Those who wish to diversify their portfolio may be interested in investing in a medium-term investment. After all, spreading out redemption terms is also a way to take advantage of economic moments and investment characteristics.
However, it is not enough to simply choose a medium-term investment to make the contribution. It is essential to know the main alternatives, how they work and for which investors they make the most sense.
Therefore, below you will understand what medium-term investments are, the importance of defining them and 4 alternatives for your portfolio. Don’t miss out!
How crucial is it to establish due dates for investments?
When you’re building an investment plan, your investor profile and financial goals are the most significant considerations. You therefore need to choose options appropriate for your tolerance for risk.
Furthermore, investments need to be a means to achieve your financial goals. Therefore, these purposes must be defined in advance — and have concrete values and deadlines.
For example, you might want to buy a property, change your car, go on a trip, receive passive income for retirement, among others. Each of these goals has different deadlines and costs, right?
Therefore, the importance of defining investment deadlines lies in finding the most suitable alternatives for each of your plans. After all, investments work differently and can be more or less aligned with a specific objective.
Furthermore, defining periods helps diversify your portfolio. This strategy serves to mitigate the risks associated with investments. Therefore, if you make investments with the same term, you may be more exposed to market risks and fluctuations related to the period.
What are medium-term investments?
Now that you understand the importance of establishing deadlines for your investments and diversifying, you need to know what a medium-term investment is. In this regard, deadlines are usually tied to the date on which you will withdraw the funds.
Therefore, the period definition fits variable income as well as fixed income. The medium term is determined when the redemption period is between 1 and 5 years — from the contribution to the investment.
Short-term investment involves funds which you plan to withdraw within less than 1 year. On the other hand, long-term investment will be retained invested for more than 5 years. Consideration of these periods allows you to form a good plan.
3 Medium-term investments for your portfolio
After knowing the importance of establishing deadlines and what medium-term investments are, you need to know possible alternatives.
Check it out!
1. Direct Treasury Bonds
Government bonds are available, They are highly secure and predictable investment alternatives, given that the profitability logic is known in advance and is guaranteed by the National Treasury.
These securities are often used for a variety of purposes — by those who want to guarantee the purchasing power of the amount invested or to build up an emergency fund, for example. Thus, they can serve as investments with different terms for more conservative investors.
2. Bank deposit certificates (CDBs)
Another fixed income security that may interest investors looking for medium-term alternatives are CDBs . They are also issued by banking institutions and have FGC guarantees, like LCIs and LCAs.
However, CDBs are not exempt from income tax, which can reduce their profitability. However, they should still be considered, given that there are several offers with different profitability and terms.
Therefore, even with the payment of income tax, this option may be suitable for your strategy, as long as you consider the real profitability. As for liquidity, it is possible to find CDBs with daily liquidity or only at maturity.
3. Investment funds
Another alternative that may interest investors who wish to invest with a medium-term focus are investment funds . They provide a collective contribution with a portfolio put together by a professional manager.
This way, you can buy shares in the fund and be exposed to the movements of its assets. There are several types of funds and some of them may be more suitable for the medium term — such as fixed income funds that seek to track inflation or the DI rate.
Also, there are variable income funds. It is worthwhile to study these ones by one to choose the one that suits your medium-term plan.