So where is it profitable to invest your money so that they work? In this article we will look at 5 popular ways of investing funds, proven by time.
When writing this article, I relied on my own experience, the experience of my friends, and also studied a huge amount of materials and talked with large millionaire investors to give the most competent and detailed answer.
With this post, I begin a series of articles on the topic “Where to invest money.”
Here we look at both the popular ways of investing money and the “exotic”. I will highlight the advantages and disadvantages of each of them, and at the very end I will summarize our review.
At the end of the article I will tell you where it is NOT worth investing in order not to burn out. So let’s go!
1. Principles of good investing or what experienced investors look at
In this section, recommendations will be given mainly to novice investors – people who want to get a good return on their investments with minimal risks.
Here we consider the principles that should be followed in order to get a percentage of their investments above banking with almost the same reliability.
Why do I say that with almost the same? Remember the golden rule of investing?
Profit is always proportional to the risks that the investor assumes!
It may seem trivial to someone, but the first thing to start investing in is to acquire the necessary knowledge. This means that the first money is best invested not in stocks, not in gold, not in a bank, but to make investments in yourself – they will pay off many times over. So recommend to make the two richest people in the world – Bill Gates and Warren Buffett.
Once you have the necessary knowledge and understanding of various financial instruments, their principles of operation, expected profits and risks, you can proceed to practice.
Principles of competent investment of leading world investors
Principle 1. Create a financial pillow.
This means that without a specific financial base, it is STRICTLY FORBIDDEN to engage in investing. The only exception is a bank deposit, since it is more likely not an investment, but a savings instrument.
What is a financial pillow and how to create it?
A financial pillow is a six-month supply of money for which you and your family can live while maintaining their usual standard of living without other sources of income.
You can create such a pillow by regularly postponing financial receipts (salary) or selling your existing property.
For example, if your family is used to living at 50,000 rubles a month, then you must have at least 300,000 rubles to start investing.
The exception when you can start investing money at interest without a financial pillow is that you have passive income .
Passive income is the flow of money coming to you, which does not depend on your daily efforts, for example, on renting out real estate, dividends on shares or profits from an existing business.
Principle 2. Diversify investments
In order for your money to work properly, think about where to invest it in order to observe the principle of diversification, that is, the division of funds for different investment instruments.
If you have become interested in the topic of investing, then surely this concept is familiar to you. In other words, this means ” do not put all your eggs in one basket .” If you have a basket with eggs and it falls, then all the eggs in it will break and you will be left with nothing.
So it will happen with your savings (savings), if all of you invest them in one business (project) or investment instrument.
By the way, diversification involves not only investments in various financial instruments, but also in various sectors of the economy.
For example, if you invest money in the stock market, then try to form your investment portfolio * so that your money works in companies from different sectors.
Investment portfolio is the aggregate of all assets of the investor. For example, if you have a bank deposit, stocks, real estate, business – all of these tools for earning a profit in terms of investments will be called your investment portfolio.
To make your investment portfolio as resistant as possible to market changes, invest 20% of available funds in the banking sector, 20% in oil and gas, 20% in production, and 20% in agricultural or food.
So, if one company (sphere) starts to suffer losses, then the rest will “pull” your funds upward and will not allow the portfolio to sink.
Principle 3. Control risks.
Risks are the main “problem” that absolutely all investors face.
Remember, before you invest money somewhere, think about how much you can lose and only then how much can you earn.
Unfortunately, newcomers make one and the same mistake – their eyes light up, instead of pupils there appear dollar signs and now they are already rubbing their hands in anticipation of millions.
How are things going in practice?
But in practice – everything is different! Having overestimated their strength and experience, many people immediately try to engage in aggressive investing and lose money, instead of investing money in more conservative tools. So it turns out in the end that greed Fraer killed …
Investment is the same science as any other professional business, and therefore it is necessary to evolve in this direction gradually, going from simple to complex.
Start with 100 or 1000 dollars, and God forbid you to invest large sums at once, especially in what you do not understand!
The top of illiteracy here is to borrow money at a percentage and try to quickly “turn” them in some kind of “super profitable” way.
In 99% of 100, this results in the loss of the entire amount and the credit burden that hangs over you with a Damocles sword.
Do not rush, because if you become an expert in the field of investment, then your future millions from you will not escape anywhere. On the contrary – if you hurry and try to get rich instantly, then there is a great chance that you will never earn big money.
Principle 4. Attract Co-Investors
As you gain experience as an investor, you can invest money together to form investment pools. So you can get more opportunities – where to invest money, so that they work with maximum efficiency.
For example, you have found a project or tool that is attractive in your opinion for investments, you have available funds, but they are not enough. Then find those who are ready to support your investment idea and invest money on a parity basis with you.
In recent years, the PAMM accounts have become a fairly common topic . In this case, investors transfer in trust * their money to a professional manager of financial assets.
Trust asset management is a type of financial and business relationship where one person or company transfers its money (property) to another person – a trustee.
In this case, the manager can not dispose of the right of ownership of these funds or property, but only has the right to use it for profit, the percentage of which he receives as a reward for successful management.
So several investors can create such a pamm-account in stock and transfer this amount to trust management, while investors assume all the risks of losses in proportion to the invested funds.
Investors can agree with the manager of such an account (trader) that he should stop working on the account when receiving losses in a certain percentage of the value of the account.
If we sum up a small investment in such an investment scheme, then we see that investors are ready to donate, for example, 15% of their money in order to potentially receive a 30% return.
Principle 5. Create passive income.
Increasing your capital is very good, but no less important is the creation of passive income from your investment activities.
Why is this so important?
If you understand the course of my thoughts, then guaranteed to take a fresh look at investing your money.
You invested 100,000 rubles and received 130,000 rubles a year later, that is, earned 30% on the invested funds.
However, next time you cannot give a 100% guarantee that you will earn another 30% or more in a year. Considering that such profitability is much higher than the banking one, it means that the risks of this method are much greater.
You can even lose most or all of the amount if something goes wrong the next time.
On the other hand, if you could create a passive income for 100,000 rubles, for example, the same 2,500 rubles a month, which also amounts to 30,000 rubles a year, then in this case, you can easily borrow the same 100,000 rubles rubles and invest them more conservatively, so your asset with a passive income of 2500 rubles is a guarantee of repayment of a new amount of 100,000 rubles taken on credit.
In order to better understand how to create passive income and then create assets with it, I recommend playing the game “ Cash Flow ” of the famous investor, entrepreneur and business coach Robert Kiyosaki.
I wrote a great article about this game “ The Game“ Cash Flow – the best business game in the world! “
By the way, here is what Robert Kiyosaki says about the importance of passive income:
2. How much can you start investing?
You can start investing with any amount. If you have chosen a bank deposit or a stock as an investment instrument, then you can literally start from 100 rubles.
If you have no money at all, then simply start saving at least 10% of any of your income. So you will form the habit of creating a financial reserve for yourself, and as income grows, your savings will increase proportionally. The money will work for you while you relax.
The fact that you need to save money, they say all the famous people who teach success and the proper handling of personal finances: Bodo Scheffer, Brian Tracy , Robert Kiyosaki, Warren Buffett.
The fact is that with the increase in incomes, many people begin to spend even more and even take loans, as they do not have enough money all the time. This is called “Dorval to the good life . “
All the time control your balance between income and expenses, live within your means!
One of the most reliable and profitable ways to invest includes starting a franchise business.
Want a reliable investment option? Take advantage of the offer of partners of our site: become co-owners of a network of restaurants of Japanese cuisine Sushi Master .
The project deals with Alex Yanovsky, a businessman with 20 years of experience, running a lot of successful startups from scratch. At the time of writing the article on the Sushi Master franchise, 125 restaurants are open in 80 cities and 8 countries.
My acquaintance, Sergey, opened the Sushi Master point in the island format in Maykop, having invested 1.5 million rubles and in six months paid back his investments. So the scheme works not only in theory, but also in practice.
In section 4, I will describe in detail how to competently open a business for this franchise, having invested quite a moderate amount in a promising area of public catering.
Here’s what Alex says about the pros of starting a franchise business:
3. Where to invest money so that they work – 5 profitable ways to invest
Now many people have eyes of various proposals – where to invest money. If you open the Internet and read articles on this topic, then someone offers to buy such a super-course, which you will become a millionaire in a week.
But in most cases, all these “magic pills” are nothing more than a good way to divert your savings.
Now we will look at classic methods that allow you to invest in understandable instruments with predictable returns and moderate risks.
Method 1. Bank deposit
This is the most popular way to save money, but its income is hardly comparable with the rate of inflation in the country. So if you invest money in a bank and keep it there from year to year, then at best you simply won’t lose it, there’s no question of more or less tangible earnings.
A law has now been passed in Russia that guarantees payments on deposits of 1,400,000 rubles if the bank goes bankrupt. This applies to all banks that have a formal banking license.
Previously, the insured amount was 700,000 rubles . That is, if you have invested your money in the bank and for some reason it ceased to exist, the state will compensate you for your money if the amount of the deposit does not exceed the insurance amount.
Now in our country there are hundreds of banks with interest rates ranging from 5% to 12% .
Historically, Sberbank is the most popular bank among our citizens, although here the percentage of deposits is one of the lowest, but the large branch network and high reliability of the bank itself allow it to remain the leader in terms of deposits.
Pros and cons of investing money in a bank deposit
- high reliability (low risks);
- high liquidity (the ability to return money at any time);
- the minimum threshold for investment (you can start with 1000 rubles);
- simplicity and clarity of the investment tool.
- low interest on deposits;
- loss of interest in case of early withdrawal of money.
Method 2. Stock market and mutual funds
The stock market is a part of the financial market where people or companies can acquire stocks, bonds, futures and other securities.
If you have free funds and want to get more income than at a bank, but you take on relatively large risks, then the stock market will be a good tool for you.
To start investing in securities, you just need to contact a bank or a specialized brokerage company that deals with operations in the stock market.
Personally, I recommend for this purpose two well-known broker companies Investment Company Aton and Brokerage House Otkritie. You can safely invest your money in these companies so that they work and not be afraid of losing them.
Many cities have their offices.
By the way, speaking of the stock market, it is worth noting that there are different types of investors for the duration of investment. There are short-term investors , they are also called speculators. These are people who buy and sell securities in a short time: from a few minutes to a few weeks.
There are medium-term investors, they buy stocks for several weeks or months. There are also long-term investors , usually they act according to the “bought and forgotten” principle – they invest their money in securities for several years, assessing the potential of the company and the industry in which it operates.
The latter type of investors is investment guru Warren Buffett. Once he was asked when it was worth selling the purchased shares, and then Buffett replied that never! This is his long-term investment concept.
You can independently manage your investments or entrust this business to a professional manager (trader).
There are also special funds where you can invest funds – mutual funds.
Mutual Fund – mutual fund. This is a financial organization that independently form their investment portfolio from different financial instruments (shares, bonds, bank deopozity) and sells shares in the portfolio – the units .
According to the results of a certain term of management, interest is calculated according to the size of your share.
But if you definitely get more money than you invested in the bank at the end of the year, your profitability here can be negative, that is, the fund can work out at a loss.
Pros and cons of investing money in the stock market and mutual funds
- a small initial amount for investment (from 1000 rubles and even less);
- interest at the end of the reporting period is usually higher than at the bank;
- a wide range of investment instruments (stocks, bonds, futures, options);
- opportunity to receive dividends;
- the ability to independently create an investment portfolio by choosing a flexible ratio of risk and expected return.
- relatively large complexity of the investment process compared with a bank deposit;
- relatively large risks (you can get a loss);
- In certain cases, special knowledge is required (with independent management of the investment portfolio).
Method 3. Forex (foreign exchange market)
Forex is a global global currency exchange market. Here you can exchange (convert) almost all known currencies, that is, buy one monetary unit for another, for example, dollars for euros.
Forex traders earn speculators, most of them perform intraday trading.
After all, we want to know all the ways where to invest money so that they work and Forex will help us with this. After all, here you can quickly raise capital several times in a couple of months. In a popular article on our website, I already talked about my trading experience and how to make money on the Forex market .
Indeed, in Forex you can earn a lot of money quickly . However, this carries enormous risks and you can lose your investment capital in a matter of minutes.
Now a large number of companies offer Forex trading services. Such companies are called forex brokers.
I will give you good advice
Be careful when choosing a forex broker. Since now there are a lot of companies that do not withdraw your trading transactions to the real foreign exchange market and you just play on your computer in the trading program like in a casino (naturally, losing your money).
Before you start doing this way of investing, read customer reviews, go to the company’s office, make sure it is trustworthy and serious.
Pros and cons of investing money in Forex
- a small entry threshold (usually from $ 100);
- the ability to quickly and earn a lot;
- a large selection of investment instruments (currency pairs for trading).
- special technical skills and knowledge are required for investment;
- very high risks.
Method 4. Bitcoin (Cryptocurrency)
Here you can earn very well, but also lose, if you do not follow the market. The most famous cryptocurrency – Bitcoin. Its main advantages: decentralization, anonymity, security, limitations. This means that Bitcoin is not controlled by any state and due to limited emissions and the growing demand for cryptocurrency, its price will only grow in the future. You can buy Bitcoin at a favorable rate in Matbi – this service is not only an exchanger, but also a crypto-wallet, where you can safely store cryptocurrency.
Method 5. Real Estate
One of the classic investment tools when a person with money wonders where you can invest your money.
You can buy both residential and commercial invisibility. Naturally, commercial real estate provides more income than residential, however, and requires more knowledge for its competent purchase.
In addition to buildings, real estate also includes land, water bodies, ships, airplanes and spacecraft in accordance with the Civil Code of the Russian Federation.
Real estate has a number of great advantages, but this investment method is also not without drawbacks.
Pros and cons of investing money in real estate
- the opportunity to rent property and receive passive income;
- the opportunity to sell real estate and make money on the difference between the purchase and sale prices;
- a reliable way to save money (real estate in most cases protects money from inflation – depreciation);
- due to the fact that real estate is a tangible (tangible) asset, it can be used for your own commercial or non-commercial needs, for example, you can open a business indoors, you can live in residential real estate.
- high entry threshold (usually from a few hundred thousand);
- low liquidity (it is impossible to sell quickly without a significant loss of market value);
- subject to mechanical damage – damage to tenants, natural disasters, force majeure – an explosion of gas, fire, and so on (insure your property to avoid losing money if it is damaged or lost).
Method 6. Own business
If you have an entrepreneurial spirit and a certain commercial experience, then one of the best solutions for you will be to invest in your own business.
A simple example:
Resale of Chinese goods with a large margin (300-800%).
You can buy goods in bulk in China or from a wholesale supplier in a large city and start selling them online. Often such a scheme is also called “Business with China” – a very profitable and promising direction in runet.
The team of our site is personally acquainted with the successful entrepreneur in this topic, Yevgeny Guryev . Zhenya not only has been conducting his business efficiently for a long time, but also teaches others about it.
If you want to start your own startup in the near future and start earning 100-200 or even 500 thousand rubles in a few months – contact Evgeny and he will take you by the hand on all matters of creating a successful business selling Chinese goods.
Be sure to check out the apprenticeships of married students to be inspired by their success stories:
Yes, there are also certain risks here, but you can manage them flexibly, because in this case you decide where to send these or other funds in order to get the most out of them.
It is especially effective to invest money with your own business if it is already running, and your new investments will help the business to bring even more profit.
Pros and cons of investing money in your business
- you yourself manage your money by building and optimizing business processes (being the owner of the business);
- for business projects, it is quite easy to find co-investors, which helps to attract larger amounts than if investments were made alone;
- it is easier to get a loan for a business than for other investment tools.
- high risk of losing money;
- low liquidity of the majority of assets (it is impossible to quickly sell equipment, goods, etc., without a significant loss of value);
- loss of share in a business project (in the case of attracting co-investors).
4. Sushi Master Franchise Business – investing money with profit
Own business from scratch is a rather risky event. This requires a solid start-up capital, an original idea and a thought-out business technology. But there is an alternative option – to use a ready-made commercial model with a known payback period and guaranteed yield.
The network of restaurants of Japanese cuisine Sushi Master has its offices in Russia, China, Ukraine, Lithuania, Hungary, Kazakhstan and other countries. The main share of business falls on the Russian market.
Franchising is one of the leading activities of Sushi Master. A firm’s promoted product is a predictable business with a proven and efficient structure.
The owners transfer the finished model to their partners, the last thing that remains is to comply with the established standards in cooking and marketing, and also to maintain an appropriate level of service.
Payback period of the franchise: 5-18 months depending on the region of location, the chosen format and other objective factors.
The algorithm for opening a branch of Sushi Franchise Master is as follows:
- Apply on the official website of the company.
- Pay the lump sum – at the time of this writing, this amount is 400,000 rubles.
- Take a course at the training center in Krasnodar.
- You get the right to open a point under the brand SUSHI MASTER, a formal contract, production technologies, original recipes.
- Together with the owners of the franchise, choose a place for a restaurant, expect a payback, get support for a start-up team.
- Open a restaurant.
- Together with the team, bring the project to a stable profit.
You will calculate the total initial investment together with the team individually. Cost range: from 1.3 to 4.5 million rubles. The opening time of the restaurant – from 3 months.
The advantage of this model is that it is guaranteed to work. All possible problems and obstacles that may arise at the launch stage have a proven elimination algorithm. You do not work alone, but become a member of a successful business, which has already paid off more than 100 times, brought and still brings profit to its owners.
The co-owner of the company, Alex Yanovsky, is the founder of his own School of Business behind Glass, a successful entrepreneur whom I know personally. In his honesty, as in the profitability of the franchise, I have not the slightest doubt.
The risks are minimal, and the support of the training center under the direction of Alex Yanovsky is continuous and constant. At your disposal – the experience of successful businessmen, professional equipment, proven marketing technologies.
The market niche that you occupy is now on the rise: there is an outflow of visitors from expensive restaurants to cheaper ones. Catering establishments in the street format or the “island” format are in demand and are popular – we offer our partners just such options.
5. Where you should not invest money to not burn
It is not worth investing money in knowingly losing enterprises – financial pyramids , casinos, illegal and morally unacceptable projects.
These include criminal types of business: trafficking in drugs, weapons, contract goods, the organization of brothels, front companies laundering money, as well as fraudulent schemes in real estate (corruption in construction, eviction of lonely old people and re-registration of housing).
To live in peace, be engaged in honest and socially acceptable ways of earning money, then you will find not only financial freedom, but also spiritual harmony.
In this article, we examined the fundamental principles of investment, recommendations from the best investors and experts in the field of business and finance, as well as got acquainted with the most popular ways of investing free money.
In the next part of the article “Where to invest money”, I will talk about less common and seemingly not obvious ways to increase your capital.
And if practically everyone knows about bank deposits, the stock market and real estate, for example, not many people know how to create a good passive income for themselves by investing money in their own Internet projects.
Dear friends, I hope that now you have figured out where to invest money so that they work and bring you profit. After all, you can become rich and earn millions.
I wish you a good investment!