Rent determines and rent variable

The rent concepts fix and variable rent is two concepts that are due to have well in clearly if we want to learn to invest our money correctly.

When rent speech determines and rent variable, reference to the rent is made generally that the assets financial or titles generate values (action, bonds, letters, etc.); nevertheless, these terms in fact are applied to the rent generated by any type of investment (including the saving systems).

Fixed rent

The rent fixes occurs in the investments where it is known beforehand (or at least in a level of acceptable prediction) which will be the rent flows that they will generate (which not necessarily must be constant or regular).

Example of rent investments fixes are the financial assets or titles values such as the bonds, the obligations, the letters, and the promissory notes; real estate in rent, and the systems of savings such as the deposits on credit and the accounts of saving.

Generally, the investments of fixed rent generate a smaller yield than the investments of variable rent, but they present/display a smaller risk. Generally, these investments are realized in the long term.

Variable rent

On the other hand, the variable rent occurs in the investments where it is not known beforehand which will be the rent flows that they will generate (which even can get to be negative), because these depend on diverse factors such as the plunge of a company, the behavior of the market, the evolution of the economy, etc.

Example of investments of variable rent is the actions, the convertible participation in investment funds, and bonds and obligations.

Generally, the investments of variable rent generate a greater yield than the investments of fixed rent, but they present/display a greater risk. Generally, these investments are realized to short or medium term.

Conclusions

The investments of fixed rent present/display a low yield and a low risk, whereas the investments of variable rent present/display a high yield and stop risk.

The best way to reduce or to handle the risk is through the diversification, that is to say, “not putting all the eggs in a same basket”, but rather to diversify the investments.

A form to diversify the investments is acquiring investments of fixed rent and investments of variable rent, that is to say, constructing a portfolio that combines both type of investments.

The proportion of these investments will depend on the objectives and the profile of the investor, for example, if a greater yield looks for, major will have to be the investments of variable rent; and while smaller it is the tolerance to the risk, major will have to be the investments of fixed rent.