This week we heard and read everywhere the news about the negative movements in the financial markets due to the results of inflation in the United States, which stood at 8.6%; the increase in the interest rate of the Federal Reserve of the United States and the expectation that the Bank of Mexico will follow this trend to contain the rise in prices.
But how does all this impact your pocket?
With the rise in interest rates, the cost of money becomes more expensive. What does this mean? That the interest rates for the credits will increase and the financing acquired at a variable rate will also rise, for example, those of the credit cards, so if you have important debts in them, it is better that you advance payments, highlighted Gabriela Siller, director of economic analysis at Grupo Financiero BASE.
On the other hand, the increase also impacts investors because bond prices fall and capital losses are reported, so it is better, if you have investments in the stock market, think about them long-term.
“All these movements affect us because the cost of money for loans rises, first in the United States, and in Mexico because the following week the Bank of Mexico is expected to increase its interest rate, which is expected to end this year between 9.5 and 10%”, explained Gabriela Siller.
So, if your plans include buying a car, a home or a loan for your business, do it before interest rates rise further and all these monetary policy movements do not impact your pocket so much.
On the other hand, for those who have debts on a credit card, they would be paying more interest, because the yields on these products depend a lot on Banxico’s reference rate.
With credit cards, one way to avoid this impact is to avoid the minimum payments and settle the purchases that have been made per month, that is, be a totalero, in this way you will be avoiding the collection of interest that will be rising.
Gabriela Siller warned that the Mexican economy will continue mired in economic stagnation and therefore caution must be exercised in purchases made, especially those made through credit.
for investments
Now, what if you want to invest but are scared by movements in the financial markets, such as those manifested in recent days in various stock indices, such as Dow Jones, S&P 500 and Nasdaq.
It is always a good time to invest. But now it has to be done with more caution.
The main thing is to think about long-term investments. It is important that before doing so, you review what type of investment portfolio to build, identify your investor profile and, above all, think about operations with longer terms.
“For those who invest, what has happened is that the interest rate on bonds rises, but a downward trend is being seen in the capital market. If you enter the capital market, you have to think that you will have a return in the long term, not in the short term”, explained Gabriela Siller.
Jorge Marmolejo, vice president and debt portfolio manager at Franklin Templeton Mexico, emphasized that if you have money and a long-term horizon, it is an interesting time to invest, because there are low valuations in various financial instruments that can be used.
“You can enter when pessimism is at its maximum, when things look dire, that’s when it can be interesting to enter the markets. On the other hand, if you wait for inflation to go down and face an economic recession, which is expected to be slight, then the markets will have already recovered”, said the specialist.