If I withdraw my AFP and CTS, in which business is it advisable to invest?

After the optional withdrawal of 100% of the Compensation for Time of Service (CTS) was approved and the operating procedure for the withdrawal of AFP funds was published, a large number of people are preparing to access this money. In some cases they will prioritize the payment of debts or urgent expenses, others seek to obtain a higher return than what they have been receiving.

Among the alternatives that a person can resort to is the option of opening a business. At this point, they will depend a lot on the person, since it depends on the field in which they venture, it can generate short, medium or long-term profitability. Therefore, we consulted with the economist Renzo Vidaldirector of the Economic and Financial Analysis magazine and of the Professional School of Economics of the San Martín de Porres University, for

In which business should I invest my AFP and my CTS?

If the person has the vision of doing a business and seeing results in the short term, the economist recommends investing “mainly in businesses dedicated to the marketing of fast food or, for example, hairdressing, in grooming care (products or services). people and even in technological matters (computer products, computer software or consultancies for private or public entities), such as the sale of devices or motor vehicles that also generate certain returns”. So this possible investment with “immediate” results would be more aimed at a trade or services.

“These alternatives can generate short-term profitability, not so great, but that can make or give you a permanence of income, a permanent income flow that could be low, but that possibly allows you to generate or cover certain costs” , he added.

On the other hand, he pointed out that if the person thinks more about the medium or long term“they should consider generating a return on the banks. For example, longer-term savings on fixed terms where it generates some considerable returns because they (the banks) still offer some quite attractive rates.”

Along the same lines, the fixed term offers a fairly controlled risk. Another alternative is to generate a portfolio linked to savings issues, both variable income (buying shares) and fixed income (debt papers, installments), since financial instruments are more open today. One can not only invest in the national stock market but also in the international stock market, do a little trading. In the case of the Stock Market, although it is remaining a little unstable, it continues to remain at high levels, that is, there is a quite nice gain and due to the high levels that are currently seen, the forward perspective is that this will improve,” he pointed out. .

What is the function of the AFP?

The Pension Fund Administrators (AFP) are private financial institutions whose purpose is the administration of pension funds in the form of personal accounts. They grant pensions retirement, disability and survival. They were created in 1993 and operate within the Private Pension System (SPP), which is supervised and audited by the Superintendency of Banking, Insurance and AFP (SBS). In Peru, there are four private pension funds: Profuturo, AFP Integra, Prima AFP and AFP Habitat.

How is CTS calculated?

Calculate the amount of the CTS requires considering several factors. First, the full service time until April 30 or October 31 of each year must be taken into account. The calculation basis includes the last salary and the computable remuneration, which may include usual bonuses, commissions and other additional amounts.

To correctly calculate the amount to be received, workers must add the days actually worked, divide them by 360 (number of days considered in a complete year), and then multiply the result by the monthly remuneration. It is necessary for workers to verify that the salary information is updated and correct to avoid errors in the calculation that could affect the final amount deposited.