Given the current economic volatility, geopolitical tensions, and financial uncertainty, the key question for investors is:
Where to protect and grow capital?
This article will examine in two chapters the current situation of the two main investment options such as financial market and the real-estate market and in the third I will compare, analyzing their advantages and disadvantages in times of turbulence.
What is investing?
Invest, It is the allocation of resources (money, time, effort) with the goal of obtaining a future profit or benefit. It involves giving up a current use of those resources in order to obtain a greater return in the future. To better understand the behavior and decisions behind investing, it may be helpful to know more about the investor psychology.
Key factors to consider before investing:
Before making a decision, it is essential for the retail investor to answer the following questions:
- Investment time horizon: Short term or long term.
- Risk profile: How much risk are you willing to take to achieve greater returns?
- Capital to allocate to investment: The more capital we invest, the wider our range of possibilities will be.
- management : The time it would take to undo our investment to recover the money.
- Current context: Global uncertainty.
- In this environment, explore real estate projects with solid support and a vision for the future, such as those offered by Larimar City, can be an attractive alternative to diversify and protect capital.
Financial Assets
Financial assets are non-physical assets whose value is derived from a contractual right to an underlying asset. In simpler terms, they represent a right to receive a stream of income or benefits in the future.
Today's markets are directly affected by the uncertainty generated by the policies of major powers (China, the US, Europe), trade tensions, and geopolitical conflicts.
I will take two references to show the current situation, the index VIX and the SP500, for non-financial people I will explain what those words are.
VIX Index, (Volatility Index)The VIX, better known as the volatility index, is one of the most common barometers of market sentiment. Implied volatility typically rises when markets are experiencing turbulence or the economy is declining. Conversely, if stock prices are rising and dramatic changes don't seem likely, the VIX tends to fall or remain stable. In other words, there is a negative correlation between the VIX and stock performance.
S & P500, is an index that represents approximately 80% of U.S. stock market capitalization. It comprises the 500 largest and leading companies in various sectors and is considered a key indicator of the overall performance of the U.S. stock market.
Key factors to consider before investing in the financial sector:
With this explained, so far in 2025 the index VIX has risen by just over 72%, reaching five-year highs, only surpassed in March 2020 by COVID-19, and in November 2008 with the bankruptcy of Lehman Brothers.
El S & P500, fell by just over 10%, recovering and demonstrating the high volatility of the markets.
Another significant fact has been the presentation of results of the companies listed on the SP500 As of April 2025, only 59% of companies have exceeded earnings per share (EPS) expectations, 49% have exceeded sales expectations, and only 36% have exceeded both, compared to historical averages of 64%, 59%, and 45%, respectively.
It should be noted that these results do not reflect the protectionist measures (tariffs), which will worsen future results. These data give the impression that financial markets are experiencing high volatility and fixed-income yields are losing their appeal in the face of inflation.
By Luis Velázquez Moreno,
Account executive
Larimar City & Resort