Understand
the Economy and Banking

An investment is the allocation of capital to a financial asset or an item with the intention of generating a return or appreciation in value over time.

Expected returns
Investments are made with the expectation of future returns, which can be generated in the form of income (such as interest or dividends) or capital appreciation (increase in the value of the asset).

Fixed rate or variable rate interest
If fixed, the interest rate remains constant throughout the duration of the contract, while if variable, the rate may change in relation to the performance of certain factors.

Risk
Each investment involves a certain degree of risk, that is, the possibility that the actual returns differ from what was expected. The risk may arise from a variety of factors, including economic, political or investment- and issuer-specific changes. A higher level of risk is generally associated with a higher expected return. Conversely, a lower level of risk will result in a lower expected return.

Time horizon
Investments have their own expected duration, which is called the "time horizon", which can be short, medium or long-term.

Liquidity
The liquidity of an investment refers to the ease with which it can be converted into money without a significant loss of value.

Diversification
Spreading investments over products with different characteristics helps to reduce the overall risk (this is known as the "diversified portfolio" technique). Diversification can minimise the losses of a single investment with the returns of others.

Shares
Instrument of participation in the ownership of a company. Ownership of a share
entitles the holder to a number of economic and administrative rights (e.g., participation in profits and voting rights at shareholders' meetings). Being a shareholder means participating in the business risk of the company in which you have invested (referred to as "risk capital").

Bonds
Debt securities issued by companies (corporate bonds) or states (government bonds) that can generate periodic interest and repay principal at maturity.

Mutual investment funds
Containers that collect money from various investors to structure a diversified portfolio of shares, bonds and other financial instruments.

ETFs (Exchange-Traded Funds)
Exchange-traded funds that follow the performance of an index or basket of shares.

Property
Investments in property for commercial, residential use, etc.

Raw materials
Investments in goods derived from natural resources (e.g., oil, diamonds, nickel) that are the basis for the production of other goods (petrol, jewellery, batteries).

Investment policies
These are financial products that combine an insurance component with an investment opportunity. These types of policies allow the policyholder to pay premiums that are then invested in mutual funds or other financial instruments, with the aim of earning a return.

Short-term investments
Investment of financial resources for a relatively short period of time: typically a few months to a maximum of one year. These investments typically maintain good liquidity while offering a return that is generally lower than longer-term investments.

Medium-term investments
Investments with a normal duration of one to five years.

Long-term investments
Investments in financial assets or goods that are expected to be held for an extended period of time, usually greater than five years.

Conservative investments
Aim to preserve capital and generate stable (albeit lower) returns, often through bonds or government securities.

"Aggressive" investments
Aims for high returns by taking on greater risks, often by investing in shares of high-growth innovative companies or start-ups.