By Irving Escalante
One of the most important points of analysis when making the decision to invest a capital in a project is to look at the rate of return. High rates mean high risks.
However, as I have mentioned in other articles, it is necessary to observe the forest and not just “one tree”.
Let us explain. The productive projects that seek capital have previously defined their business plan, which is nothing more than the way in which they obtain profits from the operation of the company. This poses a challenge for the investor since contributing capital to a company that is not theirs in exchange for a return is not reduced to making a loan in exchange for interest.
Most investors starting out in this field stick with the latter concept. I give you my money so that you work and in exchange for your profits you give me a return. Do you need money? I’ll lend it to you and you guarantee me an interest rate at the end of a certain period, I don’t care what you do with it, just pay me back.
This that seems so simple only demonstrates the lack of financial education and is reduced only to looking at one tree, instead of the whole forest, as I said at the beginning.
The smart investment
Investing wisely leads to looking at the whole forest and beyond. Although today there are various platforms for investing in multinationals that offer good returns, other additional benefits are being lost sight of, which can only be obtained when investing with a local and regional development perspective.
This does not mean that local investment projects offer lower rates of return, which by the way are very competitive compared to others of their type; Investing in local and regional development projects, in entrepreneurial projects, is a sustainable alternative for the investor and where he lives.
When investing in a local productive project, it is totally identifiable and real since its business model is established or leveraged in the city or in the region. By complying with a local regulatory framework, your tax contribution stays where the investor lives. Being productive, the project generates wealth for the company, its workers, partners and investors who in turn spend locally on other businesses. In short, it is a virtuous circle in which, as an investor, you participate in the development of your community, while earning money.
Already in other countries of the world and 100% capitalist economies such as the United States are promoting investment projects with a new component called SROI (Social Return on Investment).
I briefly explain that this model, in addition to the financial component, includes the quantification of the social utility of the project, that is, it identifies the benefits for the community and the environment.
At PROVIFIN we have local investment projects that offer excellent returns. Our Financial Linkage model verifies and qualifies projects and their business structure to clear up uncertainty variables for the investor, all within a legal framework that offers legal certainty.
by Irving Alberto Escalante Castillo
[email protected]
Irving is a Public Accountant from the Autonomous University of Yucatan. Master in Business Administration with a specialty in Finance from the Tec Milenio University. He has more than 20 years of experience in team leadership in the planning and execution of business projects, crisis management and corporate finance.
He has collaborated with companies such as MEGAMEDIA where he served as Director of Administration and Finance, he is a Partner of the firm CONSORCIO in the Finance and Business division, Founding Partner and Executive Director of the IDET CONSILIUM Tax Education Institute, a training company specializing in legal, tax , patrimonial, managing partner of PROVIFIN, a financial linkage firm that operates investment and direct loans to companies and business projects.
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