On the other hand, investors who chose the conservative strategy and diversified your investments, you can count on plus 3-4 percentage points to the average rate on deposits in the long term. What steps should be taken to stop being afraid of the crisis and make money in any situation?
Three rules of investment
A few years ago at the University of southern California conducted an interesting study. The subject is offered to play a game, the probability of winning which was 50%: at a loss, he would lose $1 and when you win you would receive $2.5 million. That is, if you play this game many times, eventually you will win. In this light, once lost, the subject, the idea was to continue the game. However, it turned out that after losing only 40% of the participants had decided to re investments, while the rest preferred not to risk.
In the genetic memory of a Russian investor have stored too many crises — 1998, 2008, 2014. All these events make the person with the money to ask yourself: “what if everything collapses? Why risk not simply whether all the money placed on Deposit?” However, people understand that the Deposit will bring a pretty limited income and their extension rate may change. The desire to make money pushes them to invest in the stock market.
I suggest before you open a brokerage account to agree with myself on several counts. The first thing to do is to accept and understand one of the basic laws of the market. It may seem very simple, but it is somehow forgotten when you start to imagine what will spend the unearned profit. The market may rise and fall. Therefore, the yield above the Deposit is not guaranteed, and in a negative scenario possible losses. Even if the portfolio is very diversified, the probability of getting the income less rates on deposits on short-term interval (i.e. three years) and competent risk assessment is more than 50%.
From this follows the second rule: before you start to invest, it is necessary to clearly define their risk profile and understand what part of the portfolio of the person is willing to lose. Here we turn to the field of psychology, where there are no clear evaluation criteria. So pretty everyday, at first glance, the aspects that help to determine how well the investor to cope with negativity in life.
I recommend to watch their emotions by presenting a simple situation. You pass the exam at the Institute. How much are you worried? If your feelings can be described as “if I don’t pass the test — nothing bad will happen, I’m just gonna retake it” means you can safely burn themselves into the category of moderate risk investors.
If emotions can be expressed with the words “if I don’t pass this exam on my future life and career can put a cross,” it is better to focus on fixed income instruments, that is on Deposit. Of course, the exam exam is alike, but for some people it decides their fate, while others always find reasons not to worry.
In the next stage it is necessary to determine the proportion of savings that will be invested in the market. We recommend starting with 5% of the free amount, and every six months, add 5%, bringing the total investment amounts to 20-30% of the available funds. This approach has several advantages. First, even in a strong market decline immediately after the purchase, the loss will be small. Second, reinvesting the earned market income, the risk is not accumulated, and earned investment income. So what is the difference between the profit and the Deposit rate will be insignificant and will not prevent a novice investor to further develop the stock market.
Then you can proceed to the choice of instruments.
Portfolio for the investor
What do the investors who are still afraid of correction in a volatile market? You need to collect maximally diversified portfolio of the tools that can protect from the volatility of the assets. I propose to consider three ways of filling the investment shares of the portfolio. Take for example the novice investor who decided to invest in investment assets, only 5% of its portfolio.
Option 1. To open an individual investment account and to acquire bonds of companies from the list of “blue chips”. It is important to hold these bonds to maturity, since such paper is exposed to market risk: if you sell them before you lose a part of invested funds. If you hold the bond the entire maturity, it is possible to obtain the forecasted income for her, which is the sum of the coupon payments and the payment of “body debt.” Here will almost certainly yield “Deposit plus 0.5 percentage points”. At the same time, the person will feel in practice, what is market risk. This option has the undeniable advantage of the tax deduction, which after three years can be up to 52 400 rubles. There are, however, negative — with a small amount of funds will not work to make a diversified portfolio of bonds.
Option 2. To open an individual investment account and purchase mutual Funds or ETF. In this case, will also be the tax benefit. The yield of this portfolio can be both plus, and minus 1.3 percentage point the average rate on deposits. Increase of profitability in this case will depend on the level of risk tool that will choose the investor. For example, the equity Fund will allow you to earn more income, but also “fine” to rate this choice possible is more significant.
Option 3. Buy products with capital protection. The essence of products with capital protection that in any case, they ensure the return of client funds — in the negative it is impossible to escape. It is primarily structured notes and exchange structural bonds that produce the brokers and asset managers and investment products of life insurers. All of these tools involve investment in a wide range of securities. This is a fairly stable strategy, which will bring a bit more than investing in the BFL, but most likely it will give way to yield mutual Funds and ETFs. If successful, the outcome of the investment portfolio of structured products will bring a plus of 0.5-1.5 percentage points to the Deposit rate, while the negative market scenario, the investor did not earn, but at least preserve the initial investment.