Afore investments obtain historical losses during 2022

Afore investments obtain historical losses during 2022

The losses, which are temporary losses of money, were greater than in 2018, when the cancellation of the new Mexico International Airport (NAIM) in Texcoco was announced.

Why were there handicaps?

In 2022, global inflation accelerated to two- and four-decade highs, forcing central banks to raise interest rates to try to contain it. In the case of Mexico, August and September were the months with the highest inflation of 8.7%.

To offset the rise in prices, the Bank of Mexico (Banxico) raised the rate to 10.5%, a level never seen before. The Afores saw the greatest losses in September with “losses” of 2000,653 million pesos.

“During 2022 we had consecutive increases in Mexico and the United States, which are the main countries where the Afores invest and it must also be remembered that the prices of the bonds have an inverse relationship with their yield: if the interest rate increases, its price decreases “, explained Janneth Quiroz, Monex economist.

The specialist explained that since the Afores invest in bonds, the losses are more evident. The highest handicaps should be observed among the youngest people.

Will there be losses in 2023?

Yes, but they will be less than last year. Quiroz estimated that in the face of new, but minor increases in interest rates, the Afores will continue to suffer these losses, at least in the first six months of this year.

“The markets are discounting that at the end of the year there will be a cut (in interest rates) in Mexico,” he added.

Banxico could make one last interest rate increase in February and towards the end of the year, if inflation shows a clear slowdown, the rate could be lowered.

How to prevent disabilities from impacting my retirement savings?

The Consar highlights that in times of disability, the recommendation is that workers do not change their Afore.

Even, to prevent workers from losing resources for their retirement, the agency decided to suspend transfers for three months.

The Consar points out that handicaps are temporary and that retirement savings, being a long-term investment, can recover lost returns over time.

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Written by Editor TLN

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