Where to invest money: recommendations of lawyers.
There are a lot of options for investing free funds - some of them are familiar to most, others are known to a narrow circle of people. How not to get lost in the financial markets and choose the best way when deciding whether to preserve and increase your capital? We will talk about the main ways of investing and give some recommendations based on their advantages and disadvantages.
So, where to invest money:
1. Deposit
Investing in a contribution is one of the most common types of investments that do not require special knowledge. Its undoubted advantages include a clear legislative regulation of relations between the depositor and the credit organization, as well as the existence of established guarantees of deposit security. Cons - quite low yield. More precisely, one should speak not even about profitability, but about compensation of a part of inflation losses, since the rate on a deposit is in any case lower than inflation rate.
2. Mutual investment funds (mutual funds)
Having even a small amount of cash, you can become a shareholder of an investment fund by acquiring an investment share - a security certifying the investor’s right to a part of the fund’s assets and the right to receive money from it, according to the investor’s share (right to repay the share). The management company manages the funds of investors, investing in various types of securities, real estate, bank deposits, etc. The yield may be higher than the deposit. But, as a rule, higher returns are promised where the management company makes riskier investments.
3. Buying a property
First of all, investments in the purchase of real estate should be substantial. Another disadvantage is the impossibility of urgent withdrawal of funds, because it will not be possible to quickly implement real estate - you need to find a buyer, collect the necessary documents for the sale and, finally, hand them over to the state registration in Rosreestr. When making real estate transactions in order to avoid possible risks of challenging the transaction, a lawyer should be involved, and the costs of paying for real estate and other services are not excluded. The owner of the property, an individual who purchased it less than five years ago, according to the general rule, will have a taxable base for personal income tax. Real estate requires the owner to monitor its condition and the costs of its maintenance. In order for investment in real estate to pay off, you will most likely have to risk making investments in the initial stages of construction, and rely on the increase in the value of the property upon commissioning, or buy something cheaper, investing in the subsequent additional funds in the calculation to sell more expensive, taking into account all costs
4. Investing in precious metals
You can buy coins or ingots of precious metals or open a special metal bank account. The owner of such an account does not have a precious metal, but has the right to receive it in proportion to the size of the account balance. The disadvantages of these investments include their insufficiently high liquidity and insufficiently high profitability.
5. Investment in securities
Buying shares gives a theoretical opportunity to earn in two ways - by exercising your shareholder right to receive dividends or by selling your stake more than you bought it. This is a high-risk type of investment, since even analysts' forecasts for the stock market do not always come true - this market is very susceptible to external events and factors, political instability, and even newspaper news.
Investments in bonds are more reliable, but also less profitable. However, the return on such investments is usually higher than the deposit. By purchasing bonds of large companies or the government, you acquire the right to demand from the issuer of bonds to pay the face value of the bond upon maturity and coupon income. The reliability of investment in bonds is quite high, the risks lie primarily in the choice of a trustworthy broker.
6. Investment ETF Funds (Exchange-Traded Funds)
In such funds is a whole set of different securities. By acquiring a stock of an ETF-fund, you thereby become the owner of a part of its property, and you can qualify for a part of its securities portfolio. This is a good way to diversify the financial risks inherent in investing in stocks.
7. PAMM accounts and LAMM accounts
The funds are located on a LAMM trading account (LotAllocationManagementModule or a lot allocation management module) that is connected to the manager's account. The manager’s transactions are copied to the investor’s account, which makes a profit commensurate with the manager’s profits to the account of which the LAMM account is connected. The PAMM account (PercentAllocationManagementModule or percentage distribution management module) works as well, but copying is proportional to the amount of funds in the investor's account. The lack of direct legislative regulation of these investment instruments makes them a major drawback.
8. Investing through the Forex market (over-the-counter foreign exchange market)
It includes different directions and opportunities for obtaining income with different degrees of risk, the size of the initial capital and profitability. You can invest in your own project and independently engage in trade, or use funds and companies that provide trust management services, or hire a professional trader, or use designs of PAMM accounts, LAMM accounts, etc. The amount of initial investments in projects depending on the chosen strategy and directions can be both minimal and significant enough.
9. Foreign currency
Investing can only be profitable if it is long lasting. The undoubted advantages include the high liquidity of investments (with current legislative regulation). The disadvantages - close to zero rates for foreign currency deposits.
10. Cryptocurrency
You can invest in a cryptocurrency without acquiring special equipment, carrying out a cryptocurrency trade yourself or through trust management, or investing in mining equipment. The main disadvantage is the lack of appropriate legislative regulation in the Russian Federation.
May 30, 2019
Galina Korotkevich, partner. I love coffee, all sorts of goodies, bankruptcy cases and corporate law. I am writing articles, looking for interesting information and proposing ways of its practical use. I believe that thanks to high-quality legal analytics, clients come to a law firm, and not vice versa. Do you agree? Then let's be friends on Facebook.
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