When people have free money, the question arises of how to dispose of it. Financial gurus teach not to waste, save, invest. The approach is correct and profitable in the long run. But minimal financial literacy suggests the word “inflation”. Money tends to depreciate, which requires protection. To reduce inflationary risks, bank deposits were invented, but today they barely cover the real values of the depreciation of the ruble.
If you want to not only save money, but also earn, you need to look for more profitable investment options. As an alternative to bank deposits, you can consider buying stocks or securities. Remember! Trading in any securities is associated with real risks of losing all invested money. We do not recommend you earn money on securities, but only talk about its possibilities. Earning on stocks requires an investment of money and therefore can lead to financial losses, so it will not be superfluous to think about how you can really make money on the Internet without investing money.
What are stocks and securities – what types they are
Shares and other securities, and there are several types of them, represent a kind of agreement between the investor and the company. Different types of securities have different terms of cooperation and obligations of the parties. All interaction is carried out through a broker.
Shares , as a type of securities, give the right to receive a part of the company’s profits, the size of this part is proportional to the volume of the holder of the “package”. By owning shares of the company, the investor gets the right to a part of the property in case of bankruptcy. Today the paper version of shares is a thing of the past, all transactions are carried out electronically. Papers have gone digital.
Bonds are a type of investment, similar to a deposit in a bank. The investor has the right to receive his funds back, he will also receive interest on deposits. The term of the deposit and interest are negotiated in advance.
Futures is an interesting tool that allows you to buy assets at current prices, but in the distant future. You can count on a profit if the asset price rises in the future. No one is insured against losses either.
ETF funds are a tool that allows you to invest in a large number of stocks and other financial instruments at once, with lower risks and costs. The Etf fund is a collection of several securities of one of the countries, industries, etc. For example, there is a fund of American shares FXUS, which can be bought on the Moscow and St. Petersburg stock exchanges; this fund includes securities of companies from various industries. It will take millions to buy your own stocks included in the FXUS fund. And with the help of ETF funds, you buy a share in it or a part of all the shares included in it.
An option is a tool for fairly experienced investors. There are two types: for sale and for purchase. The bottom line is the seller’s right to sell the option to the buyer at any time. And also buy. For the other party, the sale or purchase will be an obligation. Which option to buy depends on the market situation. The main types of shares and securities that traders (investors) operate on the exchange are listed. The type of investment is the more risky, the more it brings profit, since it also increases the likelihood of losses. Most investors opt for stocks, as they are a fairly flexible resource that can be traded in the short, medium and long term.
Why investing in stocks is better than bank deposits
It is rare in what years in Russia that bank deposits have attractive interest rates. Usually, the interest on the deposit barely exceeds the level of real inflation in the country. In such a situation, there is no need to talk about earnings, because money must work. Any bank deposit is designed for a long term, it is then that the interest is relatively sane.
Many banks completely set the terms of the deposit, the violation of which deprives the depositor of the accumulated interest. In this regard, the shares have more favorable terms of “cooperation”. The choice of promotions is great, there are much more of them than bank tariffs. Although stocks have potential risks, with the right choice of strategy they are small, but they can bring tangible profits.
There are companies whose shares have been afloat for many years or decades. The price for them almost does not fall, which in any case will lead to income. It is the level of possible profit that determines the appearance of more and more new investors. Those who have tried and learned to invest will never return to working with deposits.
How to start making money on stocks – top ways to make money
To start earning income on shares, you will need an initial amount, depending on the methods of earning. The nuance lies in the impossibility of purchasing shares by individuals (that is, ordinary citizens) directly from the market. Cooperation is carried out through intermediaries – brokers. A broker is a kind of office that follows the instructions of individuals to buy or sell shares. If they want to buy, they must find a seller and vice versa.
This happens instantly using terminals on the Internet. So, to get started, you need the amount and choice of a broker. An agreement is concluded with a broker (also virtually in most cases) and an account is registered. It is extremely important to choose a reliable broker, check its presence in the register of the Central Bank of Russia, only then your actions will be protected by law. You also need to think about your future investment portfolio.
An investment portfolio is a collection of all your securities that you have invested in. Then you can choose your strategy for making money, of which there are several. The size of the possible profit depends on the riskiness of the method. Consider the options that are used by most investors.
Top 3 main ways to make money on stocks
Investing in dividend stocks . Quite a common method, both among beginners and more experienced investors. It’s just that you buy shares of companies that pay the largest dividends on the market and, most importantly, do it regularly for several years. In the case of such an investment, it is better to focus on “dividend aristocrats”, these are companies that focus on dividends and try to increase their volume every year. Many American “dividend aristocrats” have been paying dividends for decades.
Trading or speculation . This is a very risky way of investing in stocks, but at the same time it can bring good returns. Such earnings on stocks are not very suitable for a beginner, due to the high risks. Here, on the one hand, everything is simply buying shares cheaper and selling more expensive. But on the other hand, everything is very risky, confusing and uncertain. If the stock has fallen, this does not mean that it will not fall yet, and you will not lose your invested money. Speculating or trading is a rather scrupulous and complex work that requires analytical skills, very strong nerves. After all, you have to follow the news from all over the world almost 24 hours a day and keep abreast of all trends in the financial markets. And even experienced speculators are not immune to losing money.
Long-term investment . Probably, this is one of the most rational types of investment that investors use, regardless of their experience. Here, the purchase of stocks, bonds and funds is carried out for a long time and therefore does not greatly depend on the price of the securities being purchased at the moment. That is, you buy securities for a long period of three years or more, counting on the fact that over time they will rise in price, and you will increase your capital. One way or another, the securities from your investment portfolio will grow because, as a rule, the world market grows over time. Also, many companies pay dividends, due to which your income will increase over the years.