Different sources, preference is given to various instruments.How to understand the contradictory information and where to invest with maximum efficiency?
Investment Group
Unfortunately, an ideal investment instrument that ensures a profitable investment with a guaranteed ultra-high yield and minimum risk does not exist.Deposit accounts in banks provide relative safety of invested funds, but have a low income.Mutual funds and PAMM accounts can be highly profitable, but the risk of losing money is very high.From the ratio of return and risk all the tools of investment experts conventionally divided into three groups:
1. Conservative .They are characterized by high liquidity and a guarantee of safety with a minimum level of profitability.These include deposit accounts in banks, precious metals (bullion, coins), certain types of property.
2. balanced. characterized by high safety guarantee and middle-yield (up to 35% per year).These include investment in the business, certain types of investment funds and real estate.
3. aggressive. characterized as the ability of high earnings (over 100% per year) and the high risk of losing all or almost all.These include the PAMM-accounts and certain types of mutual funds.
investment portfolio
balanced investment portfolio, which includes all three investment groups, makes it possible not only to maintain but also to increase their capital.The share of each group in the portfolio depends on your expectations and risk appetite.The following table shows the two most common approach to investing, and recommended to them the ratio of funds:
Tools save attachments you consider yourself
investing is for you to aggressive investors
greatest value and are willing to risk
Conservative 50% 20%
Balanced 40% 30%
aggressive 10% 50%
portfolio investment theory was awarded the Nobel Prize in 1990 and has proven to be effective.At will, you can choose where to invest, as well as to increase and decrease the share of each group in its portfolio.
Investment Tools
We consider six basic the most popular investment tools that most investors include in their portfolios.
Deposit accounts in banks. most often refers to a conservative investment instruments.The main advantage of the deposits in the bank that invested funds, you can withdraw completely or partially at any time.The main drawback - low interest rates, which often does not even cover inflation.By investing in deposit accounts of banks included in the deposit insurance system, even though you get a low but guaranteed income, which is not subject to fluctuations and provides the highest level of safety of your money.It is recommended to be used for storage, the accumulation of money and / or to cover unexpected expenses.
Gold .If we consider the material gold (bullion, coins), not on a virtual account, it belongs to the conservative investment instruments.The main disadvantages:
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inevitable extra costs that entails purchasing and storage of gold and other precious metals (tax on the purchase, rental safe, insurance);
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impossible to predict the price, for example, in recent years, gold shows high yield, whereas until recently for nearly 20 years, the price remained at the same level.
This asset is recommended for the creation of the stabilization fund in the event of major shocks such as the global crises, hyperinflation, and so on. N. Since gold and precious metals are not correlated with other assets (real estate, securities, etc.. n.), their presence in your investment portfolio will protect your capital even against the background of falling stock market.
Estate. can be attributed to both a conservative and a balanced investment instruments.When purchasing real estate to generate income is necessary, first, to have originally large sum, and secondly, to be able to assess the market and to understand its trends.Otherwise such attachment means may be ineffective.The main drawbacks - the cost of maintenance and repairs, depreciation.Upon delivery of real estate for rent - unscrupulous tenants, which can cause damage to your property or, for example, flood neighbors from below and thus impose on you additional costs.Despite the fact that the acquisition of real estate does not guarantee anything, it can do a good service if located in a good place; even in times of crisis such objects easily find their tenants.
business investment. With proper choice of investment object, whose reliability is confirmed by the guarantee of third parties and / or collateral, this investment can be attributed to a balanced investment instruments.The main advantage of investment in the business - interest rates are higher than on bank deposits, as you issue the loan directly, ie without the involvement of intermediaries.The main drawback in the selection of business investment in the Internet - in most areas no one conducts evaluations of projects submitted.As a consequence, there is no guarantee of repayment and profitability of investment.
Recently, however, there are sites online loans that, preserving the main advantage - the rates on loans from 15 to 35% were able to provide high guarantees of investment, transparency and accessibility for both investors and borrowers:
1. Reliability and validity.Projects borrowers on such exchanges are published only after checking reliability and solvency.As a result of collection and analysis of information on the actual, not declared the state of affairs (for regulated documents, based on the analysis of management reporting and as a result of personal checks, which are conducted by specialists in the field of business) investors receive all necessary information on the prospects of development and the potential risksenterprise potential borrowers.
2. Guarantees of repayment. borrower's obligations to investors provided by third party guarantee or collateral.
3. Risk management.Depending on the preferred approach to risk management, you can select high-yield projects with a lower rating, reliability and solvency, or invest in a business that has high ratings stability, but with less favorable rates on loans.You can also make loans only part of the amount requested in a group of other investors.
mutual funds. Depending on the type of fund (bond funds, the "blue chips" of the real estate and so on. P.) And style of investment management company (for example, the company prefers shares of fast-growing companies), this type of investment can be attributed to both a balanced,and aggressive investment instruments.The main advantage - does not require a large initial investment, the management of your funds is carried out by professional managers.The main disadvantages:
1. The complexity of choice. Currently in the world there are more than 30,000 mutual funds, which often leads to the fact that choosing the most suitable for your purpose fund may only professionals.
2. No Warranties.By law, mutual funds are entitled to speak only about the level of profitability of the previous periods.As a consequence, the ratio of profitability and risk can be anything, t. To. The yield is not fixed, and the repayment of funds is not guaranteed.
3. Additional costs.Management companies charge a commission of up to 5% of the input and output, as well as the service in the form of an annual deductible interest, which is paid a management company, even if the fund suffers a loss.
PAMM. One of the most aggressive investment instruments.It is present as a quick and highly profitable earnings and a high probability of losing all the money invested in a very short period of time.Even if you choose carefully manage your account (the trader), which had high rates of return in the past, it does not guarantee you a safe and profitable investment.
Summary
Currently favorable equity investment available to almost everyone, regardless of the amount of initial capital.You can control the majority of the online investment, which also extends the range of your ability.If the simultaneous management of all investment instruments seems to be too challenging, it is advisable to opt for a balanced instrument, such as business investment.By investing in projects of different companies (such as high-yield and high repayment guarantee), you get an efficient portfolio, managing just one tool investment.
