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Mutual or Investment Funds (Fondos de inversión)

An investment fund is in essence the patrimony of a group of participants or investors, who leave the actual investment decision-making in the hands of a team of experts (gestores) for which they charge a commission. These experts put together an investment portfolio where they try to maximise possible return at the same time maintaining risk as low as possible. At present there are literally thousands of such products on the market and they are largely distinguishable according to their composition: just as with pension funds, there are investment funds that invest more heavily in shares (FIM Renta Variable) and others that place a higher proportion of their patrimony in public and private debt (FIM Renta Fija). The advantages of these funds are that they are relatively safe as they are normally well diversified and made up of assets of known solvency. Apart from this we might also add that they are highly liquid in that it does not normally take more than a day or two to sell the participation. Disadvantages are that the commissions applied affect the return slightly. Apart from this they do not have the same tax advantages as pension plans for instance. The likely return on such plans will depend very much on just exactly how the fund is made up: public debt has the advantage of being highly secure but offers a low return. Shares are more volatile.

Stock Market (Bolsa)

With the huge growth of the Internet and Internet banking over recent years, the sale and purchase of stocks and bonds by private individuals has been given a further boost. Hand in hand with easily accessible information on prices, many investors who would previously have been more reticent about investing in the stock market are now doing so more willingly. Possible returns are high but so are the risks although, due to the variety and complexity of the products on offer, the return, risk and liquidity would depend on the merits of each of them. Products vary from ordinary stocks and shares which are more volatile, to public and private debt (bonds) which are normally safer but offer lower returns Experts in the field normally advise against short term speculation unless the investor feels that he/she is sufficiently experienced or knowledgeable in the field. Generally speaking, the shares of the larger and more established corporations (Telefónica, Endesa etc.) offer greater security than the smaller firms although you may want to take a gamble on a lesser- known company's future if you think that their share price is undervalued.

Other Savings and Investment Opportunities

Bank accounts

Although interest rates have fallen dramatically in recent years offering very little return for the saver, many people continue to hold their money in bank accounts largely due to 3 reasons: liquidity, safety and simplicity. Generally speaking, there are two types of account: current accounts and savings accounts the former being more popular and flexible in that they normally provide for credit, chequebook and other facilities.


Despite the recent and severe downturn, property investment is still an important investment area in Spain and is of huge national importance for continued economic growth and creation of employment. Although for some not strictly speaking an investment product, the prospect of a rise in prices as well as relatively low interest rates can make it an attractive proposition. There are also significant tax breaks for homebuyers to encourage such investment.