You products financial These are essential tools for anyone who wants to better manage their money, achieve financial goals, and build a more secure future. From basic options like savings accounts and investment funds to more sophisticated alternatives like stocks and bonds, each product caters to... different investment profiles. 

In this comprehensive guide, you will understand what financial products are, how they work, and how to choose the best options according to your goals and risk tolerance.

What are financial products?

Financial products These are instruments created by financial institutions to meet the needs of individuals and legal entities with regard to asset management, investments, and property protection. These products range from simple options, such as savings accounts and insurance, to more complex alternatives, such as stocks, government bonds, investment funds, and derivatives.

Each product is designed for different purposes. investment profiles, Financial products vary in aspects such as risk, liquidity, and potential return. For example, while savings accounts are a safe and low-risk choice, stocks and multi-market funds can offer higher returns, but with greater exposure to market fluctuations. Understanding what financial products are and their characteristics is the first step towards making more informed and strategic decisions regarding your money.

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Investments, as told by Professor Edison Feghali

To begin our conversation, before we get to know the financial products, The first step in putting together your investment plan is to understand your... investor profile. But how so? Your habits, behaviors, and attitudes will lead you to discover your profile and the path to investing. Here are some examples of profiles: 

• Conservative
• Moderate 
• Aggressive.

If you have any difficulty in conducting a self-assessment, there are several free investor profile tests with questionnaires available online for consultation. 

Investment risks

Before discussing each profile, let's talk about risk. Each person perceives risk differently. Skydiving can be a fantastic experience for some and a terror for others; this has to do with risk perception. Got it? Don't worry, we'll explain it better!

We mean that we have to associate the investor profile The perception and willingness to take risks. Remember that there are nuances in this decision, the conservative investor It runs a low risk, moderate medium risk and aggressive high risk. 

Let's delve a little deeper, come along! 

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Investment asset classes

Now, let's look at the asset classes (your investments) that will make up your investment portfolio, also known in financial market terminology as an investment portfolio. We're talking about... fixed income e variable income. 

It's simple, the fixed income This is an investment where you define and know in advance, at the time of application, the investment amount, the term, and your return. Fixed-income investments are suitable for investors with a conservative profile due to their low risk. Examples include:

1. government bonds, for example, the Direct Treasury.
2. Bank CDs
3. fixed income investment funds.

In investments in variable income, You don't know your return or profitability at the time of investment, only at the time of redemption. That's where the high risk lies. The future is uncertain; you could win or lose. The decision of when to redeem is yours, and ideally, you should have a full understanding and knowledge of the variable income market to avoid losing money, agreed? 

Given the high risk, they are recommended for investors with bold profile. Who are they? Those who don't lose sleep when they lose a good amount of money, can wait for the appreciation to resume and sell at the best time, then with high gains. Here, the best example is stocks traded on the stock exchange and equity investment funds for those who are starting out and don't yet feel confident in building their own stock portfolio, therefore relying on the expertise of the equity investment fund manager. 

And to fulfill the desires of investors with moderate profile, The suggestion is a combination of investments in assets of fixed income and variable income, adapting to a willingness to take moderate risks. 

It's important to highlight here the need for a prior assessment of risk and return, remuneration, or profitability before making a decision. In theory, the lower the risk, the lower the expected return, and the higher the risk, the higher the expected return; it's a directly proportional relationship. This aligns with the investor profile. Here, we have debentures, which are private debt securities, multi-market funds, and real estate funds.

Read more: What are the best types of investments and why invest your money?

Conservative investment profile

Shall we take a trip down memory lane together? Remember that conversation you had with your grandfather? It was when you, worried about him, asked how he earned money being elderly and no longer working. That's when he told you that he had a passive income resulting from an investment plan throughout his life; he invested in real estate and today receives rental income that allows him and your grandmother to live a life of dignity and financial security.

Very well, your grandfather has a conservative profile. He built his wealth throughout his life – brick by brick – taking low risks, thinking about the long term and his retirement. 

The investor with conservative profile It prioritizes investment security and therefore forgoes the expectation of a higher financial return. At the time, the financial and capital markets were not as sophisticated as they are today, and investments were usually made in non-financial assets, those that are not monetary in nature and not linked to financial instruments, such as real estate. 

Nowadays, if you want to follow in your grandfather's footsteps, you don't have to wait so long and can start investing in real estate investment trusts (REITs) now and receive monthly dividends like your grandfather's rental income, with the added benefit of being exempt from income tax. Sound good? That's almost all you need to know about it. financial products. 

I'm sending you a big hug and see you next time we talk!