SANTO DOMINGO – María and José (fictitious names) are a couple preparing financially to buy a home and get married. For them, it's crucial that this process be well-planned, as they don't want to jeopardize their relationship due to financial difficulties.
Although they've already had several consultations, María decided to get one last financial consultation before embarking on a property search with a real estate agent. While they've managed to save over RD$2.5 million, she knows it might not be enough.
As a good student, she remembered that she had once heard about the stock market and asked José to research the topic, because it could be a viable option to grow their savings while they were looking for a property.
This time, they contacted Yudelka Parra, a personal and business finance advisor and mentor. “What do you recommend we do so that, while we look for our apartment, our savings can grow?” María asked.
Yudelka Parra. (External source).
Parra congratulated the young couple for their decision to invest in their future and reminded them that it shouldn't be done solely out of emotion, but with a clear purpose. "They should educate themselves and seek the right guidance to take things step by step until they gain confidence," she advised.
He explained that, to generate returns, they could combine a financial certificate and a fixed-income fund. “The money in the emergency fund, which we highly recommend, could be divided between these two instruments. This would allow them to understand the pros and cons of each,” he explained.
José and María nodded, since, although they had received information beforehand, they hadn't dared to withdraw the money from their bank account. "So, we should only take a portion?" José interjected.
“Yes,” the advisor replied, indicating that once they knew and managed that part, they could move on to diversifying the instruments available in both traditional banking and the stock market.
However, she was very clear: “Taking control of our finances means moving to the next level. Investing is that level that will allow you to embark on a path toward true independence and freedom,” she advised, reminding them that they must have clarity of purpose. “Your motivation must be so strong that it drives you to search, explore, understand risks, but above all, to take action.”.
Parra emphasized the importance of diversification, which “can be as simple or sophisticated as the investor's level of experience.” And since they already had a clear objective, he recommended that, rather than spreading themselves across multiple options, they focus on one.
As an example, he explained that starting with a financial certificate and a fixed-income fund is both focused and diversified: “Both are liquid investments that are easily accessible if needed. With the certificate, you'll get a fixed return, while with the fund, although it's called fixed income, the return is variable depending on the daily performance of the market.”.
“It will always be important to value the principle of diversification, but without spreading oneself too thin across instruments that one is unfamiliar with or uncomfortable with, just because diversification is required,” he concluded.
Maria thanked Parra for the explanations. She and Jose agreed to visit several institutions to choose the one that offered them the best rate for investing their savings.
Content originally published in issue 12 of El Inmobiliario print magazine.
