Learn which are the best long-term investments to build equity and what you need to know before you start investing.
You must have stopped to think about what the future will be like . If you’re going to have enough money for a comfortable life, if you’re going to have the dream house paid off or if you’re even going to be able to leave something for the kids, right?
Well, the secret to being more relaxed is to create equity . Equity is a guarantee of financial security and comfort for the future.
There are several ways to build a heritage , one of them is long-term investments.
To find out what it is and how to make long-term investments , follow us here. In this article, we’re going to talk more about which are the best long-term investments for you to build your equity.
Shall we go ?
What does long-term investing have to do with equity?
Personal assets are nothing more than a set of assets and rights , as well as debts that a person may have.
This equity can be active (assets and rights) and passive (debts assumed) . Investments and real estate are understood as assets.
In general, anyone who is working can acquire equity, but it can also be acquired through donation or inheritance.
What kind of assets can I have by building a personal estate?
As we said above, when building a personal heritage you can have assets, rights and debts (obligations).
Assets are anything that can have an economic value :
- tangible assets (cars, money, land);
- intangibles (internet domains, trademarks, patents);
- furniture (utensils, animals, money) and
- real estate (land and buildings).
Rights are everything that can be claimed by the individual . A sale made on deadlines is an example of this. The money is not with you yet, so it is not an asset, but it is your right to receive it.
Obligations are the debts that the individual needs to discharge. Loans, financing and accounts are some examples. This part of equity is negative.
And how does all this relate to long-term investing?
Do you remember that up there we said that investments were a type of active equity?
Well then, long-term investments are the financial products that help a person build a personal wealth .
So, if we’re talking about starting to invest , it makes sense that long-term investments are those aimed at building future wealth, right?
In general, long-term investments make sense for this purpose because they present a good opportunity for gain . But in addition, they also tend to have greater volatility. Got confused? Let’s explain.
How to start building a personal wealth?
If you want to build your equity through a long-term investment, you need to organize yourself financially and plan .
We have some tips here to get you started!
1. Start by knowing your finances and make financial planning
To make any investment, whether short or long term, it is essential that you understand and organize your personal finances . In financial planning you need to know all the money that comes in and out, what your fixed and variable expenses are, etc.
But it is also necessary to define how much you want to save and what tools you intend to use to achieve this financial goal . A spreadsheet, a notebook or an app to save money .
Do not waste time! Define what your goals are , make a list of earnings and expenses and analyze the financial conditions you are in.
2. Cut expenses that are unnecessary for you
Any superfluous spending is worth it! Those weekend trips to the mall, delivery on sale and even that stop at the coffee shop can make a big difference in your budget at the end of the month.
See what your priorities are and make smart cuts that won’t compromise your income.
3. Create a financial reserve
Finally, you need to create a financial reserve to start building equity. It is characterized by an amount that you accumulate , which can be applied to an investment with immediate redemption, to be used only when there is an emergency .
This is a reserve that will guarantee your financial stability if you have any unforeseen circumstances. Therefore, it is very important to start saving money. That way, you will have more freedom and security to build your heritage.
With this, you will not need to liquidate long-term investments, where they may be low or have high income tax rates, for example.
Remembering that the financial reserve is only used in emergency situations , okay? Let’s give some examples: broken car, medical and veterinary problem, unemployment, among other situations.
How to choose a long-term investment?
The next step in building equity is knowing how to choose a long-term investment. Currently, private pension plans are one of the main investment options that offer excellent conditions for investors who want to save money for a longer period of time.
Continue here with us to learn what you should evaluate when choosing a long-term investment!
set your goals
To start your long-term investments, it is essential that you define your objectives and choose based on the established goals.
They will serve as a basis when choosing your investment, in addition to helping you stay focused on achieving the ultimate goal . Therefore, define what your goals are, what you want to get from this investment and for what moment in life it will be valid.
If you plan to build equity from a diverse asset portfolio and with the support of specialized management, the long-term investment may be a private pension plan.
Know your investor profile
It is also very important that you know your investor profile when choosing the best investment. There are several asset options that you can include in your portfolio, but it is important to consider which types you feel most comfortable investing in.
More conservative profiles tend to use fixed income strategies in search of less volatility and a return close to the CDI.
Investors seeking medium and long-term profitability can opt for an investment mix that includes variable income. They can deliver more results, but they are also riskier.
Knowing your investor profile is essential to discover the extent to which you are willing to take risks when investing. See below which are the three investor profiles and their characteristics:
- Conservative investor – this investor prefers low-risk investments, even if they have lower returns.
- Moderate investor – the moderate investor likes to diversify his asset portfolio, with a mix of safer investments and bolder ones.
- Bold investor – the bold investor is the one who seeks greater profitability, even with more risks.
Study the financial market
Before choosing your long-term investments, it is important to know the financial market and the available assets, according to your objectives.
Understanding the subject is interesting for you to choose investment strategies that are more suitable for your profile.
The financial market is not complicated. Knowing how it works, the types of investment available and the best options for each objective, is what will make you invest with more responsibility and knowledge .
Some investments, such as pension funds, have specialized management , which help the investor throughout the process. With that, he can be carefree as his money is being managed by a qualified team.
