ALL OR NOTHING

The financial managers of companies should pay special attention to the

investment strategies and processes of evaluating them, since all the investment
decisions of a company must be concatenated with the investment opportunities
offered by the market. Therefore, the external search for "room for growth capital"
should be analyzed taking into account the variables that influence the opportunity
cost of investment, among these are: inflation and growth. This study should be
combined with internal growth opportunities, whether this or Easter internal
business need, is important enough to divert investment funds to meet the
requirements of the same.

The possibility of electronic and global transactions makes it more interesting

investment opportunities, now tracking global economic trends is very
"economical".

The first investment option is usually put money in a bank. This is the least risky
alternative given that the bank offers a predetermined interest rate. At first glance
always win but the risk of inflation and devaluation will be present.

Another alternative is to invest in mutual funds. This option carries additional risks
because the value of the funds will fluctuate (can up or down) depending on the
values on which it has invested. There are several types of mutual funds, each
with different associated risks. An efficiently managed fund may offer higher than
those obtained in a bank deposit returns.

It may also invest in bonds. Most bonds offer regular interest payments and
principal (down payment) at maturity. However, their prices fluctuate (can go up
or down) depending on the behavior of interest rates, among other factors.

Another alternative is to invest in shares. When you buy shares you the chance to
win, but there is also the possibility of losing. Therefore, it is important to study
and understand the principles and financial tools before you think about investing.
When you invest in stocks, the yield is not predetermined as in a bank deposit, but
comes from the dividends paid by the company or the capital gain (difference
between the purchase price and the selling price).

You cannot put aside the term to talk about investment risk, the risk is generally
the possibility of damage or loss, or an excellent profit, there is a relationship you
should not ignore when talking about risk is" risky investments are generally highly
profitable." This concept applies equally to investments. For example, an increased
risk could be the total loss of an investment, or a profitable gain.

People can have different levels of risk tolerance, and even this level of tolerance
may change over time. Therefore, the first question before investing is knows what
level of risk that the person is willing to assume. If the answer is, "I'm willing to
lose my entire investment," it faces a high risk investor. If instead the answer is "I
want to protect my capital and not lose a penny", the investor will be extremely
cautious. Most investors fall between these two extremes.

You can identify the following risks:

Market risk or “systematic vs. total risk” This risk relates to the change in
value of an investment. Market risk is low if changes in investment are small. For
example, the deposit in the bank because the interest rate is default or at least
varies little. By contrast, market risk will be high if the investment changes are
dramatic. For example, investing in stocks of small companies but with growth
potential.

The standard way to calculate the market risk of an investment is to calculate the
standard deviation of historical prices.

Market risk = volatility = standard deviation

This measure has also been questioned, especially for assets with prices constantly
rising, with very small or very large variations. In these cases, standard deviation
is large, but does not reveal the risk associated with the asset.
Another practical measure of risk is the distribution of drawdowns. Based on
historical prices of an asset and assuming an investment strategy (buy long-term
or short-term), one can estimate the maximum gain or loss that has been
registered, the frequency of gains or losses, and the average ratio gain / loss.

Unsystematic Risk Unsystematic or specific risk can be reduced through

diversification. However, we cannot completely eliminate the risk as systematic risk
will remain as it is inherent in the market in which it operates, and is not
controllable by means of diversification. For example, to buy shares of IBM, Ford,
etc., we eliminate the risk inherent in each of these companies (risk from your
market, product, etc.), But not to the risks that affect all elements of the portfolio
generally. In fact go public, pursuing previous ¬ are subject to the vagaries of the
stock market, which in turn depend on various economic factors.

Systematic Risk This is one of the risks that affect the performance of a stock.
In particular, the systematic or market risk does not depend on the individual
characteristics of the title, but other factors such as general economic conditions or
political events, which, in turn, influence the behavior of prices in the market
values.

Liquidity Risk, The risk of not being able to sell quickly and make money value
some actions can be sold easily while others will probably require a sacrifice in
price to be sold quickly.

Business Risk, It is the risk that a company may not achieve the objectives, and
therefore the expected returns for their shareholders. No dividend price fall.

Impairment of Purchase for Inflation It is based on the risk that an

investment will lose value because of the impact of inflation. The very long term
savings could be affected by inflation exceeds the rate of interest to be received.

Interest rate Risk Mainly associated with the bonds because their price is
inversely related to the behavior of the interest rate. The price of a bond falls
when interest rate increases.
Risk of default or prepayment mainly associated to the bonds and the payment
capacity of the issuers. The issuer may prepay, however it is likely that at that
moment not count on an interesting alternative.

When investing should first acknowledge the risk you want to take , then identified
the type of investor that the best strategy is to analyze the best available
information on investments , bonds, stocks, mutual funds and the company,
generally all that that may be influencing or influence , directly or indirectly, in the
ROI.

Nobody invests to lose, the costs associated with that are truly high risk and the
investor must be addicted to it.

There are countless magazines, websites, experts, financial institutions can provide
a wonderful support to the investor, if the first time you invest.

One of the most important issues when deciding to invest what is the thought that
the money is not worth the same today tomorrow in regards to their purchasing
power, since there are factors such as interest rate and inflation rate, influencing
the purchasing power of people. To compare amounts of money, we must use a
common time base.