In Mexico, financial assets play a crucial role in the economy.

According to the 2021 National Financial Inclusion Survey (ENIF), 67.8% of people aged 18 to 70 have some type of formal financial product. This is equivalent to 56.7 million people.

As of the second quarter of 2021, total financial savings in Mexico were equivalent to 98.2% of the country’s Gross Domestic Product (GDP), with a balance of $25.5 trillion pesos. These statistics demonstrate the relevance of financial assets in the daily lives of Mexicans and in the country’s economy.

 

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What are financial assets and why are they essential?

Financial assets are assets or rights that have a double function. On the one hand, they finance the activities of companies and other types of entities; on the other hand, they enable savers to make the most of their money and earn a return.

In other words, financial assets allow the investor to generate income and the issuer of the asset to finance itself.

How are financial assets classified?

There are many types of financial assets depending on their characteristics, such as the maturity period or the form of repayment.. Here are some of the most common types:

  1. CashThe most basic and liquid financial asset.
  2. Fixed-income financial assetsThese are loans made to companies or governments, in exchange for regular interest and repayment of principal. Bonds are an example.
  3. Equity financial assetsThese are investments in the ownership of a company, such as shares. These assets can vary in value of return.

Examples of financial assets

Financial assets can take many forms, from money itself to a bank deposit or shares in a company..

For example, if a person buys shares in a company, that share is a financial asset. Similarly, if a person has a savings account in a bank, that savings account is a financial asset.

How do financial assets impact the Mexican economy?

Financial assets have a significant impact on the Mexican economy. As mentioned above, total financial savings in Mexico in 2021 were equivalent to 98.2% of the country’s GDP.

This shows that financial assets, such as savings accounts and investments in stocks and bonds, are an integral part of the Mexican economy.

What are the risks of investing in financial assets?

Investing in financial assets involves several risks. Here are some of the most common ones:

  1. Market riskThis risk refers to the possibility that the prices of financial assets may fluctuate and affect the value of your investment. Economic, political and social factors may influence these movements. The assets will be quoted in their respective markets, and this quotation is influenced by different variables, such as the evolution of the economy or the political situation.
  2. Credit risko: This risk relates to the possibility that an issuer of a financial instrument will not meet its payment obligations. It refers to the failure of a given issuer of fixed-income assets to meet its obligations, either of interest payments, principal payments or both.
  3. Liquidity riskLiquidity risk: In the case of trading in certain assets, generally small-cap securities or markets with low trading volume, there may be restrictions on unwinding positions, which may influence the sale price and therefore profitability.
  4. Currency riskCurrency risk: When investing in foreign currency, i.e. in a currency other than the local currency, the performance of the investment will be influenced by fluctuations in exchange rates.

 

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How can I start investing in Mexico?

To start investing in Mexico, you can follow these steps:

  1. Generate savingsBefore investing, you need to generate a certain level of savings that will allow you to make different types of investments. Pou can avoid unnecessary expenses and allocate a percentage of your income to build up your initial capital..
  2. Define your financial objectivesYou should define your financial objectives and the time frame in which you would like to achieve them. It is about establishing how much you want to earn and in what time frame you expect to achieve it, so that you can outline an investment strategy.
  3. Know your investor profileTo know your profile as an investor, you should analyze what your risk preferences are. There are three main types: conservative, moderate and risky. After knowing your profile you can set a strategy considering higher and lower risk investments.
  4. Diversify your investmentsRemember to diversify your investments by using different types of assets. This is a very good way to get the most out of your money, minimizing the possibility of losses.
  5. Constantly review your investmentsAnother recommendation is to constantly review the status and evolution of your investments and always keep yourself informed of economic news and new investment opportunities that may appear.
  6. Seek advice from a specialistSeeking the advice of a specialist is something that will also help you make the best decisions.