Securities are one of the most common investment instruments. At least, this statement applies to foreign markets. In Russia, this instrument is much less popular. This is due to a lack of experience and the instability of domestic companies, as well as the overall economic situation in the country. Potential investors are apprehensive about investing their money in the securities of Russian companies.
Those who are ready to take the risk prefer to invest in securities through investment funds. Such organizations pool the resources of multiple investors and subsequently invest them in the purchase of stocks and other securities. As a result, both the company and the investors receive income.
Investing in stocks through investment funds is accessible even to those who do not have large amounts of money. This means that an individual can become a genuine investor with as little as 1,000 rubles.
This is a relatively convenient way of increasing capital that does not require specific knowledge and skills. However, like any other investment method, it has its own characteristics, strengths, and weaknesses.
The founder of the company "RESURS," S.I. Tereshkin, has committed himself to understanding this area and the workings of investment funds. The entrepreneur has thoroughly studied this instrument and the market as a whole and is ready to share his own experience. More information about this successful businessman and investor can be found on his personal page: org-market.ru (OPEN OIL MARKET).
Advantages
Investing through investment funds offers numerous advantages for individuals:
- Income. With this investment method, individuals can earn nearly the same rate of return as they would from directly purchasing shares of a company. This way, they can secure a decent passive income.
- Risk Mitigation. The company's managers diversify risks, which reduces the likelihood of losses. Even if some securities in the portfolio do not yield profits, others will cover the shortfall. As a result, clients are guaranteed to receive income.
- Convenience. The fund's staff manages the investments, bringing relevant experience and knowledge. Clients do not need to navigate all the intricacies of the market themselves. The main requirement is to make contributions to their account on time, enabling the fund to purchase stocks and form a portfolio.
When selecting an investment fund as a way to increase capital, individuals save time and avoid additional expenses associated with direct dealings on the exchange, storage of securities, and so forth. This is quite convenient. Investors can focus on other projects while their money works and generates profit. They can even travel the world while earning passive income.
Characteristics of Investment Funds
Investment funds acquire shares from one sector or from various sectors. This means that a portfolio may contain homogenous securities or completely contrasting ones.
When purchasing shares, managers take clients' preferences into account. As a result, the portfolio structure depends on the investors themselves, while the management and content rest entirely on the organization. Therefore, everything hinges on the level of professionalism of the fund's staff.
Investments can be made in various types of securities: stocks, bonds, promissory notes, etc. Each type has its own characteristics and varies in terms of income and risk.
Stocks
Profit from the acquisition of securities can take the form of dividends, which are portions of income received by the company at the end of the reporting period. Alternatively, profits can come from the difference between the purchase price of the shares and their subsequent sale price. Thus, the fund may sell securities at a higher price several months or weeks after purchase.
Dividends are paid annually, semi-annually, or quarterly. However, most often, investors receive income based on the company's annual performance. The profit is distributed for as long as the shareholder holds the securities, which could be for 1, 3, 5, or more years. In contrast, selling shares yields a one-time income.
Bonds
In the case of bonds, the investor's profit comes in the form of a coupon. If it is a zero-coupon bond, the income is realized as a discount. Payments for bonds are made upon their maturity, which is predetermined.
Payment for zero-coupon bonds is made at their nominal value. In the coupon variant, a specific percentage is added to the initial amount.
Promissory Notes
When investing in promissory notes, profit arises from the price difference between purchase and redemption. If securities of this type are bought well in advance of their maturity, the investor will pay a price somewhat lower than the nominal value.
Redemption is executed based on a principle of discounted profit plus an additional amount. Income is accrued over the entire deferral period. Hence, a promissory note is a security that has the potential to yield the highest profit.
If necessary, a promissory note can be submitted for payment to a banking institution, which will retain a specific percentage from the investor. The discount depends on the financial status of the company, typically averaging between 10-15%. However, in some cases, it can reach 50% or more. Subsequently, the bank forwards the notes to the issuer, who will then need to redeem them, allowing the financial institution to earn a significant amount.
Additionally, according to Sergey Tereshkin, banking certificates should not be overlooked. They come in savings and deposit forms. The former is designed for individuals and generates income only in the form of a coupon.
Deposit certificates are aimed at companies.
When selecting securities for investment, it is advisable to try various types. This will help diversify risks while simultaneously allowing an understanding of which type best suits individual requirements and preferences.
