Where to invest money – 5 ways to invest your capital

An investment is an investment of one’s own funds in one or several promising projects in order to extract additional passive income and income. In this article, we talked about five ways to invest. Indicated their pros and cons. Check out and analyze all the options, because to choose where to invest money, only you.

1. Bank deposit

Bank deposit is the easiest and most affordable way to invest. To create a passive source of income you will need:

• choose a bank;
• open an account;
• invest the required amount.

When choosing an organization should be guided by the terms of the program and the overall rating. It is recommended to give preference to banks that are ready to provide a system of savings with interest accrued monthly. Some financial institutions provide for the possibility of early withdrawals. The average yield is from 6 to 10%. However, at the current level of inflation, the profit from the deposit will be insignificant.

Pros:

• The minimum entry threshold is 1 thousand rubles (depends on the program of a particular bank).
• High level of reliability.
• Known Result.
• Low taxes.

Minuses:

• Low profitability, which slightly exceeds the current inflation rate.
• Low liquidity (not every bank has deposit programs with early withdrawals).
Carolina Kudelina, an expert of the Financial Health project, advises: “A deposit in a bank is the simplest and therefore the most popular type of accumulation. The chain of actions is primitive, in a mobile application or in person at a bank, open an account, deposit funds, while the bank uses your money you get a percentage ”.

We told in more detail about how to make a bank deposit correctly. here.

2. Mutual investment funds (UIF)

Mutual Fund is a management company that specializes in the purchase / sale of stock market assets. You invest money in mutual funds, whose managers distribute them for different securities. This is called trust management. You do not make independent choice of assets and investment tools, but simply wait for income.

There are many similar financial organizations with different profitability indicators. An investor, when making a deposit, becomes the owner of the PAY – a share in the company’s property. Earnings depend on the increase in the value of assets that are owned by the fund. You can get acquainted with the statistics of profitability on the website of the organization selected for investment.

Pros:

• A large number of profitable strategies.
• Experienced experts manage your capital.
• Relatively low risk.
• Low entry threshold (from 1000 p.).
• Suitable for beginners.

Minuses:

• Mutual funds do not guarantee income.
• Basic knowledge is required to choose a mutual fund.

Tatyana Saprykina, an economist, recommends: “A mutual fund can be imagined as a big money bag, where the funds of thousands of small investors – shareholders, which the management company invests in various assets, are piled up. As a result, the funds of each shareholder are distributed among different securities. In exchange for his money, the investor receives an investment share, certifying the owner’s right to a share of the fund’s property.

A mutual fund is not a bank, so you can’t count on either interest or dividends. Money can be obtained only by paying off the share, that is, by selling it to a management company (that is legally obligated to redeem it). The positive difference between the purchase price and the sale price will make your income. However, the difference may be negative – all risks fall on you. ”.

3. Stocks

This method of investing is capable of generating significant profits if you have knowledge and practical skills. For investments, it is recommended to independently form a portfolio of assets based on analytical materials and financial statements of companies. We talked about how to choose the right stock. here.

It is more efficient for beginners to give preference to shares of large and stable companies (“blue chips”), which include:

• Microsoft Corp;
• Johnson & Johnson;
• Sberbank of Russia;
• Gazprom;
• Rosneft and others.

Pros:

• Potentially high return on investment.
• inflation protection.
• Source of passive income.
• Long-term investments do not require much time.
• Availability of dividends.

Minuses:

• High risk of losing part of the funds.
• Difficulty in the absence of knowledge.
• Influence of external factors.
• Shares of individual companies can be quite expensive.

You can also consider ETF funds. They do not require large start-up capital and cover many sectors of the economy at once. ETFs are noteworthy for beginners and allow you to invest in several companies at the same time. For example, in the shares of several large American IT companies. The cost of individual ETFs varies from 3,000 to 5,000 rubles. We talked about ETF in detail here.

“A stock is a security that makes you one of the owners of a joint stock company. Based on this, the shareholder has the right to vote (if it is an ordinary share), the right to receive dividends, the right to property in case of liquidation of the joint-stock company, etc. Many believe that only a select few can purchase shares in a large joint-stock company. This is not true. Stocks are traded on a stock exchange..

In Russia, the main exchange platform is the Moscow Exchange. Only professional participants in the securities market can make transactions on the Moscow Exchange, therefore, in order to purchase a share, you need to contact an intermediary, that is, a broker. For their services, the broker and the exchange charge a commission, which depends on the selected tariff. ” – says Tatyana Polteva.

One of the most popular and largest brokers in terms of cash flow and number of clients is Finam. It provides the investor with all the necessary trading functions. People with no experience are offered training, consultations and ready-made investment strategies. All transactions occur online..

4. Gold

Gold is always associated with stability, and for many, buying gold is the most reliable investment tool. Indeed, during the crisis, demand for gold increases.

Ways to invest in gold:

• Buy gold bullion or coins at the bank, but you will still have to pay VAT for gold bullion. Moreover, if the ingots are stored in a bank, storage will also have to be paid..

• Purchase gold through the exchange. You can both speculate on the price and subsequently receive gold physically in the form of ingots. But this is a big risk..

• The most modern option is to open an anonymized metal account. This account, and accordingly the income / loss on it, is directly related to the value of gold. But physical possession of gold is absent.

• Invest indirectly in gold through the purchase of shares of gold mining companies, gold futures, gold mutual funds, gold ETFs.

Pros:

• More suited to portfolio diversification.
• Can save money but not increase it.

Minuses:

• Low profitability. Valuable metals in the past five years show the worst yield.
• Contribution to an anonymized metal account is not insured by the state.

“The rise in the price of gold occurs during the crisis period, when there is a decline in the financial market. Conservative investors at such a moment get rid of other financial assets, preferring stable gold. For Russia, the success of investing in gold is connected, inter alia, with the devaluation of the ruble, as the price of gold is set in US dollars, ”says Tatyana Polteva, senior lecturer, TSU Entrepreneurship Department.

Tatyana Saprykina, an economist, adds: “Valuable metals, like any market instrument, are subject to their ups and downs. Despite the steady industrial demand for gold, its price is regularly subject to technical correction. It is very difficult for an individual to get income from investments in gold. The gold bullion market is too cumbersome, and organizations providing access to metal accounts are rather slow. The period of investment in gold is a significant number of years, usually at least 5 to make a profit ”.

5. Real estate

A feature of such investments is a relatively high threshold for investments to start and an understandable scheme for making a profit.

Pros:

• High investment security.
• Guaranteed payback, regardless of the chosen method of generating income.

Minuses:

• Low profitability. When renting an object, the payback will be no more than 1% per month of the deposit amount. If we consider the sale of an apartment at market value after putting the house into operation, then the potential profit can be 30%.

• Starting such an investment will require significant capital. The amount of deposit depends on the region of real estate acquisition. If in the Southern Federal District you can become the owner of a studio apartment at the first stages of construction for 600,000 rubles, then in other regions (there’s nothing to say about the capital), the cost of similar real estate will be significantly higher. However, there are services that allow you to invest in real estate collectively, for example, aktivo.ru, but the entry threshold remains high.

Sergey Razuvaev, Director of Marketing Consultant Group, said: “A dramatic paradigm shift has taken place over the past 5-7 years. If before people bought real estate in order to resell it, now people buy apartments in order to live in them. Accordingly, consumer behavior is changing dramatically. Once a person is going to live in this apartment, he looks at the layout, area, ergonomics, the number of apartments on the floor and so on. Previously, investors did not look at these things, only profitability was important to them. And now consumer qualities of the apartment come to the forefront ”.

In order to choose an object for investment and to understand where to invest money, personal financial goals and terms for their implementation should be established. It is important to compare profitability indicators with potential risks for decision making. Investment activity is an opportunity to achieve financial independence, today such earnings are available to everyone.

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