Many young people have once dreamed of having financial freedom, that is, being able to travel to any part of the world, go out on a weekday afternoon and spend hours reading a book in a cafeteria. To achieve this goal, investments are attracting the attention of many, as experts say that everyone can be an investor if they plan, analyze, study and acquire new financial habits.
But the question that arises for young people is what and how to invest. According to a study carried out by ESET, a leading company in proactive threat detection, almost two-thirds of consumers around the world, that is, 62%, use some financial application or platform, which can range from those developed by entities banks to fintechs or trading tools.
Among the variety of possibilities offered by these technologies, real estate, both in housing properties and commercial projects, became an option for young people to invest.
In Colombia for 2021, according to the latest DANE Property Valuation Index, the value of real estate increased by about 4%.
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However, due to the costs in initial installments, young people have greater difficulty when it comes to investing. According to Camilo Olarte, CEO of LOKL, there are still many barriers that prevent this population from acquiring a property, such as access to mortgage loans, very high interest rates, or raising enough capital to pay the down payment.
“It is even commonly believed that buying a mortgaged apartment is a good investment, but due to the high interests, between 10 and 12%, their returns become very low in this sector. While projects for rent such as hotels, coliving, coworking, among others, the returns can be higher than 15% per year”, Olarte assured.
Recommendations for young people with little money to invest in real estate
Bearing in mind that for many it is difficult to find the right path to start with, the CEO of LOKL gave five recommendations for young people who want to invest with little money in real estate:
– Trace your objectives and plan your resources: Before jumping into the water in a first investment, you should think about the objectives and goals in the short, medium and long term. What do you want in the future: a trip abroad, retire before 50, undertake a new project, support your family, etc. The fundamental thing is to have that clear purpose, so it will be much easier to plan resources.
In addition, you must analyze where the money for the first investment will come from, what actions must be taken to get that extra money, how much must be saved and how much profitability you want to see.
– Training: education and reading are essential to make a good investment. In addition, the internet offers endless free information, which can be used to understand how to diversify the investment, take advantage of compound interest and understand how the fall of the markets in the Stock Markets can affect our investments.
But social networks also do their part, and through the ‘finfluencers’, people who viralize financial information of all kinds, we can learn ways to create investment strategies or manage personal finances, going through analysis of the latest cryptocurrency or action booming, products such as mutual funds, digital platforms in which to take the first steps as an investor or how to create an electronic commerce business.
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– Maintain good financial habits: After having clear objectives and constantly studying, the next recommendation is to maintain good financial habits, since they will allow you to pay debts, save and even have an emergency fund in case you need it.
– Analyze where you are going to make the investment: Of course, on the internet there are a number of platforms in which you can invest, however, it is important to analyze and investigate these spaces.
however, three aspects should be highlighted, the first, “not to eat story” of high returns and easy money in short periods of time. If something offers to double your money in just months, you should try to understand what business can produce that type of returns and if it is a real opportunity; the second is to review the legal terms of each investment; Finally, study every detail, from who are the CEOs of the startup, what properties or projects do they offer to invest, where are they located and how will they generate returns.
– Bet on diversification: After having made a good first investment, it is time to diversify the portfolio. Review the market, analyze again and see different classes of assets and financial instruments.
