Currently for Mexicans investing has become essential. If inflationary shocks are taken into account, they have caused problems around the world, but nowhere has been as affected as Latin America. Price increases are exceeding the goals of central banks in the main economies of the region. In Mexico, inflation data was recently published showing its highest level in the last 20 years. This means that, in just one year, money in Mexico has lost about 7% of purchasing power compared to 2020.
And no promising outlook is expected anytime soon. The main Wall Street banks predict that the average rise in the cost of living in Latin America will close the year above 10% – the highest in the world – and project that the pressure on consumer prices will extend until 2022.
That said, this is not a time to put money under the mattress and wait for purchasing power to wane. It is time to put savings to work and look for options that protect people’s value of money.
To face the current situation, an alternative is investments in Investment Units (UDIS), which are units of value that are based on price increases (inflation). These instruments were created after the crisis that occurred in 1994-1995, so that banks could set the interest rate for loans. UDIS are currently used as an investment benchmark and a tool that protects money from inflation.
One of the most accessible vehicles to start investing in these instruments is through mutual funds. The contracting and offering is found in most of the country’s banking institutions. One of the advantages is that its contracting and operation is simple and the minimum investment amounts are regularly very low (less than 100 pesos). Mutual funds offer a diversified portfolio, transparency in their operation and efficiency without sacrificing liquidity.
There are many investment alternatives on the market and funds represent an accessible option. It is advisable to carry out a historical monitoring of their behavior before making a decision and if there is any doubt regarding investment instruments or vehicles, it is better to seek specialized advice.
You should not wait to start investing because as time passes, fewer opportunities will be obtained to obtain benefits in the long term, since the true power of investment derives from capitalization and this requires time. As the saying goes: “The best time to invest was yesterday and the next best time is today.”
*El autor es Vice President Product & Client Servicing en BBVA Asset Management.