Investment Alternatives: stocks, bonds, real

estate, small business.

Feb 15-19. 2

A job that pays well will provide enough to get you by and see you through rough
times. You might make enough to send your kids through school and save up for retirement.
You’ll eventually make enough to buy a home to raise your kids in and a car for the daily
work commute. However, in order to accumulate more wealth, you need to face the risks and
uncertainties of investment. The payoff is financial freedom, an aspiration that’s top of mind
for citizens of the 21st century.

Saving to build wealth is investing. When people have too much money to spend
immediately, that is, a surplus of disposable income, they become savers or investors. They
transfer their surplus to individuals, companies, or governments that have a shortage or too
little money to meet immediate needs. This is almost always done through an
intermediary—a bank or broker—who can match up the surpluses and the shortages. If the
capital markets work well, those who need money can get it, and those who can defer their
need can try to profit from that. When you invest, you are transferring capital to those who
need it on the assumption that they will be able to return your capital when you need or want
it and that they will also pay you for its use in the meantime.

Investing happens over your lifetime. In your early adult years, you typically have little
surplus to invest. Your first investments are in your home (although primarily financed with
the debt of your mortgage) and then perhaps in planning for children’s education or for your
retirement.

After a period of just paying the bills, making the mortgage, and trying to put
something away for retirement, you may have the chance to accumulate wealth. Your
income increases as your career progresses. You have fewer dependents (as children leave
home), so your expenses decrease. You begin to think about your investment options. You
have already been investing—in your home and retirement—but those investments have
been prescribed by their specific goals.

You may reach this stage earlier or later in your life, but at some point, you begin to
think beyond your immediate situation and look to increase your real wealth and to your
future financial health. Investing is about that future.

Your investment options

Securing your financial foundations is a tall order in itself and getting these basics
right might be all that you need to do. But, if after going through these you find that you still
have the burning desire for wealth building and financial independence (and who doesn’t?),
there are three paths you can take: financial markets (stocks, bonds and funds), real estate,
and small business.

I will present these alternatives with historical evidence supporting each one.
However, please remember that all of these investment options involve risks so that I
recommend you to study with more detail each one of them before you decide to
invest. And, as financial specialists say, in order to mitigate risks, it is advisable to
diversify your portfolio of investments.

Please let me remind you about the concept that we studied a couple of weeks ago
about inflation. And let me show you an example of the net yield that you would be obtaining
with traditional investing.

The pagaré at a Mexican bank is averaging 0.25% per month, 3.04% per year.

https://www.bbva.mx/personas/landings/pagare-compra-plazo.html?cid=sem:br:ggl:mx-pre-i
nversiones-plazos_actuales:plazos-bc-pagare:::pagare-bbva:b:::text:::&gclid=CjwKCAiAjp6B
BhAIEiwAkO9Wunsrw4VNXQjGd6BxYjg7sdR4cCXx0GTn94DYP53UItUfX8u6SMo-dBoCwK
4QAvD_BwE

Also, please remember the example that we saw with the Afores. Investing your
money in one institution compared with another can give you a difference of 500,000 pesos
with just 1% interest rate difference and considering a salary of 10,000 pesos for 40 years.

Stocks
Stocks (also known as equities) are liquid investments that can provide quick cash
flow when needed. Income from stocks is passive, and individual investors have no control
over the amount of this income.

Stocks do allow diversification over a variety of companies and industries, and there
is no minimum amount to investing in them, but it can take decades for them to produce
significant income for investors.

There are many stock specialist companies such as Seeking Alpha, Motley Fool,
Zacks, Market Watch, etc.

https://seekingalpha.com/article/4406952-top-buys-from-best-money-managers-q4-2020

Graph of growth of Dow Jones Industrial Average

https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years

Year Dow Jones % Increase Value of Lowest Point Value of

Industrial (Decrease) 10,000 USD 10,000 USD
Average, versus (200,000 (200,000)
Year Close previous MXP). MXP if we
data (year or Reference invested at
decade) year 1980 the lowest
point

1980 963.99 10,000.00

1990 2,633.66 173.20% 27,320.41

2000 10,787.99 309.62% 111,909.77

2007 13,264.82 122.96% 137,603.29

 2008 8,776.39 (33.84%) 91,042.33 7,552.29 10,000.00

2012 13,104.14 49.31% 135,936.47 14,931.13

2015 17,425.03 32.97% 180,759.45

2019 28,462.20 63.34%

2020 30,606.48 7.53% 317,497.90 18,591.93 10,000.00

16,462.24

Growth of Amazon
https://www.macrotrends.net/stocks/charts/AMZN/amazon/stock-price-history

Year Opening Price Value of 10,000 USD

(200,000 MXP). Reference
IPO year

1997 May $18 $10,000

2021 February $3,277 $1’820,555

Growth of Google
https://www.macrotrends.net/stocks/charts/GOOGL/alphabet/stock-price-history

Year Opening Price Value of 10,000 USD

(200,000 MXP). Reference
IPO year

2004 September $85 $10,000

2021 February $2,095 $246,470

Growth of Tesla
https://www.macrotrends.net/stocks/charts/TSLA/tesla/stock-price-history

Year Opening Price Value of 10,000 USD

(200,000 MXP). Reference
IPO year

2010 June $17 $10,000

2021 February $816 $480,000

Growth of Bitcoin
https://www.coindesk.com/price/bitcoin

Year Opening Price Value of 10,000 USD

(200,000 MXP). Reference
IPO year

2011 February $1 (1 Bitcoin = $1 USD) $10,000

2021 February $46,809 468’090,000

Growth of Mercado Libre

https://www.google.com/search?sxsrf=ALeKk00jb9pIDAY1D8ud9DQA4ZF1uFlVLQ%3A1613
663976730&ei=6I4uYIeNLJH-sAWhhpHACA&q=meli+stock&oq=meli+stock&gs_lcp=Cgdnd
3Mtd2l6EAMyBAgAEEMyBAgAEEMyBQgAEMsBMgUIABDLATIGCAAQBxAeMgcIABCHAh
AUMgIIADICCAAyAggAMgIIADoHCAAQsAMQQzoECCMQJ1ChvwNY9tADYPrSA2gBcAJ4
AIABmQGIAdoLkgEEMS4xMpgBAKABAaoBB2d3cy13aXrIAQrAAQE&sclient=gws-wiz&ved
=0ahUKEwiHofrg5vPuAhURP6wKHSFDBIgQ4dUDCA0&uact=5

Trading Platforms
Not too long ago, it was not possible to invest in international trading platforms. And
investment banks in Mexico required considerable amounts of money in order to start an
investment (for example, 1 million pesos). Currently, access to trading platforms is very
easy, with as much as 200 USD (4,000 MXP). Here are some examples of trading
platforms.

https://comparebrokers.co/compare/mexican-brokers/
https://brokernotes.co/mexico

Since investing in stocks requires deep knowledge of how the market operates, there
are some platforms that offer the function of Copy Trading.

Pros of copy trading

● Copy trading enables you to diversify your portfolio into markets that you are
unfamiliar with but want exposure to
● Through copy trading, you can access another trader’s expertise or make the
most of seasonal trends that you wouldn’t usually consider as a potential
opportunity
● With copy trading, you can make the most of your time by basing your
decisions on those of traders with proven track records

Cons of copy trading

● Copy trading can provide little incentive for traders to do their own research
and learn about the markets
● Copy trading does not eliminate risk – and sometimes the copy trading notice
boards could be used by traders that are seeking to influence a market’s price
for their own financial gain
● While copy trading can help you when you first get started, it is not the only
trading strategy available – but the allure of potential profits with little work
might be enough for some people
Stock Markets in the USA
Since the Dow was established at the end of the 19th century, it has been joined by
the S&P 500 and the Nasdaq as three of the most notable market indexes in the U.S.

The Dow tracks the 30 largest U.S. companies. This means it represents large-cap
companies like Johnson & Johnson, McDonald's, and Coca-Cola. Although the companies
within the Dow represent only about 25% of the total value of all stocks on the New York
Stock Exchange, it is widely accepted as a leading indicator of market health.

https://finance.yahoo.com/quote/%5EDJI/components/

The S&P 500 tracks 500 large U.S. companies across a span of industries and
sectors. The stocks in the S&P 500 represent roughly 75% of all publicly traded stocks.
“S&P” stands for the market research firm Standards and Poor’s.1Companies can be listed
in more than one index, and some of the largest companies in the S&P 500 also are in the
Dow.

The Nasdaq Composite is an index of more than 3,000 stocks listed on the Nasdaq
exchange that includes the world’s foremost technology and biotech giants such as Apple,
Google, Microsoft, Oracle, Amazon, Facebook, Intel and Netflix. The Nasdaq Composite
should not be confused with the Nasdaq Stock Market, which is a trading exchange where
people buy stocks, just like they do on the New York Stock Exchange. The Nasdaq Stock
Market notably includes large technology companies like Apple and Google, but its listings
are not exclusively technology stocks.

Exchange Traded Funds (ETF)

An exchange traded fund (ETF) is a type of security that involves a collection of
securities—such as stocks—that often tracks an underlying index, although they can invest
in any number of industry sectors or use various strategies.

A well-known example is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500
Index. ETFs can contain many types of investments, including stocks, commodities, bonds,
or a mixture of investment types.

SPY ETF's Top 10 Holdings (as of December 2020)

% SPY Portfolio
Holding (Company) Weight

Apple Incorporated (AAPL) 6.56%

Microsoft Corporation (MSFT) 5.39%

 Amazon.com Inc (AMZN) 4.38%

Facebook Inc - Class A (FB) 2.10%

Alphabet Inc A (GOOGL) 1.67%

Alphabet Inc Class C (GOOG) 1.62%

Tesla Inc. (TSLA) 1.58%

Berkshire Hathaway Inc - Class B (BRK.B) 1.39%

Johnson & Johnson (JNJ) 1.29%

JPMorgan Chase & Co (JPM) 1.21%

SPY's returns have beat the average return of other large blend funds in the past
decade. The SPDR S&P 500 ETF Trust (SPY) has generated average annual returns of
13.55%.

https://www.google.com/search?sxsrf=ALeKk03FUBCukEQQTUNPJVhdXALwKPLA
AA%3A1613483173208&source=hp&ei=pcwrYPytCtHysQXDyLKoDg&iflsig=AINFCbYAAAA
AYCvatVT1fwF6Zme05jt2NajoA3p06x5j&q=spy+stock&oq=spy&gs_lcp=Cgdnd3Mtd2l6EAM
YAjIFCC4QkwIyAgguMgIIADICCAAyAggAMgIIADICCAAyAgguMgIIADICCAA6CAguEMcBE
KMCUBdY-gFguhxoAHAAeACAAZkCiAG_A5IBBTAuMS4xmAEAoAEBqgEHZ3dzLXdpeg&s
client=gws-wiz

IShares Emerging Markets EEM

Top 10 Holdings (27.86% of Total Assets) Get Quotes for Top Holdings

Name Symbol % Assets

Taiwan Semiconductor Manufacturing Co Ltd 2330.TW 5.87%
Alibaba Group Holding Ltd ADR BABA 5.57%

Tencent Holdings Ltd 00700 5.28%

Samsung Electronics Co Ltd 005930.KS 4.50%

Meituan 03690 1.73%

Naspers Ltd Class N NPN.JO 1.13%

Reliance Industries Ltd RELIANCE.B 0.98%

JD.com Inc ADR JD 0.96%

China Construction Bank Corp Class H 00939 0.92%

Ping An Insurance (Group) Co. of China Ltd Class H 02318 0.92%

https://www.google.com/search?sxsrf=ALeKk03WofMoru53etdbOS9nDYNoQKd43g%3A161
3483179356&ei=q8wrYJmeFdGisAXH1bygAQ&q=eem+stock&oq=eem+stock&gs_lcp=Cgd
nd3Mtd2l6EAMyBAgAEEMyBggAEAcQHjIGCAAQBxAeMgYIABAHEB4yBggAEAcQHjIGCA
AQBxAeMgYIABAHEB4yBggAEAcQHjIGCAAQBxAeMggIABAHEAoQHjoHCAAQsAMQQzo
HCC4QsAMQQ1C3rwVYrrkFYLG8BWgBcAJ4AIABzQKIAeQHkgEHMi40LjAuMZgBAKABA
aoBB2d3cy13aXrIAQrAAQE&sclient=gws-wiz&ved=0ahUKEwjZn4aexe7uAhVREawKHccqD
xQQ4dUDCA0&uact=5

IShares USMV
Top 10 Holdings (15.02% of Total Assets) Get Quotes for Top Holdings

Name Symbol % Assets

Vertex Pharmaceuticals Inc VRTX 1.59%

Johnson & Johnson JNJ 1.55%

T-Mobile US Inc TMUS 1.53%

Microsoft Corp MSFT 1.51%

Visa Inc Class A V 1.49%

Accenture PLC Class A ACN 1.48%

Merck & Co Inc MRK 1.48%

NextEra Energy Inc NEE 1.48%

PepsiCo Inc PEP 1.46%

McDonald's Corp MCD 1.45%

SPDR Gold Shares

ETF that access the market for gold.

https://www.marketwatch.com/investing/fund/spy/download-data?mod=mw_quote_tab

Country ETF

EWJ iShares MSCI Japan ETF

FXI iShares China Large-Cap ETF

EWZ iShares MSCI Brazil ETF

EWT iShares MSCI Taiwan ETF

RSX VanEck Vectors Russia ETF

DXJ WisdomTree Japan Hedged

Equity Fund

EWG iShares MSCI Germany ETF

EWH iShares MSCI Hong Kong ETF

EWI iShares MSCI Italy ETF

EWW iShares MSCI Mexico ETF

EWU iShares MSCI United Kingdom

ETF

EPI WisdomTree India Earnings

Fund

PIN Invesco India ETF

IDX VanEck Vectors Indonesia Index

ETF

EWY iShares MSCI South Korea ETF

EWA iShares MSCI Australia ETF

EWM iShares MSCI Malaysia ETF

EWS iShares MSCI Singapore ETF

EWC iShares MSCI Canada ETF

EWP iShares MSCI Spain ETF

EWL iShares MSCI Switzerland ETF

EZA iShares MSCI South Africa ETF

EWW iShares MSCI Mexico ETF

https://www.google.com/search?sxsrf=ALeKk00MYfeCvv4kZgcgzyOnX5zdFczG4A%3A1613
483473297&source=hp&ei=0c0rYKz1D4awsAXh3q8o&iflsig=AINFCbYAAAAAYCvb4fGIUFV
4hS1UqL-bu9XLjlqzMIXs&q=eww+stock&oq=eww+stock&gs_lcp=Cgdnd3Mtd2l6EAMyCggA
EJECEEYQ-gEyAggAMgIIADICCAAyAggAMgIIADICCAAyBggAEBYQHjIGCAAQFhAeMgYI
ABAWEB46BAgAEEM6BQgAEJECOgQIABAKOgUIABDLAToECC4QCjoHCAAQhwIQFDoC
CC5QlgFY4RFgnBVoAHAAeAGAAfQEiAGQDZIBBzAuOC41LTGYAQCgAQGqAQdnd3Mtd2
l6&sclient=gws-wiz&ved=0ahUKEwjsoZmqxu7uAhUGGKwKHWHvCwUQ4dUDCAc&uact=5

Composition:
https://www.ishares.com/us/products/239670/ishares-msci-mexico-capped-etf

Cryptocurrencies
A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and
services, but uses an online ledger with strong cryptography to secure online transactions.
Much of the interest in these unregulated currencies is to trade for profit, with speculators at
times driving prices skyward.

Cryptocurrency is a form of payment that can be exchanged online for goods and
services. Many companies have issued their own currencies, often called tokens, and these
can be traded specifically for the good or service that the company provides. Think of them
as you would arcade tokens or casino chips. You’ll need to exchange real currency for the
cryptocurrency to access the goods or service.

Cryptocurrencies work using a technology called blockchain. Blockchain is a

decentralized technology spread across many computers that manages and records
transactions. Part of the appeal of this technology is its security

These are the 10 largest trading cryptocurrencies by market capitalization as tracked

by CoinMarketCap, a cryptocurrency data and analytics provider.

Cryptocurrency Market Capitalization

Bitcoin $563.8 billion

Ethereum $142.9 billion

Tether $25.2 billion

 Polkadot $13.9 billion

XRP $11.4 billion

Cardano $9.7 billion

Chainlink $8.3 billion

Litecoin $8.1 billion

Bitcoin Cash $7 billion

Binance Coin $6.2 billion

Cryptocurrencies appeal to their supporters for a variety of reasons. Here are some
of the most popular:

● Supporters see cryptocurrencies such as Bitcoin as the currency of the future and
are racing to buy them now, presumably before they become more valuable
● Some supporters like the fact that cryptocurrency removes central banks from
managing the money supply, since over time these banks tend to reduce the value of
money via inflation
● Other supporters like the technology behind cryptocurrencies, the blockchain,
because it’s a decentralized processing and recording system and can be more
secure than traditional payment systems
● Some speculators like cryptocurrencies because they’re going up in value and have
no interest in the currencies’ long-term acceptance as a way to move money

Cryptocurrencies may go up in value, but many investors see them as mere

speculations, not real investments. The reason? Just like real currencies, cryptocurrencies
generate no cash flow, so for you to profit, someone has to pay more for the currency than
you did.

That’s what’s called “the greater fool” theory of investment. Contrast that to a
well-managed business, which increases its value over time by growing the profitability and
cash flow of the operation.

As some writers have noted, cryptocurrencies such as Bitcoin may not be that safe,
and some notable voices in the investment community have advised would-be investors to
steer clear of them. Of particular note, legendary investor Warren Buffett compared Bitcoin to
paper checks: “It's a very effective way of transmitting money and you can do it anonymously
and all that. A check is a way of transmitting money too. Are checks worth a whole lot of
money? Just because they can transmit money?"

For those who see cryptocurrencies such as Bitcoin as the currency of the future, it
should be noted that a currency needs stability so that merchants and consumers can
determine what a fair price is for goods. Bitcoin and other cryptocurrencies have been
anything but stable through much of their history. For example, while Bitcoin traded at close
to $20,000 in December 2017, its value then dropped to as low as about $3,200 a year later.
By December 2020, it was trading at record levels again.

Forex
Forex is a portmanteau of foreign currency and exchange. Foreign exchange is the
process of changing one currency into another currency for a variety of reasons, usually for
commerce, trading, or tourism. According to a recent triennial report from the Bank for
International Settlements (a global bank for national central banks), the average was more
than $5.1 trillion in daily forex trading volume.

The foreign exchange (also known as FX or forex) market is a global marketplace for
exchanging national currencies against one another.

Because of the worldwide reach of trade, commerce, and finance, forex markets tend
to be the largest and most liquid asset markets in the world.

Currencies trade against each other as exchange rate pairs. For example, EUR/USD.

Forex markets exist as spot (cash) markets as well as derivatives markets offering
forwards, futures, options, and currency swaps.

Market participants use forex to hedge against international currency and interest
rate risk, to speculate on geopolitical events, and to diversify portfolios, among several other
reasons.

What Is the Forex Market?

The foreign exchange market is where currencies are traded. Currencies are
important to most people around the world, whether they realize it or not, because
currencies need to be exchanged in order to conduct foreign trade and business. If you are
living in the U.S. and want to buy cheese from France, either you or the company that you
buy the cheese from has to pay the French for the cheese in euros (EUR). This means that
the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into
euros. The same goes for traveling. A French tourist in Egypt can't pay in euros to see the
pyramids because it's not the locally accepted currency. As such, the tourist has to exchange
the euros for the local currency, in this case the Egyptian pound, at the current exchange
rate.

One unique aspect of this international market is that there is no central marketplace
for foreign exchange. Rather, currency trading is conducted electronically over-the-counter
(OTC), which means that all transactions occur via computer networks between traders
around the world, rather than on one centralized exchange. The market is open 24 hours a
day, five and a half days a week, and currencies are traded worldwide in the major financial
centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and
Sydney—across almost every time zone. This means that when the trading day in the U.S.
ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can
be extremely active any time of the day, with price quotes changing constantly.

Commodities
A commodity market is a physical or virtual marketplace for buying, selling, and
trading raw or primary products. There are currently about 50 major commodity markets
worldwide that facilitate trade in approximately 100 primary commodities.

Commodities are split into two types: hard and soft commodities. Hard commodities
are typically natural resources that must be mined or extracted—such as gold, rubber, and
oil, whereas soft commodities are agricultural products or livestock—such as corn, wheat,
coffee, sugar, soybeans, and pork.

A commodity market involves buying, selling, or trading a raw product, such as oil,
gold, or coffee.

There are hard commodities, which are generally natural resources, and soft
commodities, which are livestock or agricultural goods.

Investors can gain exposure to commodities by investing in companies that have

exposure to commodities or investing in commodities directly via futures contracts.

The major U.S. commodity exchanges are the Chicago Board of Trade, the Chicago
Mercantile Exchange, the New York Board of Trade, and the New York Mercantile Exchange.

Commodities can be invested in numerous ways. An investor can purchase stock in

corporations whose business relies on commodities prices or purchase mutual funds, index
funds, or exchange-traded funds (ETFs) that have a focus on commodities-related
companies. The most direct way of investing in commodities is by buying into a futures
contract. A futures contract obligates the holder to buy or sell a commodity at a
predetermined price on a delivery date in the future.

The major exchanges in the U.S., which trade commodities, are domiciled in Chicago
and New York with several exchanges in other locations within the country. The Chicago
Board of Trade (CBOT) was established in Chicago in 1848. Commodities traded on the
CBOT include corn, gold, silver, soybeans, wheat, oats, rice, and ethanol. The Chicago
Mercantile Exchange (CME) trades commodities such as milk, butter, feeder cattle, cattle,
pork bellies, lumber, and lean hogs.

Corn Fund
https://www.google.com/search?sxsrf=ALeKk03AoP-CnTDB94YqZ4DjdfwIKvqJ4Q%3A1613
485161109&ei=adQrYN6mBoG6tgWC1Yso&q=corn+stock&oq=corn+stock&gs_lcp=Cgdnd3
Mtd2l6EAMyBAgjECcyBQgAEJECMgYIABAHEB4yBggAEAcQHjIGCAAQBxAeMgYIABAHE
B4yBggAEAcQHjIGCAAQBxAeMgYIABAHEB4yBggAEAcQHjoHCAAQsAMQQzoNCC4Qxw
EQowIQsAMQQzoECAAQQ1D0c1icf2DFgQFoAXACeACAAfIBiAGwCJIBBTMuNS4xmAEA
oAEBqgEHZ3dzLXdpesgBCsABAQ&sclient=gws-wiz&ved=0ahUKEwie_4LPzO7uAhUBna0
KHYLqAgUQ4dUDCA0&uact=5
Real Estate
Historical prices of real estate

https://dqydj.com/historical-home-prices/

Here’s how much the median home value in the U.S. has changed between
1940 and 2000:

● 1940: $2,938
● 1950: $7,354
● 1960: $11,900
● 1970: $17,000
● 1980: $47,200
● 1990: $79,100
● 2000: $119,600

Here are those values again, adjusted for 2000 dollars:

● 1940: $30,600
● 1950: $44,600
● 1960: $58,600
● 1970: $65,600
● 1980: $93,400
● 1990: $101,100
● 2000: $119,600

https://www.supermoney.com/inflation-adjusted-home-prices/

Private real estate is an illiquid investment that is noted for its low risk and high
returns.
 The category provides immediate, steady returns in the form of rental income and
long-term returns in the form of capital gains.

In the rate of return study, housing (residential real estate, including multifamily)
yielded a 7.05% annual average return, outperforming both stocks and bonds during that
time period.

What’s more, real estate is a physical asset that offers many benefits stocks and
bonds do not. Profits can be increased by improving real estate through renovations and
strong property management, boosting rental income and increasing valuation at disposition.
The category also offers numerous tax benefits and can positively impact local economies
and communities.

In addition to offering strong returns, private real estate is rightfully viewed by

investors as a safe haven for investment, providing wealth preservation for generations to
come. For all of these reasons, it makes an excellent addition to many investors’ diversified
portfolios.

Here’s the thing with stocks and bonds. Other than the decision to buy and sell,
you’re almost a completely passive bystander. There’s nothing you can do to make stocks
more attractive. Prices are what they are at the moment you decide to sell. This is definitely
not the case with real estate. Here you scratch your itch for home improvement all you want,
and profit handsomely from it. Also, unlike stocks and bonds, real estate is tangible. There’s
way more satisfaction in pointing to a wonderful piece of property and saying it’s yours, over
mentioning your shares of stock in this and that company at a dinner party.

Here are a few reasons why, despite property market busts, the attractiveness of real
estate as an investment option is enduring:

● The supply of land is limited. There is only a finite supply of land on which
homes can be built. Populations continue to rise, and the demand for real
estate will naturally increase. Building upwards in the form of highrises will
only add to the value of the land.

● Leverage. The typical initial investment for real estate is only a fraction of the
total value but once the sale is executed you have control over the all of the
value. If, for example, you buy property worth $150,000 and make a $30,000
down payment, if in three months the value appreciates to $180,000 you
would have recouped 100% of your original investment

● Appreciation. This is the increase in the value of your property over time. You
don’t have to pay tax on this profit until you decide to sell the property. Even
then, you can always choose to roll over your profits to a similar investment
so that it won’t be taxed.

● Income. You can always choose to rent out the investment property to get a
steady income stream, particularly on long-term leases. Some investors make
enough income from the property to pay off the monthly mortgage, with
enough to spare for maintenance and improvements, or even reinvestment.

US Mexican Peso Dollar Growth

https://www.macrotrends.net/2559/us-dollar-mexican-peso-exchange-rate-historical-chart
 Year MXP per USD % Increase Value of 10,000
(Decrease) versus USD in MXP.
previous data (year Reference year
or decade) 1980

1994 Jul 3.3956 33,956

1995 7.69 126.47% 76,900

2000 9.6145 25.03% 96,145

2010 12.354 28.49% 123,540

2015 17.2626 39.78% 172,626

2020 19.9372 15.49% 199,372

And, please remember that we also have to take into consideration the inflation of
our country. Here is how our purchasing power has decreased over the years.

https://www.inflationtool.com/mexican-peso/1980-to-present-value

Government Bonds
A government bond is a type of debt-based investment, where you loan money to a
government in return for an agreed rate of interest. Governments use them to raise funds
that can be spent on new projects or infrastructure, and investors can use them to get a set
return paid at regular intervals.

When you buy a government bond, you lend the government an agreed amount of
money for an agreed period of time. In return, the government will pay you back a set level
of interest at regular periods, known as the coupon. This makes bonds a fixed-income asset.

Once the bond expires, you'll get back to your original investment. The day on which
you get your original investment back is called the maturity date. Different bonds will come
with different maturity dates - you could buy a bond that matures in less than a year, or one
that matures in 30 years or more.

Say, for instance, that you invested A$10,000 into a 40-year government bond with a
5% annual coupon. Each year, the government would pay you 5% of your A$10,000 as
interest, and at the maturity date they would give you back your original A$10,000. If we use
the formula of future value that we have studied, we would have 70,399 USD at the end of
40 years.

Below please find the interest rates of CETES, Mexican Government Bonds. Please
do not forget to consider the inflation rate of our country to have the real interest rate.

http://anterior.banxico.org.mx/tipcamb/llenarTasasInteresAction.do?idioma=sp
 Bonds are typically low-risk, low-return instruments. They also expire after a certain
time, ceasing to pay out investor returns. Bonds do offer stability, paying about the same
amount to investors each month, but the cost in lost returns over time is high.

The dotcom bubble that burst just as the 20th century drew to a close, and especially
the Great Recession of 2008 has scared off many would-be investors. Who wouldn’t be?
Wall Street firms going under. Stock prices plummeting to record lows. Unemployment
soaring to record highs. Falling real estate prices, rising foreclosures. This didn’t deter those
who understood the nature of investments well. The resulting low prices made for a perfect
buyer’s market and because over the long term standard investment instruments – stocks,
real estate, and small business – are bound to bounce back, there was money waiting to be
made. And make money they did.

Before you take the plunge you need to put your financial house in order to ensure
that you’re high and dry when disaster strikes. The risk associated with investments can
never be overemphasized.

Know your appetite for risk

Which one of these are you?

● Conservative – you’re not willing to take chances with your money, even if it
means missing out on big gains.
● Semi-conservative – you’re willing to take small risks with enough information.
● Semi-aggressive – you have a bigger stomach for risk and you’re willing to
take the chance of earning more money if the odds are in your favor.
● Aggressive – looking for every opportunity to make your money grow, even
when the odds may be against you.

Here’s a quick quiz from Rutgers to help you test your tolerance for financial risk.
https://missouri.qualtrics.com/jfe/form/SV_e5O9zdPbe1NDMWh

Set up an emergency fund

Make sure you have quick access to at least three months’ up to as much as six
months’ worth of living expenses. You don’t want to end up on the street if your investments
are wiped out. Also, you don’t want to sell off your investments because you need
subsistence money. First things first, yes? Keep this emergency money in a money market
fund, where there is a very low risk of your investment ever losing value because they’re
invested in government securities, certificates of deposit, commercial paper of companies, or
other highly liquid and low-risk securities. This will be your first baby step towards other more
sophisticated investments.

Pay your debts off

Many personal finance experts believe that this, in itself, is the single greatest
investment you can make. Instead of investigating ways of making more money, find out how
you can stop losing money instead. Look at how much interest and service charges you
have to pay off every month and compare this to the earnings you expect to make on an
investment. You might be surprised to find out that the cash going out can exceed cash
coming in and paying off your debts might be the best high-return low-risk option. Consider
this. If you have credit card debt with a 15% annual interest rate, paying off that debt is the
same as putting your money to work in an investment with a guaranteed 15% tax-free
annual return. Many investment options can’t beat that rate.

Monitor your savings rate

After all, you will need to accumulate money to invest. Your savings rate is the
proportion of the money you didn’t spend out of your income. Doing quick mental math will
give you a picture of your current savings. Are they practically non-existent? Very low?
Substantial? During your most productive years, saving 10% of what you earn usually
guarantees you at least 75% of the money you’ll need to retire without a substantial change
in your standard of living. There are two ways of accumulating savings: (1) reducing
spending, and (2) increasing income. The second option, especially if you already work hard
and do long hours on the job, is quite difficult for most. Reducing expenses is the easier way
to go. Remember this. Successful investors always live within their means. You will need to
take stock of all your regular expenses and find out where you can cut spending without
sacrificing too much of the lifestyle you think you deserve.

Protect your assets

Few people will have enough bravado to invest everything they own, especially
because there are other people who will be affected by their investment decisions. If
something unforeseen and uncontrollable happens to your investments or to yourself, you
need some form of protection. It’s always wise to investigate the insurance options available
to you:

● Major medical health insurance. You want a policy that pays for all types of
major illnesses and major medical expenditures.
● Life insurance, if loved ones depend on your income.
● Disability insurance, because you need to survive injuries without having to
sell off your investments.
● Liability insurance, to protect your assets and net worth from lawsuits if you
decide to invest in a small business. You’ll need adequate coverage from
charges of malpractice, injury or negligence or you might end up with just the
shirt on your back to show for many years of hard work.

Financial markets in a nutshell

Most businesses start small, but as they grow bigger they will need more money
(capital) to expand – to hire more people, buy new equipment, or set up the computer
systems. Small firms may borrow from banks, but the bigger ones can choose two financial
market instruments to raise the money they need — bonds and stocks:
● Bonds are loan instruments that the company must pay back with interest.
When a company issues bonds and you buy them, you’re essentially lending
money to the company. The company doesn’t relinquish ownership to you, but
they’re obliged to pay you back.
● Stocks, on the other hand, are shares of ownership in the company. When
you buy them, you essentially own a piece of the company. You only realize
profit when you sell your stocks or when the company issues dividends for the
shares that you own.
● Companies can choose to raise funds either way. When the stock market is
booming and the stock can fetch premium prices, stocks are an attractive
 option. Stocks are also favored by companies not comfortable with heavy
debt. However, the regulatory requirements and paperwork necessary to offer
stocks make this option burdensome. Also, when shares of a company’s
stock are publicly held, this opens the company up to pressures from
shareholders to turn in short-term profits which can harm their ability to plan
for the longer term. Relinquishing ownership also means relinquishing part of
the control the original owners have on the company’s direction.

Financial sign posts to watch out for

If you decide to invest in financial markets, you will need to understand how
companies behave in order to remain profitable so you can keep an eye on the rise and fall
in value your investments. Always do your homework so you’re sure you are investing in a
stock’s underlying value and not being blindly led by escalating market sentiment or irrational
exuberance.

● Innovation and Invention. Companies with a track record for coming up with
new products that shake up the market and capture the consuming public’s
fancy will have very animated share price activity. There’s a lot of money to be
made in these companies, but only if you react quickly because the merest
whisper can send prices tumbling down or wildly spiking up. Technology
companies such as Apple and Google are a good example of this.

● New markets. When a profitable company with established global brand

recognition enters new territory, a spell of profitability usually follows. This is in
part because there is an existing unmet demand for their products in these
new markets. The global Starbucks invasion is a good example.

● Vertical integration or related businesses. A company that controls its supply

chain can weather shocks better. If it also makes the parts that go into its
products, there is a smaller chance of delays in production. Samsung is one
good example.

● Brand equity. The profitability of companies that offer highly generic products
such as cola, soap, and mayonnaise is often decided by which of the brands
they own have more recognition and loyalty. The worth of a brand is
quantifiable and conservative investors favor the stock of companies with
established names.

● Product cost and prices. Excellent products are just half of the story.
Companies must know how to make them in the most efficient manner. They
should also know how to price and position the products in the marketplace.

● Competition. What a company does in anticipation of or as a reaction to

competing brands and products is an important indicator of its long term
profitability.

In exercising due diligence, you’ll also need to be aware of investment paths that you
need to steer clear of. Check out Binary Options Trading: An All or Nothing Gamble? Some
opportunities in financial markets are just not worth the risk.

Big future in small business

 If you’re one among countless others who’ve been burned by bosses from hell,
you’ve probably thought about what it's like to be on the other side. If you owned a small
business, that’s exactly what you’d be. Your own boss.

Before you do anything take this quick quiz: What’s your entrepreneurial IQ from
entrepeneur.com. You’ll get instant results when you click submit. These are some of the
characteristics that the quiz takes into account:

Initiative and persistence. Can you operate without a formal structure that tells you
what to do? Will you exhaust all means to solve a problem?

Independence and self-control. Entrepreneurs often need to put in long hours alone
in the early stages of the business. Can you function in this environment? Often there are no
strict rules on what you can and cannot do. Can you maintain the necessary focus?

Willingness to make sacrifices. When you’re just starting out, the financial demands
of your business may require you to give up the comforts and pleasures you’re accustomed
to. Expensive vacations, luxury cars, or designer clothing will have to wait until your business
is doing better.

Willingness to take rejection and negative feedback. You will have doubters,
naysayers, and even detractors. If your family has no history of entrepreneurship you won’t
get support even from the people you love. Can you take all of these without losing heart?

Ability to deal with risk and uncertainty. If you can’t handle these you’re better off with
a regular paycheck from a 9-5 job.

You realize you can’t escape bosses (responsibility). Yes you might not have a boss
that you report to directly but you still need to deal with difficult people (customers, suppliers,
hardheaded employees). You must have the temperament to deal with this challenge

Starting a small business

As emphasized earlier, you’ll need money to make more money. There are many
ways of securing the financing you need to start the business.

Bootstrapping. This is making do with whatever resources you have and operating
strictly within your means. It’s pulling yourself up by the bootstraps in the truest sense. To be
successful in this, you will need to have saved enough. You’ll also need to pare down your
expenses to the barest minimum.

Borrowing. Business that are just starting out often find it difficult to borrow from
banks. To be up for consideration, you will need a business plan, three years of financial
statements and tax returns for the business and its owner, and projections for the business.
If you don’t have these, consider other options.

Credit unions can be a source of low-cost funds and are willing to make personal
loans to members.

You can take a loan out against your property. Real estate loans generally have lower
and tax-deductible interest.

Borrow from family and friends. This is one sure way to ruin relationships if you can’t
pay them because your venture tanks. But if you borrow from them in the same manner that
you do from financial institutions (with a signed letter of agreement stating the terms of the
loan), and you do pay them back the goodwill that you reap can seal relationships for life.