Earn wisely, do not waste time in the office! One of the possibilities is investments (investments) in shares of domestic and foreign companies.
Many people would like to do something new for themselves, but they don’t even know the basic concepts and don’t know what to do and how. Our task is to tell all about stocks and investments, so that those who wish can improve their well-being without sacrificing financial stability.
So, first of all, let’s define the terms:
- it is easy to guess who the investor is. This is a person who has bought securities of any enterprises and paid with his own funds (this money will bring the expected profit in the future);
- investment means funds directed to the acquisition of tangible or intangible assets in order to increase;
- shares are securities indicating the right of their owner to a certain share of the property of the respective company, as well as to income in the form of dividends paid from its profit. To make investments in stocks, you need to know how it works in practice. Most often, for the purchase of such assets are traded on the stock exchange, which plays the role of a kind of shop. Shares here are available to all, individuals and other organizations, but transactions are concluded only through brokerage firms (professional investment intermediaries).
It is easy to buy a security, the main thing is not to lose our future. There are many investment options, but if you put your savings in unpromising stocks (spend an illiterate risk assessment), then do not expect them back, especially not count on additional income. In addition, this method is not suitable for those who want quick returns. That is, to invest funds for 2-3 months and guaranteed to receive income as a bank deposit will not work here. Of course, a certain probability of luck is also present in investments, especially in the case of active trading in stocks. For example, sometimes in the world or in Russia there are some important events that dramatically increase the importance and prospects in the market for some projects and businesses. If the investments are placed in the shares of these companies, then the indicators of their profitability will increase significantly.
Types of equity investments
- First, public subscription or purchase through the stock exchange is available to a wide range of people. If investments are accepted only from a certain group of founders (such organizations have the designation AO), then you will not find their shares on the open market.
- Depending on the characteristics of this type of securities are privileged and ordinary. The yield on investments in shares of the first type is fixed, but their owners are deprived of influence on management decisions. Most often, third-party buyers deal with ordinary securities. Income from investments in such shares is determined by the success of the company that issued them.
- In free circulation there are, as a rule, only bearer securities. The reason is simple: when investing in registered shares, a rather complicated and lengthy procedure for re-registration is required.
- Papers of different issuers are on sale, including by industry (metallurgy, oil and gas production, telecommunications, etc.) and scale.
Investing in all types of shares is a completely legitimate tool that is protected by law, and when this function is transferred to broker offices, it is licensed by the Central Bank of the Russian Federation. Their choice is almost limitless, and the profit is not limited. You can also not worry about the liquidity of such investments (it is equally easy at the stock exchange to turn money into shares, and at any time to carry out a reverse conversion). It is important that this method of increasing funds is used by both large players and participants with a fairly low starting threshold (only 3-5 thousand rubles).
Beginner equity rules
Of course, it is better to enter this sphere, at least minimally prepared. It does not hurt to know the theory about investments and, in particular, about investing money in stocks. Information is on the Internet and in special literature. Be sure to read books written by well-known experts who have achieved unprecedented heights in investment and stock trading (including Fisher,Kiyosaki etc.).
Do you have the opportunity to engage in such activities? Is there a reliable job, a stable income and extra funds that are not terrible to lose if the forecast for investment in stocks does not come true?
Focus on practicality, albeit to the detriment of the final profit. By any means, reduce the risk of complete depreciation of investments, for which purpose diversify investments in stocks. When buying, make a set of securities of several companies (preferably not less than 10–20) and necessarily from different sectors of the economy. If the profitability indicators of some of them suddenly turn out to be worse than forecasts, the proceeds from the rest will keep them afloat. When choosing, give preference to those whose scope is close to your interests and knowledge.
It is important to be guided only by current data on investments in the stock market. Useful information is contained in the latest news, analytical reviews, articles and forecasts. Practitioners and experts regularly express their opinions in them and give advice on how best to make money on investing in stocks at the current time.
The typical mistakes of newbies include buying unstable and profitable in the long run, but purely speculative tools. The profitability of investments in such types of shares can be huge, they pay off very quickly with success, but the likelihood of being burned out is still much higher. Also, they often look only at the price movement and consider that if it goes up, then this is a definite plus. In reality, after a detailed analysis, it turns out that stocks are not suitable for investment. For example, if in fact the company directs its profits solely on development, then there will be no dividends, and it is not always possible to get a lot of sales. And such nuances and secrets of investment in securities is more than enough.
From the previous point, the conclusion is: do not touch the unfamiliar without support. Only those who know how it works and what to do in one or another unexpected situation should deal with such a difficult business as investing in stocks. For such purposes, there are brokers who, in addition to the main activity, play the role of personal advisers. They represent the client on the exchange and are literally his eyes and ears. Specialists monitor the bidding process, analyze various stocks and determine their prospects for investment, offering options for action. In addition, they make forecasts and reports on transactions, withdraw money from the sale to the client’s account, and even arrange mandatory tax deductions.
Strategy Options for Equity Investments
If you adhere to a specific, proven in practice line of conduct, then more can be done! Many well-known financiers have built effective algorithms and rules for investing capital in stocks on their own successful investment experience. Such recommendations are based on careful calculations. First of all, they are aimed at the convenience of the process, its safety and the preservation of psychological comfort in conditions of possible panic in the market (mass hysterical buying or selling of securities).
Here are the three most popular strategies:
- “Buy and hold.” This option is advisable to choose at the first steps in the field of investment in stocks. Means the acquisition of a package of securities for a long period of time and the rejection of the “dumping” even in the face of economic shocks and the threat of a strong price drop. Since the term of capital investment is large, the situation is likely to improve during it, and the shares will regain their former position or grow, thus ensuring the success of the investments made. But here the main condition is to choose securities of reliable companies with a long-term presence on the exchange. A good investment idea is to invest in blue chip stocks. So called large corporations, consistently making a profit for the year and paying solid dividends. For example, in Russia they are traditionally referred to as “Gazprom”,”Lukoil”, Sberbank,”Rostelecom”,”Norilsk Nickel”And some others, and at the international level – Microsoft, Apple etc.
- Graham Rules. This is a way for the pros, that is, for those who know all or almost all about investing in stocks. The advice of a well-known economist is especially popular among a wide range of users. It consists in starting investments, if the shares are at least 30% cheaper than the real value of the assets of their issuer (if the quotes are even lower, then the profitability indicators will be even more attractive). And likewise with regard to exiting the investment: the moment will be successful when the papers are given 30–60% more compared to the valuation of the respective business.
- Of course, the strategy that the recognized genius in the world of finance adheres to is very interesting. Warren buffett. He knows how to earn on investing in stocks! And he seems to recommend obvious things: carefully study the enterprises in whose assets you are going to invest, choose among them well-known and successful ones. Separately, Buffett notes the importance of demand for products. If it remains among the leaders even under adverse circumstances, then feel free to buy the paper manufacturer.
Evaluation of profitability and risk when investing in stocks
To make the right decision on such transactions requires the calculation of numerous coefficients, a thorough comparison of the data and competent conclusions. But you can get a rough idea of the situation without special skills. How it’s done?
The yield is estimated by the following simple indicators (data for them is taken from open reports):
- EPS . It helps to determine the potential income of investments in the form of dividends (equal to the ratio of the company’s profits to the total number of shares). However, it does not take into account the goals of a particular business, as it happens that funds are directed to increase assets, and not to encourage its members;
- P / E . If the nominal value of one share is divided into possible dividends (EPS), then we get its current value (for investments it is good when the coefficient is low, but the profit is too high in this indicator sometimes indicates its soon decline)
- dividend yield (calculated as the ratio of the amount of payments for the year and current quotes).
But remember: the more attractive from the point of view of profit is the option, the higher the probability of not getting it at all, and in the worst case – even losing their original investments. But all the risks are all perceived differently. What to do and what to do is determined even by the nature of the character. Do you have a higher level of anxiety, are you nervous every time quotes on the stock exchange go down, and in the press there is at least one negative forecast? If yes, then give preference to conservative ideas of investing in stocks. At the same time, with a certain degree of composure or when investments make up an insignificant part of the savings with appropriate goals and a sufficient diversity of the portfolio, it makes sense in principle to risk. But here also observe an adequate framework: first study the financial position of the company, its development trends, compare the situation on the market with other similar options. Be sure to consider inflation expectations and possible loss of liquidity of investments in the future.
Can I make money on equity investments? Definitely! Just start, and, perhaps, it will be you who will become a new well-known investor or at least a better off person.