As of July 2019, the highest rate on bank deposits in Russia does not exceed 9.5% per annum, which is not very much. There are also not many other “passive” ways to save and increase money - for example, the cost per square meter of real estate in the capital has not actually increased for many years.
Therefore, those who want to preserve their finances and, ideally, increase their capital at least a little, today have to turn their attention to the stock exchange. In a certain situation, with the help of investment instruments existing today, it is possible to solve the problem described above. Today we will talk about them.
Note: the investment methods described in the article are available to people with little experience and who do not have millions of assets, they do not imply quick enrichment in the shortest possible time, they have their own, although not very large, risks - this needs to be understood.In addition, to perform the operations described in the topic, you will have to open a brokerage account - this can be done online (it’s free, you can also open a test account with virtual money for experiments and studying trading software).
Structured Products
Not everyone knows this, but in fact, the risk of stock investments can be managed, even made almost zero. This can be achieved with the help of so-called structured products - that is, different financial instruments collected in a single portfolio. The brokerage company's analysts select them in a certain proportion to ensure either minimal or near-zero risk when investing on the stock exchange.It works like this: a structured product “collects” assets with low risk and small possible profit and riskier assets, which, under a successful set of circumstances, can bring higher income. The idea is simple - if a risky instrument “does not work” and there is a loss on it, then it will be compensated by the profit from a less risky asset - therefore its volume in the structured product is higher.
For example, 90% of a structured product may be federal loan bonds (OFZ), and 10% shares of a company. We wrote more about the parameters of structured products (terms, levels of capital protection, available instruments, participation rate).
Here we will briefly say that strategies with structured products are constantly updated, the most relevant ones. In July-August, you can use several strategies with a capital protection level of 100%.
An example of such a strategy:
It works like this:
- If at the time of redemption of the product the price of the underlying asset (Lukoil shares) is lower than the “Initial price” parameter, then the investor receives back the invested capital in full.
- If at the time of product redemption the price of the underlying asset is higher than the “Initial Price”, the investor earns participation in growth plus receives back the invested capital in full.
Model portfolios
A model portfolio is an investment portfolio that consists of several securities selected according to certain characteristics (for example, bonds or shares of one sector of the economy). It is somewhat similar to a structured product, but there are fewer opportunities for risk management, although you can start investing with slightly smaller amounts (tens, rather than a couple of hundred thousand rubles).Such portfolios are convenient for novice investors who have several tens of thousands of rubles, but have no experience working on the stock exchange, which means there is a high probability of losses when trading independently. Each portfolio has an expected return so that the investor understands how much he can earn.
The scheme is simple:
- the investor chooses the portfolio of securities he likes;
- contributes money to form a portfolio;
- sets the investment period - the longer the period, the higher the overall profit is possible, usually choose terms of 6 months (but less is possible);
- If necessary, funds can be withdrawn early.
An example of such a portfolio: a model portfolio of American stocks - the possible return is 23% per annum with a low level of risk. Read more about model portfolios.
IIS accounts + federal loan bonds
An individual investment account (IIA) is an investment instrument that allows you to save money with high degree reliability, and in addition - earn extra money. It's like a savings account: you put a certain amount into it, top it up at any time, don't withdraw your savings for 3 years - and you're entitled to tax benefits different types.Such accounts became operational in Russia on January 1, 2015. Initially, up to 400,000 rubles could be placed on the account, later the amount was increased to 1 million rubles. In addition, it became possible to add 400,000 rubles. during two years.
When using an IIS, you can receive two types of benefits. The first of them is a tax deduction (13%). To receive it, you need to deposit money into an investment account and also have official, taxable (NDFL) income. For example, if you deposit 400 thousand rubles into an IIS, then the maximum you can return as a deduction is 52 thousand - for this you will need a salary of 33 thousand per month. According to the rules, the money must remain in the IIS account for three years; you can withdraw it earlier, but then the deductions will have to be returned.
The second type of benefit when using IIS is exemption from income tax from transactions on the stock exchange. And this opens up space for low-risk investments - just right for our task of preserving finances and, if possible, increasing them.
This strategy can be implemented using ready-made model portfolios using OFZs - Russian federal loan bonds - and bonds of Russian companies.
OFZs are securities that the state issues to attract additional money to the budget - and pays interest for it. The OFZ yield in the summer of 2019 ranges from 7-7.9%, that is, it is approximately equal to the rates on most deposits. In terms of reliability, this asset is also comparable to deposits - although assets purchased on the exchange are not covered by the deposit insurance system, the government’s refusal to pay debts will mean default (with all the ensuing consequences, including for the banking system).
Similarly, large Russian companies also issue bonds – and their yield is higher. As a result, using a model portfolio that combines such bonds and OFZs, you can earn up to 12.5% per annum. There are also portfolios that contain bonds (debt obligations) of companies, including those with government participation. An important point: to start work, a few tens of thousands of rubles are enough, and all income will be exempt from income tax - after all, we used an IIS account.
Trading and purchasing securities, thanks to electronic access to trading, has become widely known for last years. Today you do not need significant funds to work on the stock exchange; it is enough to have a computer, the Internet and a minimum amount of money. However, according to statistics, more than 80% of novice traders face failure, losing their deposit, which leads them to a logical question - is it possible to really make money on the stock exchange, how much money is needed for this and how long will the process of making money last, as well as what types of money exist? ways to make money on the stock market. The answers to all these questions are below.
Initially, shares were invented so that people would make money on the development of the company, and not on changes in prices on the stock exchange.
Is it possible for a beginner to make money on the stock exchange?
It is quite possible for a beginner to make money on the stock exchange. However, it is worth realizing that trading is not a game. In order to start really making money on the stock exchange as a beginner, you need to learn the art of trading, understanding the laws of the market, technical and fundamental analysis. And even after mastering all the necessary skills, it will not be easy for many, since this type of activity requires having a certain mindset.
It all comes down to a simple understanding of the company's business and the market.
Great success in the investment business is achieved by those who try very seriously to study and analyze a market that is convenient for trading.
Of course, a case like Microsoft is one of the best investments. In reality, investors reduce risks, which ultimately results in profits in the region of the above-mentioned 15-50% per annum. Reviews from experienced investors say that diversification is the only correct investment option.
How long does it take to learn how to make money on the stock exchange?
As for training time, there are no clear answers. According to popular opinion, the average period for which you can actually start earning money is 1 year.
“Until the basic literature has been studied and some time has been spent with successful traders, we can assume that trading for a novice trader is limited to the space of a supermarket.”
The reality is far from average figures. You need to constantly look for good information for analytics, and trading itself is not suitable for everyone. Some people can learn to trade for 5 years or more without ever starting to make money. Here we can draw an analogy with any other type of activity:
- Medicine. To become good doctor, first you need to study for more than 8 years, and then go through considerable medical practice, see thousands of patients.
- Jurisprudence. First you need to get proper education for 4-5 years and then practice in real court cases. All this may take an indefinite period of time, and in the end, you may remain only a mediocre lawyer or prosecutor.
- Sport. Some athletes spend their entire lives (10-20-30 years) improving their skills. Sometimes their efforts may be in vain, because they will not be able to win a medal, become famous and earn a decent income.
Trading and investing are one of those areas where there is a very wide range between starting an activity and earning money.
As a result, everyone decides for themselves how much time it takes to learn how to make money on the stock exchange. Someone starts earning money after a year, but there are very few of them, the rest - after 4-5 years, but the majority leave the business altogether. The longer you trade, the higher your chances of being on the winning side.
How much can a beginner earn on the stock exchange?
Doubts about whether it is possible to make money on the stock exchange over the Internet have been dispelled. However, what kind of income can a novice trader expect?
Under successful circumstances, a novice investor can earn about 20-50% in the stock market in the first year (experienced ones can make a profit of around 100% per annum or more).
Traders can earn a higher percentage of profits, but they also spend more time on work. 1-3% per trading day can be considered an excellent result.
However, several conditions must be met for this to happen.:
- Continuous training;
- Predisposition to trading;
- Availability of strict discipline in compliance with risk management and analytics.
If you started from scratch, having read the literature and trained on small amounts in 5-10 transactions, then 0% and saved money is already a success, because if you have no losses, this means you at least understand the market.
Example. Below you can see an example of earnings from buying shares. We have opened a broker platform that offers a large number of shares for trading and investment, as well as high leverage of 1:300.
We dragged the desired shares onto the chart and opened a buy trade ( Buy):
After a couple of business days, the value of the securities increased in price along with our profit:
To take profit, we closed our position:
As a result, the profit from the purchase of shares amounted to $96,62 :
- Don't trade or study with other people's money. Taking out loans and asking to borrow money is an undertaking at your own peril and risk. It is advisable to open accounts freely, for what a private investor would spend as an investment in a startup, for example.
- Look for trending stocks. For successful trading, it is best to choose stocks with a strong trend and make money on their movement. Best suited for a beginner. However, it is necessary to avoid trading stocks with a weak trend, otherwise there is a high probability of falling into a correction or reversal, which will bring losses to the beginner. If on any given day you cannot find stocks with a strong trend, it is better to avoid trading altogether before they appear.
- Determine entry and exit points before opening a position. It is normal for anyone to experience fear of losing money or greed when caught in a profitable move. In order to exclude the influence of these factors on profitability, it is necessary to know in advance when the entry will be made and at what point it is necessary to exit the position. You definitely need to remember about stop orders and take profits.
- Maintain discipline. You need to set daily goals and limits and strictly follow them. If one trade managed to reach the daily goal, then you cannot continue trading simply because there is still time left. Moreover, under no circumstances should you try “ get even» after reaching the daily loss limit. The stock market is not a casino; trading requires a fresh mind, calm nerves and deep market analysis.
- Don't chase the number of deals. It would be much better to make one transaction per trading day, but well thought out, than half a dozen “raw” ones.
- Don't rely on popular analysts, use your own analysis methods.
Myths
Some popular misconceptions about investing and trading:
- Myth No. 1. Being a trader is easy, you can earn money from your laptop while lying under palm trees by the sea. Unfortunately, trading presents a lot of psychological and intellectual stress. A speculator needs to analyze news, charts, risk money and control himself during losses. This is why successful investors and traders on Wall Street prefer high-rise offices and business suits rather than palm trees.
- Myth No. 2. To start trading you need a lot of capital. This is wrong. Today brokers offer access to the market with a minimum amount. For example, you can trade shares on FinmaxFX using leverage from $10.
- Myth No. 3. The stock exchange is a scam for ordinary people. This point of view is erroneous, since the stock market is regulated at the legislative level and is a source of income. Here you can actually get a share in the company’s ownership, dividends and participate in the business. As was said at the very beginning, shares are created to earn money from a share of ownership of a company. Price speculation is just an additional opportunity.
Conclusion
Is it possible for a beginner to make money on the stock exchange online?
Certainly. With development modern technologies communications, the question of whether it is possible to make money on the stock exchange should not raise doubts. Experienced traders have learned to extract stable income from trading securities. However, it is necessary to understand that trading is the same mental work as any other.
The amount of earnings on the stock exchange can be completely different; for stable success, a level of 30-50% per annum is enough; the most talented traders earn 100-500% or more.
You can achieve stable earnings on the stock exchange if you work hard and do not pay attention to the prejudices that have formed around the stock market.
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Trading on the stock exchange and investing in shares may seem to be identical activities at first glance. Ian Harvey, trader, researcher, financial writer for the educational site Investopedia.com, explained how the work of a stock trader differs from the work of a stock investor.
With the original article by Ian Harvey “The roles of the stock trader and stock investor in the market” - “Stock Traders’ vs. Stock Investors’ Roles in the Marketplace” can be found on Investopedia. Com.
Many people use the words "trading" and "investing" interchangeably, when in reality they are different activities. Even though traders and investors operate in the same market, they perform very different tasks using very different strategies. Both of these groups of stock exchange participants are necessary, however, for the market to function smoothly.
Stock Exchange Traders are individuals or organizations that engage in the trading of equity securities, or the transfer of financial assets in any financial market, either for themselves or on behalf of someone else. They work as agents, hedgers, intermediaries in banking and trading operations, speculators or investors.
Stock Exchange Investors are individuals or organizations that use their own money to buy equity securities that offer potential benefits in the form of interest, income or appreciation in property value (capital gains).
Let's take a closer look at the work of investors and traders on the stock exchange.
Today in developed countries, many working people, in addition to their main income, try to invest money in various securities. This can be additional income with the prospect of profit growth in the future. The most common instruments are shares and bonds of large companies.
Where to begin
Before you take money to the stock exchange, you should take care of the “reserve fund”. Investing in securities is always a risk. Therefore, first you need to make a deposit in a bank, where you can save up at least three monthly salaries. This will be a “safety cushion” for a rainy day, in case you lose. When choosing a bank, you should adhere to the golden rule - the credit institution must have a valid license from the Central Bank of the Russian Federation. Only this guarantees the safety of your funds.
Before choosing an investment instrument and buying securities, it is also a good idea to educate yourself and understand at least the basics of working on the stock exchange. Many companies today offer free courses to get started with investing. It should be remembered that some brokerage companies specifically teach clients to speculate, that is, to play on the stock exchange every day, buying and selling shares. This method is not for beginners, and you can be sure that you will not earn anything, but will only “feed” the broker with commissions.
The brokerage company must also have a license from the Central Bank. A list of such companies is on the Central Bank website in the “Financial Markets” section. Brokerage services are also provided by large banks.
You should be especially careful when contacting companies that operate in the Forex market. There are a lot of illegal dealers in this market.
“In the first quarter of 2018 alone, the Bank of Russia identified 99 illegal Forex dealers, data on 78 such organizations was sent to the prosecutor’s office to block their websites through legal action,” Valery Lyakh, director of the department for combating unfair practices of the Bank of Russia, told Karelinform.
As a rule, scammers lure clients with the promise of easy and big earnings. On their websites, such companies provide access to a “personal account” and supposedly a trading terminal. In fact, clients do not invest in currencies, and all the results on the sites are “painted”. As a result, clients’ invested funds go to scammers’ accounts, and when attempting to withdraw cash, “technical problems” begin to arise.
“Often, companies that do not have a license from the Bank of Russia trump the fact that they are registered abroad and have a license from a foreign regulator. But remember - if problems arise when interacting with such a platform, and they arise in 99 percent of cases, you will have to fight for your rights in a foreign jurisdiction - in the Virgin Islands or even further,” warns the Central Bank expert.
In any case, it is worth remembering that currency trading is the riskiest way to invest money.
How the exchange works
There are several common myths regarding trading on the stock market. One of them: the exchange is like a casino, the client always loses. Another misconception is that playing on the stock exchange is easy and extremely profitable. Both statements are extremes. In reality, the stock market is just a place where you can buy and sell securities.
There are two main types of company securities: stocks and bonds. By purchasing shares, a person becomes the owner of a share in the company. By buying bonds, he only lends money to the company at a fixed interest rate. In both cases, the security holder can count on income that is higher than the income from a bank deposit. However, in both cases there is a risk. If the company goes bankrupt, no one will return your invested funds.
Therefore, most people around the world prefer to invest in securities of large and stable companies. But even in this case, you should remember simple rules investing.
Firstly, if you don’t understand anything at all about investments, then you can first purchase shares of mutual funds investment funds(PIF). This is the easiest way to invest in the stock market. Secondly, if you still decide to understand the intricacies of the stock exchange yourself, then you need to open a brokerage account. This service is offered by large banks or brokerage companies.
Buy and sell shares through Personal Area easy - it takes no more than a minute. But not all trades will be profitable. It is almost impossible to understand when which securities will rise in price and when they will fall. On initial stage invest no more than 10-20% of your savings in stocks and bonds.
The exchange does not offer you to earn money easily and quickly. Again, you shouldn’t put much faith in the “stock exchange gurus” from free courses that teach you how to buy and sell every day. It is also impossible to find the only correct strategy that will bring a guaranteed income - there are no such strategies, and you will soon be disappointed.
Remember that stocks and bonds are long-term investments. You don’t need to expect that in a year or two you will already have saved up for a new apartment. It may happen that by the time you buy an apartment the stock market will fall, then you will have to wait for a new rise in the market.
Mutual fund - for beginners
Beginner investors are always advised to choose a mutual fund instrument. You simply transfer money to the brokerage company, and managers will make trades for you.
The easiest way to invest is through index funds. Managers do not try to speculate and take risks, but simply invest in the securities of large and stable companies. Moreover, the commission for such funds is usually the lowest. Most non-professional investors around the world invest their money this way.
However, this instrument is more suitable for investing small amounts up to 100 thousand rubles. If you are willing to risk several hundred thousand, then it is better to study the intricacies of the stock market yourself.
Features of the national exchange
Another convenient investment tool has recently appeared in Russia. These are individual investment accounts (IIA). It works like this: the client opens an account, deposits funds into it and buys shares or bonds. As a result, the account holder receives due dividends and profits from the increase in the value of securities, coupons from bonds, but most importantly, a 13% tax deduction on a deposit for up to 3 years.
There are two restrictions. Firstly, you can deposit no more than 1 million rubles per year into an IIS account, and a deduction can be obtained from an amount of no more than 400 thousand rubles (that is, 52 thousand rubles per year maximum). Secondly, to qualify for a tax deduction, you cannot withdraw funds from your account for 3 years.
Thus, the IIS tool allows you to earn up to 11-12% per annum in three years, taking into account tax deductions - compared to a bank deposit, the profitability is almost one and a half times higher.
Real stories
Compliance with the basic rules and prohibitions of investing allows you to earn good additional income in the long term, say participants in specialized forums.
“I have been trading on the stock exchange since October 2015. And I realized that it was quite risky. The other day, for example, I earned 248,000 in one day, and a day later I lost a large amount - 170,000. But a day later I “recaptured” and received 330,000,” writes Vladimir, a resident of Stavropol.
“I’ve been on the stock exchange for about 6 years. I immediately set myself a rule - to avoid scammers. I chose the stock market as the most suitable investment environment. I remember my first deal - I bought shares at 142 rubles and sold them at 149. Naturally, I was left in the red, since I paid a commission to the broker. For the next six months, I continued to feed the broker by making daily trades. Then I realized that it was better to play for a long time. If you want to earn something, my advice to you is to buy reliable securities and forget about them for the next five years. I had a profitability of 150% on the shares of one company. But we had to wait,” writes another investor from Stavropol, Ivan.
Things to remember
To summarize, we can briefly formulate the basic rules and restrictions when investing in securities:
If you don’t have savings in the bank, don’t go to the stock exchange. First, create a “safety cushion” that will help you out in case of a crisis or failure. The reserve of funds should be equal to 3-6 months' earnings.
The best strategy for beginners is to buy and hold securities of large companies. There is no need to “play the stock market”, you need to invest.
Complete your initial training, preferably at a large, independent school.
It must be remembered that investments are long-term investments. There is no need to count on immediate profit or even large income within two years. Your perspective is 3-5 years.
Consider simple and affordable investment instruments - mutual funds and individual investment insurance. They are also associated with a certain risk, but are more understandable and predictable.
Greetings, dear readers! A fairly reliable, with a competent approach, and a profitable investment method today is the purchase of securities on the stock market.
And although this method is available to almost everyone who wants to invest, success in the market depends on numerous factors.
The purchase/sale of securities involves problems that are present in any investment process. Therefore, before investing in stocks, a potential investor needs to understand what goes into success in the stock market.
By the way, now it is possible to buy shares without leaving home through, as well as open an individual investment account (IIA) remotely.
To buy a small block of shares for testing, you can use the button below:Buy shares online
Important rules for investing in stocks
- You can invest only your available funds in the purchase of shares. Taking out loans or borrowing from friends in order to trade stocks is reckless. You should always be aware of the risks associated with. Therefore, it is better to risk free capital than, in the event of a failure, to remain in debt to third parties.
- Before you start investing in stocks, you need to create a budget. One part of the free capital must be left in reserve in case trading in shares is unprofitable. To rehabilitate yourself in the market, you need funds. So this reserve will be used for such cases. And the second part of the capital must be used to purchase shares. This budget should not be spent on anything else.
- Regardless of whether the investor himself will trade shares on the stock exchange, or he will give his money in trust to professionals, possible risks must be diversified in advance. What does it mean? Simply put, you should never invest all your money in buying shares of any one company, even if it is profitable. To reduce investment risks, capital must be distributed in such a way that it is enough to purchase securities in several companies at once. As the saying goes, “You should never put all your eggs in one basket.”
- When investing, you should never naively believe that someone will be able to provide an investor with a one hundred percent guarantee of profit. This does not happen, even among professionals who trade on stock market for years. There have been and will always be risks, so you need to prepare for them in advance. Another question is what maximum percentage of loss an investor can afford. You can learn to control and reduce losses, and all that is needed for this is a proven trading strategy, trading without which will never bring a positive result.
- Naturally, you need to invest only in profitable enterprises with a stable income. And to do this, you need to do some work and study the activities and reporting of those companies into whose shares you plan to invest funds. Simply put, you need to collect as much data as possible about several enterprises, and only after that compare their indicators and make the right choice.
- Tangible income from buying/selling shares can only be obtained in the long term (5-10 years). Do not assume that trade securities- This is a quick way to get rich. No, only the investor who has strong nerves and a huge reserve of patience can make money. There is definitely no place for rushers in the stock market.
- If a person wants to independently operate shares on the stock exchange, he will need to master all the intricacies of this process, which will take a lot of time. Self-education and self-discipline are the qualities you cannot do without when investing.
- Shares are most suitable for those investors who prioritize high returns over investment reliability. You should never forget about this. You can make good money on this asset, but the risks of financial losses are irreversible.
- It is best to buy shares when they have reached the minimum price, and to sell when demand and price for them have increased. Don't always follow the crowd. Each investor should always have his own adequate view of market trends. Well, to achieve this, you need to learn to understand market processes.
- Choosing a reliable broker is the first task that a future investor will have to do. The future success of the investor will depend on the reliability of the intermediary.
- You should never be greedy and chase profit. An investor must be able to stop in time. And even more so, you should not give in to emotions and try to win back on the stock exchange. This can only lead to greater financial losses from stock trading.
- If a person is not confident in his capabilities, but he is determined to connect investments with shares, then it is better for him to choose PAMM accounts or mutual funds, entrusting his capital under professional management to experienced traders.
For today, my brief “educational education” on the topic stock exchange, completed :) Subscribe to updates, it will be more interesting and useful.