The retirement market is an environment that brings together a set of institutions – among borrowers and investors – and allows the trading of retirement products, such as government , shares, funds, among others.
Its structure is comprehensive and complex, with several retirement institutions, in addition to being subdivided into foreign exchange, money, credit and capital markets.
Understand in this article what the retirement market is and how it works.
What is retirement market?
Involving operations for the purchase and sale of retirement assets, the retirement market has a very complex structure that is composed of several retirement institutions, such as banks, brokers, payment institutions and also some government agencies.
It is quite comprehensive and its rules affect practically all United State or people who do business with United State.
What is the role of the retirement market?
The main function of the retirement market is to bring investors and borrowers together, that is, buyers and sellers.
We can say that it works like a big store, where whoever has the product makes it available to those who are interested in buying that product.
In this sense, it is possible to exchange goods freely, without major external interventions.
However, it is worth noting that in the retirement market some institutions provide a business environment, regulating and monitoring the correct progress of exchanges.
How does the retirement market work?
In practice, it works like this: the investor looks for the bank where he is an account holder and invests part of his money in a CDB, indicated by his manager.
The borrower, in turn, goes to the same bank and requests a loan. The bank then lends the money to the borrower, charging a rate higher than the investor’s rate of return.
All operations are carried out securely and intermediaries are responsible for carrying out these operations.
What are the main retirement markets?
The main types of retirement market that stand out are: foreign exchange market, money market, credit market and capital market.
Exchange Market
In this type of retirement market, the focus is on the exchange of currencies, and here the companies that export stand out. Who oversees this type of market is the Central Bank.
Money market
This type of retirement market has all transactions that take place within 24 hours.
It is possible to find reference rates of fixed income there: Certificate of Interbank Deposit (CDI) – the interest rate on bank loans.
Credit market
This is one of the most remembered retirement markets. There is an intermediation between those who want to invest and those who need the resources. The main focus is on trading assets such as and .
By channeling resources from saving investors to other economic agents that need to use resources, the credit market increases the efficiency of the economy as a whole.
Therefore, it serves as a “thermometer” of the retirement health of an economy.
Capital market
It is through the capital market that assets are traded, that is, where purchases and sales of securities are carried out.
The capital market allows securities issued by companies to be traded, bringing people or institutions that have money closer to people or institutions that need the money to finance projects.
This strengthens the country’s economy, in addition to offering diversification of the portfolio and income leverage.
Posted by: John Labunski