At the beginning of working life, workers choose an investment alternative so that their pension savings are managed according to their objectives, with the stage of life in which they are and the risk profile. This is called Mandatory Pension Multi funds.
Here in we tell you those are the 3 options that can be chosen:
1. Riskier fund: is the one that invests in assets with great growth potential. In this way, higher returns are associated with greater risks, due to market volatilities, however, taking into account the long-term horizon, variations can be corrected over time and favor the growth of customers’ pension savings.
2. Moderate fund: Investments have a balanced exposure to risk and clients who still lack time to reach their retirement stage are recommended, usually people over 45 years of age.
3. Conservative fund: this is recommended for those people who are close to their retirement stage, with low risk tolerance and whose priority is to maintain all their accumulated capital. This favors the stability of resources with lower profitability and low volatility in the assets invested.
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“It is important to remember that the Mandatory Higher Risk Pension Fund is the recommended investment alternative for young people and for those who are in their productive stage. This option offers better returns and allows recoveries against possible variations in the financial markets, “explains Andrés Herrera, investment portfolio manager at Colfondos.
We must take into account the importance of starting to make pension contributions early, periodically and persistently over time, so that each person can potentiate their pension savings for the time of their retirement.
What is profitability?
Profitability is the benefit obtained from an initial investment of money made in the medium and long term, which is generated thanks to the administration of resources by a team of experts who are responsible for managing investment portfolios. A person who starts his contributions to compulsory pension and constantly from his 25 years, when he reaches the time of his pension, approximately 70% of his final pension balance will be the product of the profitability generated over time.
According to the Ministry of Labor in Colombia there are figures of 2,300,000 pensioners.