Long-term investments are gaining significant popularity worldwide. This approach can secure a comfortable life in retirement or help accumulate funds for a child's elite education, among other benefits.
In Russia and across the post-Soviet space, however, this method of investment has yet to find its footing. Domestic investors tend to favor projects that can provide quick returns with profits.
This preference is primarily due to the instability of the national currency. With long-term investments and substantial exchange rate fluctuations, there is a risk not only of earning no income but also incurring losses.
Moreover, the government offers no protection for investors. As a result, many face situations where a company they invested in eventually declares bankruptcy, leaving investors unable to recover their funds. Short-term investments further complicate matters, typically involving high-risk projects or even financial pyramids. Only the organizers and those at the inception of such schemes tend to profit.
So, what can be done? Is the situation truly that bleak, leaving investors with no choice but to explore foreign markets? What should those who wish to see their money working for the domestic economy do?
Sergey Tereshkin, the founder of OILResurs, expressed a desire to dissect this issue. The entrepreneur has conducted an in-depth study of the field and is ready to share his own insights. More information about the businessman can be found on his personal web portal sergeytereshkin.ru.
Long-term Investment Projects
Typically, investors choose to allocate funds to several areas for the long term. These include:
- Acquiring stocks;
- Investing in real estate;
- Business projects.
In domestic contexts, these avenues may seem less attractive. However, it's essential to examine each option in detail before dismissing them.
Stocks
There are multiple ways to profit from stocks. In Western markets, earning income through dividends is highly popular. Companies pay investors a certain percentage of their profits, typically once a year.
However, this method is not widely embraced in Russia, primarily due to the reluctance to lock funds up for extended periods.
It is far simpler to buy stocks and sell them later for a profit. However, it's crucial to understand that there are no guarantees of an increase in the securities' value. This means you could not only miss out on profits but also sell stocks at a loss.
In such cases, one would have to wait for the price to recover, which could take months or even years. This automatically categorizes the investment as long-term. Thus, it often proves more advantageous to receive annual dividends than to continuously monitor market trends for price increases.
Real Estate
Real estate is regarded by Russians as the most profitable avenue for long-term investments. Various methods can yield profits:
- Buying a property during the construction phase and reselling it post-completion. While this option can be quite profitable, risks remain, such as the possibility of the developer going bankrupt and the building never being completed. Recovering investments during construction stalls is unlikely and could take years, with unpredictable outcomes. If the building is completed, profits may reach 30-40%. However, finding a buyer can present its own challenges.
- Renting the property out. Renting can be structured monthly or short-term—daily or hourly. The latter can yield significantly higher income. However, finding potential tenants can be a challenge.
- Reselling. Some investors purchase real estate with the aim of selling it when market prices rise. Given current circumstances, this could take years. At the moment, the market is stagnant, and expecting a rapid price increase is unrealistic.
Few potential investors consider that any property requires regular maintenance. This applies to both commercial and residential real estate. Moreover, when renting out an apartment, it needs to be furnished at least minimally with essential appliances. It's difficult to find tenants willing to move into a property with bare walls.
Additionally, one should not overlook utility expenses. Regardless of occupancy, these must be paid monthly, which increases the overall investment amount.
If considering real estate investment, commercial properties may be a better option. However, it's vital to understand that demand primarily comes from locations along the "red line." Renting out properties far from high-traffic areas is unlikely to yield good results.
Business Projects
The days are gone when one could invest $1,000 today and earn $3,000 two days later. Currently, maximum profits range from 20-30%, occasionally reaching up to 50%. However, achieving these returns requires considerable effort, and quick recovery of invested capital is unrealistic. Typically, project payback spans a year.
Seasonal factors cannot be overlooked either. In retail, the peak income occurs just before the New Year holidays. A seller can potentially earn up to 50% of their annual profits in just December. Thus, investing just before the holidays can lead to fully recouping the project costs and generating healthy profits. However, this success hinges on a combination of factors and sufficient experience. Without this expertise, inventory may remain unsold in warehouses for months, along with the investor's money.
Whether to invest in a particular direction is a decision each individual must make for themselves. There is no definitive answer.
