How to learn to invest from scratch?
We will tell you how to understand investments and invest wisely, if you have never done this before.
The myths that investments are like a gambling game, in which, sooner or later, every penny will be lost has long been dispelled. With the right risk assessment and the right amount of theoretical knowledge, you can create a balanced investment portfolio that works for you and your goals. We will tell you how to learn how to invest from scratch in our article.
Why you need to invest
Savings on hand make many people think about increasing them. Keeping money in a safe at home is not very profitable, because inflation can eat it. For the registration of deposits, now is also not the best moment, since the interest on them continues to fall following the key rate of the Central Bank. Naturally, under these conditions.
With investments, you can:
protect savings from inflation;
get additional income;
create an airbag and gain financial freedom.
Before you start investing, decide on your financial goals. At this stage, it is important to prioritize and assess the value of your desires.
3 main whales of investing
Typically, investments require some kind of initial savings. Payroll deductions can be a great way. By saving only 10%, in just a year you will be able to accumulate an amount sufficient to enter the stock market. At the same time, it is not necessary to wait all 12 months, because even with 1000 rubles in hand, you can already buy a government loan bond.
It is false to believe that with 10-20 thousand rubles you will not be able to start investing. Just take a look at Warren Buffett, who started his investor journey with $ 115 and earned only $ 5 on his first deal. Today this person is included in the list of the richest people in the world.
Here are some tips for a budding investor to follow:
Decide on the investment horizon. When it comes to bonds, the stock market is conventionally divided into short-term securities and long-term ones. For example, OFZs are limited to a specific validity period (3, 5, 7, and even 10 years). Shares, in turn, are considered a perpetual asset. They exist as long as the company operates and remains public.
Choose an investment instrument. Decide where to invest your money. The investor decides what securities he will purchase, whether he will invest money in business development, whether he will entrust his savings to a mutual fund and a management company, or simply open a deposit in a bank.
Focus on risk and reward. Fixed-interest securities (for example, federal loan bonds) are considered less risky instruments compared to stocks and bonds issued by enterprises.
Tip: To make it easier for you to choose the right investment instrument, first of all define your risk profile. This is your type of behavior in the financial market. It takes into account your goals, desired profitability, investment horizon and acceptable risks. Depending on your attitude to risk, the risk profile can be conservative, rational or aggressive. Conservative investors prefer low-risk instruments with low returns, aggressive ones are ready to risk capital for the sake of high potential returns, and rational ones choose the golden mean.
Interesting! The richest man in the world – Bill Gates – distributed his savings as follows: 20% are concentrated in the shares of their companies, the rest is invested in the shares of large US enterprises and directly in business.
How to learn to invest: choosing investment instruments
Newbies, entering the stock market with $ 100 in their pocket, want to increase their capital by 2-3 times in a year. In fact, a high return on investment is only possible in the long term. If you do not have financial knowledge, take online investment courses for dummies or entrust your savings to a management company, which will form an optimal investment portfolio for a fee.
Perhaps one of the most secure investment instruments, because in the event of bankruptcy of a financial institution, the state guarantees the payment of a deposit in the amount of up to 1.4 million rubles. The instrument’s profitability is low – 3.5-6.5% per annum.
For beginners who open a deposit for a significant period, it is worth choosing a tariff with capitalization. This means that the accrued interest will join the body of the contribution, increasing the base for calculating income.
OFZ and corporate bonds
OFZ – federal loan bonds, payments on which are guaranteed by the state. They are recognized as a low-risk asset. By purchasing such a bond at a set price, the investor seems to be lending to state-owned enterprises. After a certain period, the issuer returns the money to the creditor (payment of the par value) and pays interest for their use (coupon). The yield on OFZ is low – 5-6% per annum. Coupon income is tax deductible.
Another way to generate additional income on bonds is to sell at the time of a favorable market situation. An example would be the purchase of government bonds before the start of a key rate cut by a country’s central bank. Due to falling yields on new debt securities and a decrease in the cost of funding in general, the market begins to overestimate the value of the old bonds that you bought earlier. As a result, their profitability will fall and their value will rise. Thus, you will not only earn a coupon income over the life of the security, but also receive a profit from the resale.
Shares of companies
Stocks are considered a risky investment because it is not known whether the corporation will be profitable.
Types of return on shares:
exchange rate difference from selling at a higher rate.
Unfortunately, the exchange rate and dividend yield of such securities is subject to 13% personal income tax. Want to avoid paying income tax? Then invest through an individual investment account. When storing funds in such an account, the investor has the right to a tax deduction in the amount of up to 52 thousand rubles annually.
The investor is offered 2 types of accounts – “A” and “B”. The first option is suitable for officially employed persons. If you do not plan to withdraw money from your account in the next 3 years, then annually you will receive the right to receive a 13% deduction from the amount up to 400 thousand .Type B implies exemption from tax on income from the sale of securities. Suitable for those who are actively involved in transactions with securities or have no official income.
A novice investor does not need to learn financial literacy to manage free funds. It is enough to entrust the money to the management company (MC), which will select profitable investment instruments on a paid basis.
How do MCs work? You choose the management company you are interested in and conclude a trust management agreement with it. After depositing funds into a special account, the manager forms an investment portfolio that will correspond to the chosen strategy and your preferences. It should be noted that all securities are considered your property and are separated from the property of the manager, which allows you to avoid unpleasant situations.
Choosing a broker
It is necessary to buy and sell securities through a brokerage or individual investment account. When choosing a broker, pay attention to the following parameters:
accreditation on exchanges and popular trading platforms;
commission (the amount of a fixed fee or a percentage of the transaction);
the threshold for entering the stock market.
Many brokers provide clients with online trading services. You just need to select the stock market instrument you are interested in, replenish your account and generate a request to buy / sell a security.
A strategy is a set of behavioral reactions on the exchange when trading. Be sure to determine for yourself what assets you are going to trade and what indicator you will pay attention to when making decisions.
Most often, newbie investors choose a wait-and-see strategy. They buy securities at a reduced price or at par and then expect an appreciation or fixed income. In this case, the investment period can be up to 3-5 years.
Consider the following points:
type of asset;
A portfolio investment strategy involves the purchase of various securities, which will minimize systemic risk (so-called diversification)
Tips for beginners
Try not to invest everything you have in stock market instruments. Start with a bank deposit or OFZ, creating a “safety cushion”, and then move on to stock trading.
Financial market experts’ recommendations:
set a loss limit and follow it when managing your portfolio;
diversify risks by investing in various securities of different issuers;
do not believe the tricks of dishonest management companies and venture capital funds promising to increase profits by 200% within a year;
always stick to the chosen strategy, do not act impulsively, seeing that the stock price starts to fall;
open an IIS to receive tax preferences;
rebalance the portfolio (for example, if one asset rises in price, sell it, and use the money received to purchase a cheaper asset).
Thus, you can start investing even with a small amount, and to make a profit without serious risks, it is enough to choose conservative instruments, open an IIS, or entrust the management of your savings to a management company.