Investments are classified into two main categories: fixed income and variable income. The main difference between them is that, in fixed income, the amount to be received in the future is known in the present, while in variable income, it is not possible to predict the amount with certainty. There are various asset classes that belong to one of the two groups. Additionally, there are investment vehicles that can be formed by fixed income assets but are considered variable income investments.
Some examples of fixed income investments are Pre-Defined Public Debt Securities, such as certain Treasury bonds, Real Estate Receivables Certificates or Agribusiness Receivables Certificates, with pre-defined rates, debentures, and others. In variable income, stocks and real estate investment funds are good examples. Investment funds and ETFs (Exchange Traded Funds—typically stock funds that replicate indices and are traded on stock exchanges) also usually have variable returns. There is also another investment option that can combine fixed and variable income assets, such as structured operations. These operations can be structured by the investors themselves, but it is common for brokerage firms to offer pre-structured operations for their clients, known as COEs (Certificates of Structured Operations).
In Brazil, there are several investment options. However, when comparing our country to more developed nations and markets, such as the financial and capital markets of the United States, we realize that the options here are still relatively limited. In recent years, financial education has reached more people, but there is still much room for growth in this area. Some people have preferences for fixed income investments and assets, while others prefer variable income; these preferences depend on various factors, such as the investor’s profile, risk tolerance, investment horizon, among others.
It is important to highlight that many people, when investing, do not consider some of the characteristics of investments and may also not be very aware of the risks they are taking when investing in certain assets or engaging in certain operations. This lack of awareness can lead to losses and, consequently, dissatisfaction. Therefore, it is important to seek to better understand the markets, the assets, and even the interests of the participants. The market is full of people promising returns, strategies, information, and, in my opinion, even miracles. In the case of financial pyramids, for example, people are persuaded to participate in the system and, in most cases, end up losing money, as the base of the pyramid, at the moment of collapse, is always very broad.
Regardless of your preferences regarding asset classes, it is always good to count on the assistance of a professional. As the legendary investor known as the Oracle of Omaha said:
“Risk comes from not knowing what you’re doing.”
— Warren Buffett
If you want to start investing or need help with your investment portfolio, you can count on the assistance of an Investment Consultant accredited by the Securities and Exchange Commission; contact me to schedule an initial consultation.
