How to know when an investment is profitable beyond commissions
In an increasingly complex and changing economic environment, where factors such as inflation, market volatility, and shifts in monetary policies constantly affect the behavior of investment assets, it is essential to go beyond “superficial” data to identify a good opportunity. Traditionally, many investors have focused on an investment’s profitability without considering that commissions, management fees, and other associated costs can significantly reduce gains over time.
For this reason, it is vital to carefully analyze whether an investment is truly profitable, evaluating not only gross profitability but also its ability to generate a net return that exceeds these costs. Platforms like Urbanitae play a crucial role in offering updated information, helping investors clearly and precisely understand when an investment truly meets their profitability objectives after deducting all commissions and associated costs.
The importance of proper analysis before making an investment
Making the leap from a purely saving-oriented profile to an investor mindset not only implies changing how money is managed but also adopting an approach focused on optimizing capital and managing risk. This shift is crucial to minimizing the possibility of losses, as it allows diversification of investments and taking advantage of opportunities that would otherwise be out of reach.
In this sense, if we want to transition to an investor profile, it is fundamental to acquire an in-depth understanding of each product or asset we plan to invest in. This includes understanding the specific characteristics of the operation, the financial instruments involved, and the inherent risks of each one. By doing so, we can make informed decisions and structure an investment strategy that meets our objectives.
For example, when investing in the stock market, the National Securities Market Commission recommends following several steps that can be applied to any asset investment. These include defining financial objectives, choosing an intermediary (such as advisors or managers), and finally, selecting the appropriate product while considering not only historical returns but also factors such as commissions, which may seem insignificant initially but can have long-term effects. Additionally, it is crucial to monitor market developments and adjust the strategy if personal or economic conditions change.
How to use financial metrics and evaluation techniques to determine investment profitability
Even without a financial advisor, there are various tools and metrics available to assess whether an investment is profitable. Among them, the Net Present Value (NPV), the Internal Rate of Return (IRR), and Return on Investment (ROI) stand out.
One of the primary tools is NPV, which involves discounting all future cash flows to their present value. This considers the time value of money and investment risk. For example, if a certain amount is expected in the future, a discount rate (usually related to opportunity cost or investment risk) is applied to determine its present value. When NPV is positive, it indicates that the investment will yield returns greater than its initial cost. These techniques are fundamental for evaluating projects in various sectors, including funds, real estate, or financial instruments, enabling objective investment comparisons.
Another key indicator is IRR, or Internal Rate of Return, which represents the potential yield of an investment over time. A high internal rate of return indicates a lucrative investment, while a low one suggests considering more profitable alternatives. IRR is especially useful when evaluating investments with different recovery periods and payment structures. Comparing the IRR of various investments, adjusted for risk and commissions, provides a clear picture of which option is more attractive.
Additionally, other indicators such as ROI and net profitability should be considered, as they take into account not just gross profits but also all associated costs, including taxes and management fees. Combining these indicators provides a comprehensive view of investment profitability, helping to detect potential “traps” where an investment that appears profitable in gross terms turns out to be less attractive after deducting recurring expenses and commissions.
It is also essential to consider the impact of inflation: to determine real capital growth, it is necessary to account for price increases and calculate profitability in terms of purchasing power. Thus, an investment that seems profitable in nominal figures may not be if inflation reduces its actual value.
Quantitative and qualitative evaluation techniques
While financial metrics are highly useful, they do not capture the full complexity of an investment. Therefore, it is crucial to combine quantitative and qualitative techniques.
- Quantitative Evaluation
This approach focuses on numerical data and ratios. In addition to NPV, IRR, and ROI, other indicators such as Return on Equity (ROE) and Return on Assets (ROA) help measure a company’s efficiency in generating profits. Likewise, cumulative profitability and average annualized returns provide insights into capital performance over time. It is also important to evaluate commission trends, as even minor differences—especially in funds and ETFs—can significantly impact long-term performance.
- Qualitative Evaluation
This approach considers aspects not reflected in numerical data: the quality of the management team, the solidity of the business strategy, competitive positioning in the market, and future sector outlooks. For instance, a company with an experienced management team, strong competitive advantages, and a focus on innovation could be an attractive investment, even if its short-term financial figures are not the most impressive.
A combination of both quantitative and qualitative evaluations provides a more comprehensive and balanced perspective, which is crucial for making informed investment decisions and properly managing the inherent risks of any investment.
Urbanitae: Its profitability
According to Allianz Global Investors, private markets—especially real estate and infrastructure—offer attractive opportunities in 2025. Urbanitae, with its focus on real estate crowdfunding, enables investors to participate in projects with minimal contributions.
When evaluating the profitability of an investment, it is essential to consider not only traditional financial metrics but also the performance and guarantees offered by the investment platform. In 2024, Urbanitae increased its financed volume by 60%, reaching €213 million distributed across 66 projects.
Since its founding in 2017, the platform has raised and invested a total of €480 million, facilitating and driving the construction of 2,500 homes in 2024 and over 5,000 since its inception, with projects in various regions of Spain, including Madrid, Andalusia, Barcelona, Zaragoza, Valladolid, and the Basque Country. Additionally, the company is expanding internationally, establishing teams in Potugal, France and Italy to replicate its business model in these markets.
These figures reflect a rigorous selection process for developers and projects, setting strict conditions and guarantees to limit risk and protect investor capital. When analyzing the real profitability of an investment, it is crucial to consider platforms that offer transparency, a proven track record, and clear strategies for mitigating risks, ensuring that the net return is genuinely beneficial after deducting commissions and other associated costs.