If someone wants to invest to have a stable income, a reasonable option is to distribute capital across several different types of investment of various terms and open a personal investment account. Furthermore, there are special tests that show how much risk a person is willing to take: one can venture to invest half a million in a risky asset, while someone else will never recover from losing 100,000.
It is advisable to diversify your investments. First of all, it is important to make some conservative investments: they should account for as big a share of your total investment as your age (if the investor is 35 years old, conservative investments should account for at least 35% of their total assets). The older the investor, the more conservative investments they should make because with age, it becomes more difficult to restore capital.
I would distribute the investments as follows:
- 35% in conservative instruments such as federal loan bonds;
- 20-40% in foreign currency (dollars, euros);
- 10% in precious metals;
- 25% in the Kazakh-Tajik direct investment fund and in dividends.
Currently, the Russian stock market is down and the global market is not functioning either. You can buy assets cheap but there is a possibility that the rates will go down even further. Therefore, if an investor plans to keep their shares for two to three years, these shares are safe to buy. Short-term investment should be evaluated extremely carefully.
Some people choose to invest in shares. It is recommended to keep and invest money in the currency that you will eventually use to spend it.
A personal investment account can be opened for free in any major bank. Banks have financial consultants and advisers who could guide you through various forms of investment; however, they will recommend the investment instruments for which they get higher commissions. It is better to invest not more than RUR 1 mio ($13.6K) a year as this is the maximum amount on which you can get a tax rebate. All participating banks can give you investment advice but you should always understand that the investor takes full responsibility for his or her stock choices.
Before investing, it is better to learn the basics of investment otherwise there is a chance of losing all the money. First, understand how investment works and then choose the best instruments that work for you. To earn more from the investment, you could even become a stock broker, which is a job in itself – and a difficult job involving a lot of mathematics and analytics.
You can also hire a financial manager to manage your assets and make 2% per month – but your financial manager will charge a fee on this revenue. It is better to select a financial manager based on other customers’ positive experience and feedback. If you are not sure you could distribute your funds between two management companies. You should also add a certain percentage of your salary to your capital every month. With a compound interest, the profit-making capacity of your invested money will be higher.
The most common mistake investment beginners make is buying and selling stocks fast that is, gambling. They are not analyzing data but simply hoping for luck.
By Alexei Maksimchenkov, investment and financial literacy expert