Secrets of investing. Joint Stock Funds
In simple terms, the investment fund is a depository bank. Individuals and legal entities contribute money to it, in return receiving securities. The depositary bank manages the money at its discretion. To do this, a team of specialists is working to assess the investment opportunities and make decisions about investing money. For these services, the depositary removes from the investor usually from 1% to 5% of profits and a small administrative fee. In comparison with the received incomes, money is absolutely insignificant.
It must be understood that no one will earn money for the investor. Therefore, we should immediately clarify the amount of fees and permanently delete it from the list of revenues. To get really good money, it will not work to wither over gold as Koschey.
But what about the risks?
By and large, the risks related to investing in equity funds can be reduced to two main ones:
• the risk that the parent bank will "burst";
• the risk that one or more companies from the investment package will go bankrupt.
First of all you should consider the risk of bankruptcy of the parent bank. Theoretically, this is possible. But the whole point is that the depositary bank works absolutely independently of the parent bank. In case of bankruptcy, the assets of the depositary bank will not be harmed in any way and will remain inviolable. So you can not worry about this.
As for the risk of bankruptcy of any company from the invested, everything here is quite simple. The investment procedure is recorded in the fund's regulations. Often a joint stock fund has no right to invest in one company more than 10% of the property. Thus, "golden eggs" do not hold in one basket, and it is simply impossible to lose them at a time. In the worst case - in addition, the least likely - money is invested in a dozen companies. And in the best, their number can reach several dozen. As can be seen from this information, there are risks, although they are relative.
Are there any losses when investing?
Fairy-tale life of investment funds, however, do not promise. In some cases, losses are possible. But they are often caused by erroneous actions of investors themselves. Let's say an investor invested in an investment fund in 2008.The price of the packages was quite high. And in 2009 there was a collapse of the interest rate by 15%.The situation is hypothetical and not attached to facts, is taken purely for example. The investor in a panic demands and gets his money back. It's clear that he is at a loss.
After a year or two, the price of packages went up and the shares bought in 2008 began to cost more than interest by 150%.Simple arithmetic. Do not withdraw money too quickly and at the wrong time. The investment fund is essentially a centipede. Tear one leg and the load on the other will change, but the threat of life will not bring.
What is the average cost effect?
In order to competently invest, it is important to know and use the effect of average cost. It consists in the following. Let's say an investor buys investment certificates every month for the same amount. Suppose that this sum is $ 100.If in the first month the certificates cost $ 5, then the investor bought 20 certificates. The next month the cost of certificates fell to 2 cu.and the investor bought 50 certificates. In the third month, the cost of certificates drops to a measly one cu, most of the investors in a panic sell, and the investor in question is buying. Now for 100 cuhe bought 100 certificates.
In the fourth month there is an exchange warming and certificates come back to the value of 5 cu. By this time, the investor had invested $ 300.and bought 170 certificates. He took into account the dynamism of money and now, I could sell my certificates for 850 cu. A decent profit. It is not difficult to imagine what would happen if an investor sold his certificates for 1 cu.
Seven tips for a novice investor.
• the fall in the exchange rate has to be turned into advantages, using the effect of average cost;
• do not rush and transfer money from one fund to another - permanence in this case is really a sign of professionalism;
• Do not harass yourself with constant calculations of profits and losses, the balance should be summed up regularly, but not often;
• it is necessary to trust the management of the fund, and professionals who work in it;
• it is difficult to determine the optimal time for purchasing certificates, so you should buy regularly;
• it is important to have a clear idea of the course according to which the investment fund is moving and the markets in which it invests;
• It is advisable to invest in several investment funds at once, this will help to optimize the distribution of risks.
The most important thing is to absorb as much information as possible about the work of joint-stock investment funds. There is no limit to perfection, so investing skills need to be sharpened constantly. The higher the financial education, the greater the income the investor will receive. The less risk he will be exposed. Good knowledge of the subject will make you feel confident and will reduce the loss of nerve cells. That in itself is important for good health and well-being.
Investment stock funds are becoming more common. Against the background of the traditional mistrust of domestic citizens to banks, stock exchanges and other similar structures, investment funds stand out favorably. In fact, they combine all the qualities that an ideal machine should have in order to receive money. Working in strict accordance with the regulations and the federal law, the investment fund gives its participants the following advantages:
• uniform distribution of risks, in other words - safety;
• simplicity and convenience - money works without direct participation of the investor;
• availability of withdrawal of funds - money can be withdrawn on any working day in the amount of the value of the investor's share at the moment;
• most of the profit that comes from investing in an investment fund is exempt from taxes;
• high level of stable income.
What is a joint-stock investment fund?