Co-founder of Affari Miei Independent Financial Advisory Company
July 24, 2023
Invest it’s a matter not only of where, but also when. The time horizon is one of the fundamental components for organizing a good strategy, also with a view to being able to bind the sums we want to invest.
Today I’m telling you how tie up the money for 10 yearsanalyzing all the most interesting solutions that we currently have on the market to make the most of our capital.
Let’s see together how to move.
10 years (but also 5) are today a long-term investment
The frenzy of the modern world has also reached the world of finance, and if until a few years ago 10 years were a short-medium term time horizon, today they can instead be considered as a medium-long term. This means that both the prospects and the possibilities offered to us by the markets have changed.
10 years is an important horizon, which we can obviously turn in our favor, trying to earn more precisely by virtue of the fact that we can afford to tie up the sum for such a period.
Let’s see together what are the best solutions we have available to operate.
Bond to 10 years with low risk
Let’s start with strategies a very low risk, or almost 100% protected. Those who choose this type of strategy do not want to risk the capital they have set aside and are satisfied with returns relatively low.
This is a rule of finance, and more generally of the investment world, which cannot be overcome in any way: a lower risk rate corresponds and will always correspond to lower returns.
There is no way to escape this ineluctable reality: the markets, to invest in companies, securities, riskier assets, require higher interests, while for operations where the risk is practically non-existent, they are content to bring home much less.
If your goal is to grow, even if only slightly, by committing sums for 10 years, you have several alternatives before you. For your convenience, I present to you the ones that are the most suitable for your specific path.
Deposit account: less than 10 years, but still convenient
I deposit accounts they hardly offer the possibility of investing for up to 10 years. This means that they are not perfectly fitting with the idea we had in mind, which is to invest on 10-year bonds. However, they can be convenient for those with a low risk profile, by choosing the maximum bond possible, typically 5 years.
The deposit accounts, which I have however reviewed far and wide on my platform (you can find an overview here of the best products of the moment), offer particularly interesting conditions for those who want to invest without taking excessive risks, while putting in some profits:
i interest rates offered are higher than many other low-risk investments; the capital is completely guaranteed up to €100,000 per account and per current account holder; the tool is very easy to understand and you don’t need to follow it day by day.
The deposit account is an ideal solution for those who do not have great financial skills and still want to make something from their capital. The protection offered is one of the important ones, since the guarantee fund that covers all Italian and European deposit accounts is to be considered as safe as the main European countries.
Bind €10,000 in BTPs
I BTP they are Treasury bills, very simple bonds of variable duration. Even if the yields of this instrument are at historic lows, it may be worth considering tying up one’s capital in this type of securities.
The bonds of this type can be purchased through any bank account that is authorized to purchase securities, and therefore no strange platforms are needed, much less financial intermediaries.
BTPs, if Italian, have low yields in the face of risks that are in any case not too important, at least over the 10-year horizon.
To lose all the capital, what would seem unthinkable for now would have to happen, namely that Italy would no longer be able not only to repay the debt, but to issue new debt to cover the maturing one.
This is a situation that should not be possible in any way in the coming years, and which therefore places the BTP as a decidedly low-risk instrument.
Before we go any further, here’s one for you general guide to buy BTP.
Bond with medium risk: corporate bonds
The corporate bonds they have a decidedly more risky prospectus than state ones, at least on average. They are debt securities that are in fact issued by entities that, at least in general, are much less solid than the states, i.e. companies.
Thinking, even if it is often a silly prejudice, that a state could fail 10 years from now, is much more difficult if we were to relate it to any company.
The fact is that this greater risk inherent in the type of security in question is obviously remunerated: corporate bonds have returns decidedly more important than what government bonds make.
If you feel the need to risk something more while jeopardizing, at least in part, your capital, bonds of this type could be for you: here you will find a in-depth guide.
Binding money with medium to high risk: the stock market
Personally, I’m not a fan of buying stock directly because if we don’t have big capital, it is difficult to make a good differentiation.
If you have already gone to the bank, it is probable that we have offered you the actively managed equity mutual funds which aim, in theory, to achieve this goal.
This type of investment, which is very popular with Italian institutions, presents a series of critical issues that are very important for savers: I talk about it in detail here.
I prefer ETFs to actively managed funds which have a number of enormous advantages in that:
They are easier to control; They are often more liquid; They have less costs, fees and constraints.
Who I’ll explain in general what they are while on this page you will find published the method that I use to invest.
In general, therefore, I don’t disdain stock investment – and you shouldn’t do it either if you have a ten-year time horizon – but I prefer to do it in a different way using the method I describe to you in the article linked above.
Beyond time, you need a strategy
If this is the first time you arrive on Affari Miei you must have one concept in mind: investments are not made just once and you forget about them, to have serious and tangible results you need a well-defined strategy that allows you to grow.
On this blog you will find the best material in Italian in the form of articles, podcast e video: you really have a lot at your disposal to start learning.
Furthermore, if this is your first time, you can start from the following thematic itineraries that will help you to better navigate the complex world of finance:
Good continuation on My business!
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