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Everyone knows that money should work, not just sit idle. The idea of making your savings work and generate additional income comes to mind for absolutely everyone. But for many people, these thoughts remain just thoughts, as they believe that investing is only accessible to the wealthy, and they give up on taking any action. Sometimes, however, the realization comes that investing is necessary, but the question remains: how and how can an ordinary person become an investor?
What should you start with, and which areas should you choose?
The biggest problem is that investing goes hand in hand with the risk of losing money. Most investors who decide to try their hand at this often start with negative experiences, and statistically, they lose their initial money and stop making investments.
How can a new investor, just beginning to grasp the basics of investing, preserve and increase their capital?
Start: At the initial stage, you can take a small amount, say 5,000 rubles, and invest in conservative and moderately aggressive instruments.
The initial goal is to start understanding investment instruments and create an action plan to avoid ending up with nothing. In other words, create your personal financial plan for the next few years and choose the instruments in which to invest money.
As you gain experience, you can increase the amounts invested and expand the range of investment objects. As the investor's portfolio begins to grow, new instruments and wider investment opportunities will emerge.
The main thing to remember is the basic rule of investing: never invest all your money in one instrument. Diversification will help minimize risks.
Let's consider the main instruments for an investor.
Bank deposit
The first and most reliable way to invest is to deposit money in a bank. It is unlikely that you will earn a lot on a deposit, with an interest rate of 7-15% per annum, but the investor will protect part of their money for the future and save some of it from inflation. In addition, bank deposits are insured by the state, which guarantees the safety of the money.
Mutual Funds
Recently, more and more investors have shown interest in this method of investing. The advantages of this instrument are most evident in the long term, and the return can exceed the return of other instruments available to private investors.
Real estate
Investing in real estate is not accessible to private investors due to the amounts that need to be invested at the initial stage. However, it is worth mentioning this very profitable way of investing your funds.
Investing in real estate has always been a reliable way to preserve and increase savings. Such investment of capital carries much less risk compared to investing in stocks or a bank account. Apartments in large cities will always be in demand, which means they will constantly generate income for the investor.
Stock market
Investing in the stock market is much more profitable than bank deposits. However, the profitability of investments in securities mainly depends on the state of the stock market. You should invest only a part of your funds in stocks and acquire them wisely. You should also understand that it will not be possible to get rich quickly at the initial stages, and if you do not know this market at all, it is better to find a professional broker.
Investment funds of the OFBU
If you are not ready to trade stocks on your own, it is better to invest money in investment funds of the OFBU. Such a fund is managed by a bank, which reduces the risk of losing part of your capital.
Conservative investors will be better suited for a bond fund. Such funds offer higher returns but are also more risky.
Index funds
Index funds currently show noticeably higher returns than, for example, mutual funds. Index funds are a special case of equity funds. The portfolio of these funds is structured in such a way as to максимально repeat the structure of the stock index. The goal is to achieve a return comparable to the return of the stock index (for example, the Moscow Exchange or the RTS). Stock markets grow in the long term, and it is quite difficult for fund managers to outperform the stock index in terms of return over a long period of time. Therefore, investing in an index fund may be an effective solution.
The main positive point for the investor (especially a beginner) here is the fact that the index fund reduces his risks by widely diversifying the portfolio across companies operating in various sectors of the economy. So, if the shares of some companies fall, this negative will be compensated by the shares showing positive dynamics. Thus, index funds reduce the risks associated with a single company and industry. However, there remains the risk of the stock market, which is reduced if you invest money regularly (monthly or quarterly) and for a long period of more than 5 years.
Investment insurance
At the moment, investment insurance is one of the most stable and long-term instruments for a beginner investor.
In addition to an investment account with annual interest, insurance companies offer a service such as life and family insurance for the investor. This investment option is suitable for everyone, and it is not worth neglecting it, as in difficult times this instrument may turn out to be the most beneficial in terms of assistance for the investor's family in the event of his death in an accident or disability.
No pain, no gain
There are plenty of options to invest free funds, even for a beginner investor. Choose, try.
However, remember that good returns in most cases do not come easily.
Investing is a constant, painstaking job that requires daily accumulation of experience and self-education.
Follow the work of companies and banks, study the forecasts of experts, study and ask questions on specialized forums.
It will not be possible to choose one instrument and invest in it all the time. Different instruments are beneficial at different periods of life.
Good luck with your investments and achieving only positive results in increasing your investment portfolio!
