6 Tips for Responsible Investing

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Perform technical analysis and fundamental analysis, learn to choose assets, know when to buy or sell… They are knowledge that, as investors, we must incorporate over time if we want to operate responsibly and, at the same time, increase our chances of success.

However, prior to this learning, we must take simpler steps that will allow us to order financial life and, at the same time, invest our capital safely in ultra-technological times.

In today’s column, we’ll go over 7 fundamental tips. Start!

Download the statement every month

The account statements show our positions at the end of each month: the financial assets we acquired in that period and the assets we held in the portfolio. Not so long ago it was the brokers or stock exchange companies who were in charge of sending the summaries by postal mail to the clients’ homes. They only had to be filed neatly to have proof of these positions and the operations carried out in each period. With the advances of the Internet and thanks to greater ecological awareness, now it is the investor who must remember to download them from the broker’s site to archive them on his computer (it is also recommended to save them on a Pendrive or external hard drive as a back up). These documents have legal validity in the event of any inconvenience that may arise with the stock exchange company on the investor’s holdings. In the case of crypto-asset exchanges that do not prepare these reports, it is recommended every end of the month to take screenshots of the “holder” positions in order to have at least that proof and keep, at the same time, a correct accounting.

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Activate 2FA if possible

2FA stands for Two Factor Authentication or two-step authentication/verification/identification, a process that provides a greater degree of security against potential hacks or attempts to deposit third parties into the investor’s account. While this measure was first popularized in the crypto-asset market, today it is an option provided by both local and international brokers as well as many of the Fintechs that offer payment and investment services. The options usually result in the Google Authenticator app (it is easily downloaded on the cell phone and its use is very simple) or in sending SMS to the cell phone, which is not so safe due to SIM Swapping, the theft of the phone line with a chip to the name of the owner of the line. Activating two-step authentication on our accounts is an action that can save us from severe headaches in the present and the immediate future.

Do not use the same passwords for different sites

For many, it is a very difficult item to comply with given the growing number of passwords with which we handle ourselves in everyday life: the email box, the user of each social network, platforms such as Netflix and Spotify, home wifi, etc. However, it is key to respect this principle to avoid that our bank and investment accounts being easily violated by a more or less experienced hacker. There are amenities that can cost very expensive and repeating passwords, making them very similar and never updating them is one of them.

Always assess the potential risk in relation to the expected return

The first thing that enters through the eyes when analyzing an investment is the expected return. Does it pay more than inflation? Is it going to go up a lot? Do I lose money if I invest and at the same time the dollar goes up?” These are some of the questions that I usually hear and that show not only ambition but also ignorance about the importance of risk in the world of finance. The truth is that we must become real detectives when it comes to breaking down the potential risks that an investment in fixed or variable income entails. We talk about a possible loss of capital due to a long-term drop in the price of the asset, a reduction in purchasing power due to a poor income, the opportunity cost that means choosing an asset of poor performance, and limited prospects instead of a better one, etc.

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Never relinquish ownership of the account

Every serious bet requires an investment account. If it is an omnibus account or sub-account (those that hang from a mother account that is not ours), not only do our chances of being scammed increase, but it will also be difficult for us to legally claim for our money in case it happens. For this reason, the investment account is in our name is a non-negotiable condition with the broker that offers us its services.

Use stop loss if trading with short-term thinking

As I said a thousand times, I’m not a fan of trading and short-term investments. However, for those who are determined to beat the market in a short time, I have a recommendation that can help them a lot: always trade with stop loss, which is nothing more than leaving an order to stop losses when the acquired asset falls more than a certain percentage from the point of entry. The advice is also to manage with a risk/return ratio of at least 3 to 1 (if the potential loss is 1 set by the stop loss, the actually expected profit should be 3 or more). Turning a deaf ear to this tip would mean being at the mercy of the unpredictable and often violent ups and downs of the markets in the short term, which can lead them to quickly lose much of the capital invested. An alternative is to use the dynamic stop loss: if you buy an asset at $10 with a stop loss at $9 and it quickly rises to $11, you can raise the stop loss to the line of 10 to ensure a lossless exit while waiting for new rises.

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Always maintain a percentage in cash

Very infrequently someone really responsible has 100% of their capital invested in different assets (let alone does! leveraged!). This is because you know that the best opportunities in the markets usually arise at the least expected times and, therefore, it is always important to have some money available (in cash or located in stable instruments of immediate availability) to be able to take advantage of them. How much are we talking about? The answer varies depending on the context, but between 10 and 15% would be recommended so as not to be left out of surprising and very favorable events for investment.


Do you find these tips too cautious? In the world of finance, it is better to be without giving up the risk with cause and based on knowledge tips for responsible investors

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