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When deciding where to invest money , it is necessary to conduct a thorough analysis and comparison of all existing options, taking into account the important features of investing: amount of money, profitability, payback period, riskiness of the transaction. Only after detailed monitoring can you make the right decision. Don't forget to record important points so you don't lose sight of them. This way you can easily understand where to invest your money and how to do it with maximum benefit. Remember, it is better to invest assets in areas that are familiar to you, then the chances of success will increase significantly and the risks will be reduced.
Subtleties of working in the stock market
Investing in stocks is one of the most common investment options. The profitability rate here can vary from 10 to 20 percent per year, however, this is far from the limit. What are shares? These assets are actually the basis on which the modern world of financial relations is based. It is thanks to them that any company can make itself known and attract new investors. And the latter, in turn, make quite good money.
If you have free money on hand that you don’t mind investing somewhere, then stocks will be an ideal option. With their help, you can not only acquire a stable source of income, but also take a direct part in the development of a particular business platform. In addition, working with such assets will teach you how to correctly analyze markets.
The process of buying shares is not particularly complicated. Everything is extremely simple - assets are traded on specialized platforms and sold through brokers. You don’t have to go somewhere, collect a whole bunch of documents and wait in line. Moreover, shares can be purchased without literally getting out of bed.
You just need to register on the broker’s online portal, add money to your balance and start buying. It should be noted that investing in shares of large companies is not a good idea. It's all about the amount of possible income. For example, the market capitalization of an IT giant like Google is more than $500 billion. In order to double this amount, he needs to do something truly revolutionary. It is better to pay attention to promising and fast-growing companies. They are quite capable of increasing the value of shares within one year.
Why is investing money profitable?
Many entrepreneurs and people who earn wages ultimately strive to earn passive income. One of the opportunities to start receiving passive income is investing in a potentially profitable developing project.
Note:
What does it mean to invest? Investing means investing money with the aim of making a profit.
If you invest your money wisely, then after some time you will be able to achieve the dream of all people - to manage your time as you please.
Successful investments will save you from the need to work every day, spend precious time earning money, because you only live once. Your investments will begin to work for you, you can take all the profits and leave only the initial contribution in circulation, or use the income received in circulation in order to earn even more in the future.
These words probably cause mistrust among many. It's quite normal. But it’s still better to cast aside all your fears and doubts and be an adventurer. You need to believe in your luck and strength, because those who don’t take risks don’t drink champagne .
Look around you. Some people get rich, while others are still poor. This is due to the fact that some spend their money wisely, while others lack financial literacy. The key to success is the ability to competently manage your funds, as well as time, effort, intelligence, and indeed everything that you have.
Smart and profitable investments are:
- Earnings that will not require a lot of labor from you and will not depend on them;
- Stable and promising projects that will not collapse overnight;
- The emergence of free time for everything you like: hobbies, travel, creativity, etc.;
- Complete financial independence.
Real estate
Real estate is a true investment classic, and therefore it is difficult to say anything new. People always resort to buying it in the most difficult times in order to “sit out in a safe haven.” Real estate, be it an apartment, a private house, a garage or a summer house, can be rented out. In addition, it, of course, is not instantaneous, but it rises in price (especially if purchased in an area that is just being rebuilt, which in a few years will become a business center). However, taking into account current realities, the acquisition of real estate is difficult to classify as an investment in the truest sense of the word. The maximum you can count on is capital preservation.
The advantages of this method include reliability of investments, minimal risks and a small, but still income. In addition, if necessary, the property can be sold. Among the disadvantages is an extremely modest profit margin. In fact, the money is simply frozen and does not increase capital.
Artem Deev, leading analyst at Amarkets
Considering that 2021 may be the year of a collapse in oil prices, the best investment decision may be speculation on the sale of oil. But keep in mind that working with oil contracts on the exchange requires certain financial preparation. If not, choose an alternative.
For example, a potential decline in oil prices (as a consequence of maintaining a global surplus in the hydrocarbon market) will lead to a logical devaluation of currencies, whose prosperity is directly dependent on the cost of a barrel. The ruble is one of these currencies. If Brent prices drop to $50 per barrel, the devaluation of the ruble could exceed 10%. Simply put, buying foreign currency, the dollar or the euro, at the end of 2021 can bring more profit in the coming year than bank deposits.
If you need more income, you will have to work with futures and options. In this case, it is better to bet on the sale of the American stock market and gold. In addition, the idea of investing in cryptocurrencies can be quite promising. Many experts predict that the founder of the crypto industry, Bitcoin, will rise to $50,000. If the forecast comes true, those who buy it now will be able to count on almost 1000% per annum.
The fall of idols. What happens if the cryptocurrency bubble bursts? More details
Investments in innovative projects
Startups are promising and ambitious young companies seeking to implement something completely new. However, this is by no means mandatory. In some cases, freshly launched projects do not bring any innovation, but only offer an updated version of old ideas. In simple terms, a startup is a company that produces a product that did not exist before. For example, the same Google at the dawn of its formation was a real startup. And those who had the foresight or luck to support him have become millionaires today. But don't despair. Every day many new projects are launched that have every chance of repeating the success of the famous IT giant.
How to invest in this area? You can purchase startup shares yourself or use the services of a broker. It is best to wait until the company enters the market. This event is called an IPO or initial public offering. This will demonstrate that the startup is truly promising, has a certain demand and is ready for further development. In the first hours of the sale, the price of shares can rise by more than 100%. And there is no need to hold them any longer; on the contrary, you should quickly sell assets and take profits. The fact is that over 70% of young companies cannot survive entering the real market and almost immediately fall in price. There is no need to talk about the growth of the exchange rate at all. However, there are, of course, exceptions to the rules.
If you decide to engage in this type of investment, you need to closely monitor news from the world of finance, upcoming IPOs and young companies. Just one successful investment can make up for the losses of ten unprofitable ones.
The advantages of startups include a high level of profitability, in addition, the opportunity to invest at different stages of the initial public offering. Among the disadvantages is the risk of closure of the project, and, accordingly, the loss of all your investments. What can I say - the niche is indeed extremely profitable, but at the same time very risky.
USA Real Estate
US real estate in 2021 brought its investors 13.3%. Dollar yields were slightly below zero. We track US real estate returns using the Vanguard Real Estate Index Fund ETF . The popularity of real estate in the United States has not yet been able to return to pre-crisis levels. But over long periods of time, it still brings good profits to shareholders. Over the past 5 years, the return is 23.8% (second highest after US stocks). Over 11 years - 16.5% (second place after US stocks).
What's the deal with binary options?
Binary options cannot be considered financial investments in their usual sense, but they are one of the most profitable forms of investment today. The mechanism of this type of investment is so simple that it involves only 2 points - movement up or down (that’s why it’s called “binary”). You need to specify an asset (a currency, a precious metal, a barrel of oil), and then select a condition - whether its value will increase or, on the contrary, fall.
You can set the time frame for the transaction yourself. For example, you placed a 20-minute option on shares of Audi with the condition that the price increase. If, after this period, the assets increase in value relative to the exchange rate for the period of purchase, you will be transferred a fixed profit of 70%. At the same time, it does not matter at all how much the shares grow, only the fact of growth itself matters. You can make money not only on a price increase, but also on its fall, that is, a downward movement.
Among the financial instruments offered by binary options are only the most liquid assets. Which is quite convenient, since you can always find a lot of news and relevant information on them. For clarity, a new smartphone from Apple is due to launch today, which means its shares are guaranteed to rise. We purchase the “Up” option and get a 100% profit. You can invest funds for a period from one minute to a month, at the same time the amount of income remains unchanged - approximately 70%.
How to start investing money correctly - advice from investment experts
The expert advice below will help you understand how to start investing from scratch and do it right.
Expert advice No. 1. Accumulate starting capital
Without starting capital, you will not be able to start investing. After you have collected a sufficient amount to start, you do not need to invest large sums at once, start with smaller amounts and gradually move towards larger deposits. And invest only free money.
If you properly control all your expenses and do not waste money, then you will be able to accumulate the required amount quickly enough and start investing.
Take note! The book Rich Dad's Guide to Investing , written by famous businessman Robert Kiyosaki, describes in detail how to become an investor from scratch. The author clearly and with his own example explains everything that beginners will need.
Expert advice No. 2. Set goals
If you don't have a specific goal, it will be more difficult for you to discipline yourself. You need to think through all the ways to achieve your goal and then you will be able to achieve it, otherwise you may suddenly stop developing your earnings.
Expert advice No. 3. Invest in different projects
There is no need to send all the money to just one project. Try whatever you see fit, and it is quite possible that one of the methods will bring you big profits.
Own business
Many people are interested in the prospect of investing money in a business that has already been launched and has performed well. There are many options for such companies, but finding one that is truly worthwhile can be difficult. The main advantage of this approach is the ability to personally control the project. In addition, physical businesses themselves have always had a certain degree of reliability compared to online platforms. However, in order for your business to fully develop, you will need to put in a lot of effort and money.
Potential of PAMM accounts
Speaking about investments in 2021, one cannot fail to mention the PAMM account. It represents the trader’s bank deposit, which can be replenished by anyone. The manager, in turn, carries out financial transactions on the market, relying not only on his own money, but also on the funds of investors. The trader must give back 50 to 90 percent of the profits to investors.
An unlimited number of people can participate in PAMM accounts, and income will be divided in proportion to their number and the amount of investment. An example of such a company is one of the largest brokerage houses in Russia called Alpari. Its activities are regulated by the country's Central Bank.
Structured Products
Anyone who does not trust his own intuition and relies solely on the opinion of professionals can purchase a structured product from a bank, broker or management company. “Structure” (as financiers call this product for short) is an investment portfolio that is formed from two or more financial instruments: bank deposits, real estate investments, precious metals, securities, and so on. The most common combination is options and bonds. Financial assets are distributed in such a way that the return on the risk-free part covers possible losses on the risky part of the investment.
The threshold for entry into a structured product is high: a minimum of $5,000–10,000 if we are talking about a dollar product, and 100,000–200,000 rubles if it is a ruble product. However, income under the “structure” is, as a rule, not guaranteed. It can only be paid under certain conditions laid down in the strategy. In structured products, they usually “sit” until the end (from one to three years), since this is not the most liquid instrument. But if you are patient, you can get a return higher than on bonds: for example, a structured product in euros can have a potential return of 4% per annum, and in dollars - 15%.
Bank deposit
This kind of investment should not even be considered an investment, but rather an option for preserving your capital from the effects of inflation. An income of 10% per annum can hardly be called significant. However, this method is still very popular among ordinary people, even despite the fact that our financial system is in a deplorable state today.
The greatest trust among investors is enjoyed by Sberbank, Alfa Bank, VTB and other large organizations. They provide the opportunity to place a deposit at not too high interest rates (less than 8), but can boast of relative reliability. However, you should not take part in long-term programs, even if they offer more attractive conditions. Here you should be guided by the famous Russian proverb “Better is a bird in the hand than a pie in the sky.” One way or another, a deposit in a bank will only help you save, but not increase your money.
Mutual funds and ETFs - for those who want to earn money by trusting professionals
If you don’t dare to trade yourself, then you can entrust this matter to professionals. Yes, yes, those same management companies.
Of course, after 2014, people’s confidence in mutual funds decreased - but then only those who didn’t have any did not lose money. And the management companies that lost money are not to blame for anything - if you look at the situation with an open mind. What was more important was how quickly they recovered their losses.
And here’s another interesting article: The US debt ceiling has been reached: will the dollar collapse in 2021?
Which fund to choose is a topic for a separate article. However, professional managers can work with securities more efficiently - at least due to the fact that they have more capital and they have insider information.
An alternative to mutual funds are ETFs - exchange-traded investment funds. They offer for sale not mutual funds, but shares. Otherwise everything is the same.
Afterword
The main thing in the field of investment is not to put off until tomorrow. To procrastinate means to postpone the purchase of real estate, a well-deserved vacation, or a decent education for children. Most of the methods described above do not require a physical presence and can be done via the Internet, and therefore are suitable for almost everyone. Be bold and luck will certainly smile on you.
OFZ and IIS – still working
I wrote a detailed article about exactly how this works. Briefly:
- OFZ is a super-reliable asset, the profitability is guaranteed by the state itself, and it (the profitability) is higher than deposits;
- you don’t need to pay personal income tax on coupons and sales of OFZ with a profit - you will take back everything you earn;
- With the help of an IIS, you can receive a tax deduction for the replenishment amount.
As a result, the income will be as follows: coupon + exchange rate difference + deduction. Pay the bare minimum - a commission to the broker and depository.
