This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Contractor the contributors are theirs.

In August 2019, Eduardo Rosas was very clear about two things: his path to financial freedom and that there was very little information about it. So I created the YouTube channel ‘Personal finance’ , with over half a million subscribers. There, the financial expert talks about everything related to money, investing and retirement plans to credit card reviews and how to generate new sources of income.

“Learning how to invest can make the difference between reaching our financial goals and inflation eating into your savings. “said Eduardo while attending the Money Fest 2021 interactive personal finance festival. “It can also be the difference between raising enough money to stop working at some point, or having to work even in old age, maybe for something we don’t like.”

here are the 5 basis points to start investing according to Rosas:

1. Define your goal

“You cannot start investing or define the steps to follow without first knowing where you want to go”, he explains. For this, we must answer three questions:

– So that? It helps us visualize what we want to accomplish and the importance of our goal, and it will inspire us to keep investing. It could be buying a house or raising funds for a comfortable retirement.

– How much? For example, if you want to save for retirement, Rosas says that “We will have to collect 20 to 25 times what we spend per year, you can take as a reference what you are spending at the moment, multiply it by 25 and that put it in the inflation calculator, to know how much you have to save and invest for your retirement. “ The important thing is to have an amount in mind that matches your “why?” “

– When? It is important to set a deadline for this goal, to define whether you need to collect this amount for a specific time: one year, five, ten or more.

Once these questions have been answered, you can define your goal in one sentence , for example: “I have to raise 5 million pesos for my retirement in 37 years.” Write this sentence down on a piece of paper that you can have on hand to continually visualize your priority and avoid straying from the path.

2. Know and assess the risks

“We must identify the risks that we want and can bear”, Eduardo remarked. To do this, you need to know the three basic types of investment:

– Debt. Whether it is the government or the banks, “it is considered one of the safest investments , although he has lower yields , “ he explained.

– Actions. “In this case, we expose ourselves to the fact that the company is doing badly for multiple reasons and that the value of its shares goes down” , for this reason, Rosas recommends “Invest only in a few companies” . He explains that in these investments “We expose ourselves to more risk , but they will normally be rewarded for higher yields . “

– Real estate or real estate. In this case, we expose ourselves to moderate risks and returns . “It’s a midpoint between debt and stocks”, said the financial specialist.

“The idea is to target these three types of investments, according to the level of risk that we can bear according to our objective and our way of being or of thinking”, he said.

3. Create an investment plan

“The key is to reduce risk without reducing returns. This is possible thanks to diversification, because diversification reduces risk, we are less afraid to invest and we can maintain the investment ” , explains the famous youtuber.

Rosas recommends “Starting with what exposes us least to risk: bank or government debt (cetes, bonds). Then we can consider Real Estate Investment Trusts (FIBRA). And if we can bear more risk, we switch to equities, by investing in several companies via an investment fund ” .

Eduardo Rosas, creator of the YouTube channel ‘Personal Finance’ during his participation in Money Fest 2021.

4. Start as soon as possible

Having an investment plan is a constant process, says Eduardo, it can take months or years. “What you need to do is start as early as possible to achieve your goals within the time frame you’ve set for yourself,” he said. noted. “The earlier you start investing, the more returns you will generate. The other key is to hold onto this investment for as long as possible to take advantage of the compound interest. “

5. Adapt your plan

Creating your investment plan can be time consuming and you need to constantly modify it. “Your plan should be adapted to the different stages of your life, your responsibilities and the changes that occur. As time passes, the objective is also different ” Rosas explained. “It is important that our focus changes as we change,” he said. concluded.

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