carry out more constant monitoring to know how the investment evolves, since the value of the company can go up or down in the market. Thus, you can obtain both profits and losses, it all depends on the situation of the company and when you decide to buy or sell.

If you are new to the stock market, it is advisable to start with a small stock in an established company. And once you start to get to know better how the market works and you feel more comfortable, you can expand your range with other types of companies.