What you can buy on an IIS and what you can’t: review of options5 (4)

Investor's Dictionary

Brokerage account

- an account in which all transactions, operations and assets of the client under a brokerage service agreement are recorded, and the transactions themselves are carried out on behalf of the client on the stock exchange or on the over-the-counter market.

IIS

— individual investment account. A type of brokerage account for long-term investments with preferential tax treatment. The main limitation is that money cannot be withdrawn from the account for three years. If you withdraw money during this period, the account will be closed, and there will be no tax deductions (and those previously received will have to be returned).

Qualified investor

- an investor who has confirmed that he understands how the financial market works and knows how to manage capital, or has sufficient capital and is willing to take on increased risks associated with complex financial products. This status gives access to tools that are not available to other investors.

What is IIS and what is important to know about it?

IIS is an account that can be opened by any adult citizen of the Russian Federation. If a classic income-generating account (deposit) is opened only in a bank or sometimes in a financial cooperative, then an investment deposit can be arranged with a broker. Most often this is a large bank - for example, VTB, Sberbank, Tinkoff, Alfa-Bank and others.

The amount (personal savings and/or borrowed funds) is transferred to the deposit, and only in rubles. You can top up no more than 1 million per calendar year. For example, the depository opens an IIS on December 25 and invests 1 million rubles. Already on January 1 of the next year, he can again invest 1 million. And then it is possible to replenish the deposit only in another year.

After this, the owner begins trading to generate income:

1. Active – operations are carried out independently, at your own peril and risk.
2. Passive – funds are transferred to trust management. Professional experts invest the money themselves and charge a certain percentage for it (usually 10%-20% of the income received).

Immediately after replenishment, the investor can buy and sell securities of Russian and foreign companies, as well as government bonds OFZ and other assets. You can make money on this because:

• shares are bought at a low price, and then, after some time, sold at a higher price, and the difference can be very significant;
• companies regularly pay shareholders income - dividends;
• the bonds also pay a coupon income (both by the government and by commercial companies).

The basic principle of generating income is that any company is interested in making a profit and attracting investment, including from individuals. Therefore, it places shares and bonds on the stock exchange. By purchasing this security, the investor invests funds that the organization uses to develop its business.

In the long term (3-5 years or more), many large companies actually manage to increase net income and other indicators. Therefore, their shares also rise in price.

Example:

1. Back in August 2015, 1 share of Sberbank could be purchased for 75 rubles.
2. In November 2021, the rate is 235 rubles.

Therefore, the average return over the last 5 years has been more than 40% per annum, which is significantly more than for any bank deposit. However, IIS has pros and cons. Therefore, this method of investment is not suitable for all people. The majority continues to open bank accounts, although it is practically impossible to earn money from them due to rising inflation.

What ready-made strategies does Sberbank offer?

IIS with ready-made strategies is now the most popular at Sberbank. The reasons are clear: an account with a remote control does not require any special competencies from the investor - you just need to choose a strategy, and then the experts will do everything. The number and content of strategies at Sberbank are constantly changing (those that are no longer valid are archived). Below we will consider only current strategies.

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Cumulative - in bonds

A safe strategy for investors who do not want to take risks. By connecting one, you will not earn much, but with a high degree of probability you will save your savings and even increase them.

• The strategy's investments are in government bonds of the largest companies in the Russian Federation.
• Investments in bonds - through the purchase of mutual fund investment units.
• The goal is to obtain a return higher than the deposit one due to coupon income, an increase in the exchange rate, as well as operational portfolio management.
• Suitable for investors over 18 years of age with an income level of RUB 50,000 or more. and spending - up to 50,000 rubles.

Why is it important to open an IIS right now?

The main sources of additional income for individuals today continue to be bank deposits and rental housing. They are attracted by the opportunity to make a stable profit. However, their profitability remains small. For example, the highest rates on bank deposits are 6.0% -6.5% per annum. At the same time, the predicted inflation at the end of the year is 4.0%. Therefore, the actual income received remains small.

In the case of housing rental, there are also some nuances. A significant portion of the money received goes to pay for housing and communal services. The property in the apartment gradually wears out and requires updating. In addition, you often have to deal with illegal actions of tenants, which also cause damage.

For these and other reasons, it is preferable for advanced investors with savings to invest them at a more favorable interest rate - 20% -25% per annum or more. And only investments can provide such profitability - buying shares, bonds, transferring funds to trust management.

Key features of the IIS

IIS as a way of investing and saving has several features:

1. The yield is 2-3 times higher than on deposits.
2. Profit can be obtained in at least 3 years.
3. It is possible to receive both active and passive income.
4. There are no guarantees for payment - everything depends on the success of the strategy chosen by the investor himself.
5. You can increase your profitability by taking a deduction.
6. Profit also increases due to investment in OFZs, payments for which are guaranteed.

From this review it is clear that the account allows you to earn money yourself, acting at your own peril and risk. At the same time, formally such activity does not belong to entrepreneurial activity, since a citizen is not required to register an individual entrepreneur. That is why civil servants, military personnel and police officers can open an IIS.

Tinkoff

I would call Tinkoff Investments a broker - light for the lazy. Suitable for investors who make transactions to hold for the medium or long term. Not suitable for scalpers and fast trading.

Suitable as a backup broker and for experienced investors on the “just buy and sell” principle. It is necessary to make allowances for the reliability of Tinkoff Bank itself. I don't recommend it for beginners.

Broker advantages:

• everything is simple and accessible. Easy account replenishment;
• You can trade using the TinkoffBlack card. Opening a brokerage account is mandatory;
• All fees are included in the tariff plans.

Minuses:

• The Tinkoff Investment terminal does not have trading and analysis capabilities similar to Quik. A simple program for buying and selling without frills and full technical analysis of charts;
• There is no access to foreign exchanges. Tinkoff provides access to trading of American shares on the St. Petersburg Stock Exchange;
• lack of a separate website for the brokerage division. The chapter on investments contains basic information without unnecessary details. For example, a complete list of tariffs indicating all fees in a separate application. To find out the cost of the depository, you need to try. It is extremely difficult for a beginner to immediately get answers to some important questions;
• no full support. There is a robo-advisor and a personal manager on the most expensive tariff plan.

Description of tariffs (source - Tinkoff website):

Pros and cons of IIS in detail

It is important to understand that IIS is the same means of saving money with its pros and cons. It is better to analyze them in advance to understand how best to manage your savings.

Pros of IIS

The obvious advantages of the account include the following:

1. The yield on them is much higher than on bank deposits - on average 2-3 times.
2. The account can be turned into a source of additional income in the medium term.
3. You can earn money without leaving home and without spending too much time and effort.
4. It is possible to receive a tax deduction, which significantly increases profitability.
5. Thanks to IIS, you can save money for retirement. Income on the stock exchange is not obtained immediately, but over several years. Therefore, only those who truly know how to wait can get rich in this way.

Advice

Along with IIS, it is recommended to consider other ways to obtain additional profit, which will give the first results in a much shorter period of time.

Disadvantages of IIS or pitfalls that are not mentioned

But IIS has pitfalls, and brokers say almost nothing about them:

1. Profitability on it is very probable, but not guaranteed, which is considered by many as a significant disadvantage.
2. Make a deposit for at least 3 years. If the money is needed earlier, the right to receive a deduction is lost.
3. Profitability is difficult to predict. In addition, it is unknown what the ruble exchange rate and inflation will be in 3 years, when the time comes to receive a Type B deduction.
4. Funds on deposit are not insured, and brokers usually do not mention this pitfall. However, if one broker closes, the money can be transferred to the account of another.
5. Investors also have to pay commissions for trading operations and other activities. But, as a rule, they are very intangible - for example, at Sberbank it is 0.3% of total turnover.

Important!

An individual investment account, the pros and cons of which are described in this section, can be completely lost if you use the wrong strategy or risk too much money. Therefore, you should not invest your last money, much less take out loans, which will take a significant part of your income to pay off.

Deductions for IIS

The state encourages citizens to invest money not only in bank deposits, but also in more profitable instruments, including individual investment accounts. Therefore, account holders (depositories) can receive 1 of 2 tax deductions for personal income tax:

1. Type A: 13% of the invested amount annually, maximum 52,000 rubles.
2. Type B: full exemption from personal income tax 13% on income received.

In the first case, it is beneficial for the investor to open an account and replenish it every year in the amount of up to 400 thousand rubles. Then he receives a deduction for previously withheld personal income tax (for example, 13% of salary). For example, the monthly salary is 50,000 rubles. before tax. Every month 6,500 rubles are withheld from this amount. Personal income tax. As a result, 78,000 rubles were withheld for the year.

At the same time, the depositary opens an individual investment account and intends to invest 400 thousand into it annually. The maximum deduction that it can receive is 13% of this amount, i.e. 52,000 rub. in year. And even despite the fact that 78,000 rubles were withheld from wages for the same period, the tax office will return exactly the amount of 52,000 rubles. This option is beneficial for those who do not plan to receive a very large income from the deposit and at the same time have a fairly high official salary (from 30-40 thousand or more).

In the second case, the Federal Tax Service is ready to completely exempt the investor from paying personal income tax of 13% on the income received. For example, in 3 years the depositary earned 300 thousand. If he chose the second type of deduction, the 13% tax (in this case 39,000 rubles) does not need to be paid. This is beneficial for those who plan to earn a lot, i.e. engage in active trading of shares and other assets.

You can choose the type of tax deduction yourself. Moreover, you cannot change your decision in the future. Although if you open a new IIS, it is possible to get a different type of deduction. Therefore, you can open the IIS as many times as you like. However, each depositor can have only one account (holding 2 or more at the same time is prohibited).

To receive compensation, a citizen collects all the necessary documents and applies to the Federal Tax Service:

• passport;
• agreement to open an account;
• declaration 3-NDFL;
• application (filled out on site);
• a certificate from a bank or other broker confirming the receipt of money on deposit;
• certificate 2-NDFL for the reporting period, i.e. for 1 calendar year;
• details of the bank account to which you want to receive the deduction.

The tax office accepts documents (they can be submitted online or by registered mail) and reviews the application. Usually the money arrives within a month, but delays of up to 3-4 months are possible. You can apply for a deduction at least every year, at least at other times. The main requirement is to meet the deadline of 3 years. For example, if the deposit was made on any day in 2021, the deadline for filing documents for deduction is December 31, 2021.

Important!

Both deductions are provided only if the account has been in existence for more than 3 years. If you close it earlier, you will have to return all deductions to the tax office. If the investor died and inherited the IIS, the heirs may not return these amounts.

VTB

VTB received its retail brokerage division as a result of its purchase of Guta-Bank in 2004. Today it is part of the VTB group. Second in size after Sberbank.

Broker advantages:

• the choice of instruments includes the Moscow and St. Petersburg exchanges, foreign exchanges for qualified investors;
• availability of structural products. Main focus on bonds;
• reliability;
• convenient mobile application “VTB My Investments”.

Flaws:

• not the best customer support;
• maximum amount 100,000 rub. per day for depositing through VTB My Investments plus commission up to 0.4% of the amount;
• When withdrawing more than 300,000 rubles/month, the commission is up to 0.2% of the amount.

Basic tariffs of VTB broker:

How to open an individual investment account (IIA)

Opening an account is quite simple. The main task is to choose a reliable stock broker who will provide the opportunity for trading. A bank or other company that has the appropriate license from the Central Bank can act as a broker.

The document must state that the financial organization has the right to “operate as a specialized depository.” You can check the authenticity of the license by searching for the company on the Central Bank website in the list:

• brokers;
• trustees;
• depositories.

After verifying the broker's authenticity, you must carefully study its terms and conditions:

• commissions for trading operations;
• commissions for depositing and withdrawing funds;
• minimum investment amount;
• convenient services (mobile application, demo account and others).

The next step is to carefully study the contract with the company. It should contain a clause about opening an IIS specifically according to the state program. The depositary signs the agreement personally (you only need to take your passport) or through a third party (a representative acting on the basis of a notarized power of attorney).

At the last (technical) stage, the investor creates a personal account, the broker provides him with the necessary program to carry out trading operations on the stock exchange. At the same time, the company can open a trading account, which is normal. Here you can also sell and buy various assets. But it is impossible to get a deduction on this account because it does not participate in the government program.

Note!

Some companies are cunning and indicate in the contract that the client can open some kind of “investor IIS” or place “individual investments on a trading account.” You can work on such deposits, but the investor will not receive a deduction from the state. Also, the contract should not indicate any consulting, information services, exchange trading training, etc.

Broker rating

The cost of services is indicated for clients - individuals.

• (1) — stock market.
• (2) - stock section of the Moscow Exchange. Tariff plans are standard for beginners. The size of the commission depends on the turnover per day.
• (3) - American securities on the St. Petersburg Exchange and access to trading on foreign exchanges.
• (4) — reputation assessment on a five-point scale according to parameters (each parameter has a + mark or its absence):
• availability of a license as a professional market participant (+);
• trading through a trading program with installation on a PC and the availability of a WEB version (++);
• availability of a separate website with convenient search (+++);
• access to trading in shares of foreign issuers on the St. Petersburg Stock Exchange and/or foreign stock exchanges (through the status of “qualified investor”, directly through foreign “subsidiaries” of the broker) (++++);
• general convenience taking into account all factors (tariffs, support, access to markets, quantity and quality of investment instruments, including structured products and a single account, availability of a separate website) (+++++).
• (5) - if there are transactions on the account. If no operations were carried out, the commission is 0 rubles.
• (6) - minimum recommended amount. Average balances are subject to fewer additional fees.
• (7) — the Tinkoff Investments trading program works as a WEB terminal. Quik is not available.
• (8) — FreeTrade tariff for new clients when opening an account remotely.
• (9) - urgent conclusion.
• (10) - charged regardless of account activity. In case of accrual of commission for a tariff above 200 rubles. - the difference will be charged.
• (11) - up to 300 thousand per month - 0 rubles, above - up to 0.2% of the amount.
• (12) - for withdrawals of less than 10,000 rubles. commission 70 rub.
• (13) - not provided by default in the main tariff plans.

Change charts for the top 5 brokers in 2017–2019 (source Smart-lab.ru).

1. Active clients on the Moscow Exchange.

   

2. Brokerage turnover class=”aligncenter” width=”1581″ height=”507″[/img]
3. Dynamics of changes in active clients in %.

   

What should complete beginners do in investing?

Beginners are advised to first study the pros and cons of an individual investment account and reviews about this method of investing. But even more important is to master the investment strategy. To do this, you need to get acquainted with several basic rules:

1. It is better to distribute funds across several assets at once - purchase shares of 10-15 companies, OFZ bonds and other securities.
2. It is strictly not recommended to invest the entire amount in 1-2 assets.
3. It is better for beginners to follow a conservative strategy - to purchase securities of the most reliable companies (Sberbank, Apple, Gazprom, Facebook and others).
4. Before purchasing, you should carefully analyze the market dynamics and economic indicators of the selected company. Relevant materials can be found in the public domain.

Finally, the main rule for a novice investor: you should not invest an amount that you cannot risk. If these are the last savings or borrowed funds, they are not suitable for IIS. Before investing, it is important to understand that profitability is not guaranteed, and the exchange is not a casino where large sums are risked in a fit of excitement.

For reference

Shares of the largest and most reliable companies are called blue chips. In the long term, buying such securities almost always turns out to be profitable.

IIS and OFZ - additional income

Even when successfully investing money in stocks, you should not forget about other assets. Today, federal loan bonds demonstrate confident yield indicators. You can receive 10.5% of net profit per year.

The peculiarity of this instrument is that the bonds provide a guaranteed income, since at the end of their validity period (4-5 years or more) they will definitely be purchased by the state. You can purchase OFZ on any account, and the minimum amount has now been reduced from 30 thousand to 10 thousand rubles. for 1 bond, which makes them even more affordable.

IIS (individual investment account), the pros and cons of which are described in the article, remains a riskier way of investing money. That is why most investors prefer to open a bank deposit and receive a minimal but stable profit from it. But if the client is determined to earn really tangible money, it is better for him to apply for an IIS.

Withdrawing profits to a bank account

The rules for withdrawing money invested in IIS do not affect profits from coupons and dividends. Income received from the issuer of securities is not limited in any way until it is credited to the account. Typically, funds are deposited into a current investment account. When concluding an agreement for brokerage services, it is necessary to provide for the withdrawal of profits to another account or to a bank. You can write an application to transfer dividends “outside”, but not all brokers accept it.

Let's look at the types of profits on securities and ways to withdraw them. Income includes bond coupons, income tax, and dividends on shares.