The growing interest of entrepreneurs in matters related to investments, personal finance, and wealth management is unquestionable. Currently, it is possible to see that the number of towing for Santa Clara business people entering the stock market is increasing.

However, the financial system is somewhat complex. It is important to note that investment analysis must go beyond looking at the company in which you want to invest your capital. To make an informed decision, it is necessary to analyze the context in which it is inserted in macroeconomic and regional terms.

Thus, politics exerts a direct influence on factors such as interest rates,  inflation, and influence on the movement of the Stock Exchange.

Towing and stock market: Factors that politics has a direct influence on

Interest rates

Interest rates are percentages charged by those who lend a certain amount to another party, who receives the borrowed amount. If you invest, you necessarily lend the money to someone, which can be a company, institution, or the government itself, in search of future remuneration based on pre-agreed rates.

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Inflation

Inflation consists of readjusting the prices of products and services. When this adjustment represents very large increases without a proportional increase in the population’s salary, inflation can represent a loss of purchasing power and, consequently, directly affect everyone’s purchasing power. Inflation is also subject to political factors since economic decisions by a given government are responsible for controlling this index.

As a rule, measures that involve the injection of money into the economy, either through spending reserves or printing currency, tend to cause inflationary pressure, while determinations such as the increase in the basic interest rate reduce this imposition.

Movement of the stock exchange

The influence of politics on the economy is also very strong in the movement of the Stock Exchange. That’s because the pricing of companies is subject to a lot of speculation and opinions. If a country is going through elections, for example, the release of research results is quickly reflected in the fall or rise in share prices, according to the performance of the candidate that the market considers to be the most suitable to assume the next term.

Did you notice the influence of politics on the economy? It is essential to analyze the political and economic context when investing. Crowdfunding is a good example of an investment that suffers less from volatility than markets like the Stock Exchange.

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