Did you know that one of the main causes of the failure of investors in Latin America is the lack of training in finance? The first of the financial mistakes is to underestimate the importance of good money management, in fact one of the most important factors that you must take into account is the risk to which your investments are exposed.
At Invest Latam we want to clarify that there are two profitability calculation methods depending on the type of investment. The first, for simple investments where you give money and you do not receive anything until the end of the period, the calculation is as follows:
Return = (Present Investment Value – Initial Investment) x 100
Example if we make an investment of $ 500,000 and in the course of a year we have a final value of $ 570,000 , its profitability would be this way:
$ 570,000 – 1 = 14%
We can then see that the annual return on this investment was 14 % .
The second way of calculating profitability is used for investments that period after period give liquidity as long as the term of the investment is in force . This is the case for the loan of money or the Fixed Income: every month you receive a fee as part of the refund . This is what we call amortization. After receiving money monthly, it can be reinvested . That type of interest is called: compound interest.
For example, if you invest $ 500,000 for 1 year with an interest of 14% per year, you will end up with $ 536,000 . This is because month by month, the borrowed capital is reduced since it is reimbursed within the installment. When reimbursed, this value does not earn more interest.
Comparing both investments, the “simple” investment generates a profit of $ 70,000 while the “compound ” investment generates a profit of less than $ 36,000 for the same interest rate. However, you have to bear in mind that the risk of the “simple” investment is higher , since you only get your money back in the end. In the “compound” investment you get your money back month by month . You can get the same profit of $ 70,000 if you reinvest your profit on a monthly basis . Therefore the investment is safer. At Invest Latam, the investments we have available are of the “compound” type to ensure greater security.
On the other hand, we advise you not to stop calculating the liquidity of the company where you are going to invest, obtaining the result of the liquidity ratio indicator with a simple calculation, divide current assets by current liabilities, in this way:
Liquidity ratio = current assets / current liabilities
If the result of this operation is greater than 1, the company has liquidity and is profitable, which could be an opportunity to invest, but if instead the result is less than one, it has liquidity problems and we do not recommend investing in it.
These data can be obtained in the financial statements of the companies that you have in mind to invest , these are published annually.
Many think that investing is about starting a business and working in it, and in reality it is the opposite, it is about putting money to work and having financial freedom , it is not having a business that we must attend and that consumes our money. time, but make your money multiply without much effort.
If you ask yourself where can I invest my money?, The answer is based on the Internet itself, since there are online platforms that allow you to make investments from the comfort of a computer and one of the best ways is to invest your money is through from Invest Latam, where you can do it easily, quickly and safely , in addition to generating an average return of 18% per year .
One of the great advantages you have when investing with us is that your money is insured because we have a verification process where we make sure that all the companies that request loans have liquidity, saving you those calculations and processes that could be exhausting for some investors . In addition, each company applying for a loan signs a promissory note and a credit agreement. On the other hand, they should always give a co-debtor who will back the debt in case of non-payment.
Register for free on our web platform www.investlatam.com and negotiate your investment today!