Competent investments, or Where to invest money to balance risks and get a guaranteed income.

Different sources give preference to different instruments. How to understand the contradictory information and where to invest with maximum efficiency?

Investment groups

Unfortunately, there is no ideal investment tool that would provide profitable investments with guaranteed ultra-high yield and minimal risks. Deposit accounts in banks provide relative safety of the invested funds, but are characterized by a low level of income. Mutual funds and PAMM accounts can be highly profitable, but the risk of losing money is very high. By the ratio of profitability and risks, all instruments of investment are conventionally divided into three groups:

1. Conservative . Characterized by high liquidity and a guarantee of safety with a minimum level of profitability. These include deposit accounts in banks, precious metals (bullions, coins), some types of real estate.

2. Balanced. Are characterized by a high guarantee of safety and an average level of profitableness (up to 35% a year). These include investing in business, certain types of mutual funds and real estate.

3. Aggressive. Characterized as the possibility of high earnings (over 100% per year), and high risks of losing all or almost everything. These include PAMM accounts and some types of mutual funds.

Investment portfolio

A balanced investment portfolio, which includes all three investment groups, makes it possible not only to maintain, but also to increase its capital. The share of each group in the portfolio depends on your expectations and readiness for risk. The table shows the two most common approaches to investing and the recommended ratio of cash to them:

Tools Preservation of nested

The investment of funds is for you to aggressive investors

Most important and are willing to take risks

Conservative 50% 20%

Balanced 40% 30%

Aggressive 10% 50%

The theory of portfolio investment was awarded the Nobel Prize in 1990 and proved in practice its effectiveness. At will, you can choose where to invest money, and also increase and decrease the share of each group in your portfolio.

Investment Tools

We will consider the six major most popular investment tools that most investors include in their portfolios.

Deposit accounts in banks. Most often, they refer to conservative investment instruments. The main advantage of bank deposits is that you can withdraw the invested funds in full or in part at any time. The main drawback is low interest rates, which often do not even cover the level of inflation. By investing in deposit accounts of banks that are part of the deposit insurance system, you get at least a low but guaranteed income that is not subject to fluctuations and ensures the maximum level of safety of your money. It is recommended to use for storage, accumulation of money resources and / or for covering unforeseen expenses.

Gold . If we consider material gold (ingots, coins), rather than virtual on accounts, then it is classed as conservative investment instruments. The main disadvantages are:

• Inevitable additional costs, which entail the acquisition and storage of gold and other precious metals (tax on the purchase, lease of safe, insurance);

• Impossibility to predict the price, for example, in recent years, gold shows a high profitability, whereas until recently, for almost 20 years, its price has kept on the same level.

This asset is recommended to be used to create a stabilization fund in case of major shocks, such as global crises, hyperinflation, etc. Since gold and precious metals do not correlate with other assets (real estate, securities, etc.), their availability in Your investment portfolio will protect your capital even against the backdrop of a falling stock market.

The property. Can be attributed to both a conservative and a balanced investment tool. When buying a property for the purpose of generating income, it is necessary, first, to have an initially significant amount, and secondly, be able to evaluate this market and understand its trends. Otherwise, this investment may not be effective. The main disadvantages - the cost of maintenance and repair, depreciation. When renting out a property - unscrupulous tenants who can damage your property or, for example, flood your neighbors from below and thereby impose additional costs on you. Despite the fact that the purchase of real estate does not guarantee anything, it can do a good job if it is in a good place: even in times of crisis, such objects easily find their tenants.

Investments in business. With a proper choice of an investment object, whose reliability is confirmed by third party guarantees and / or collateral, this investment can be attributed to a balanced investment tool. The main advantage of investment in business - interest rates is higher than for bank deposits, since you issue a loan directly, that is, without intermediaries. The main disadvantage when choosing a business for Internet investments is that at most sites no one evaluates the submitted projects. As a result, no one guarantees returnability and profitability of the invested funds.

However, recently there have appeared such online loan sites, which, Retaining the main advantage - interest rates on loans ranging from 15 to 35%, were able to provide high guarantees for the safety of the invested funds, transparency and accessibility for both investors and borrowers:

1. Reliability and reliability. Projects of borrowers are published on such exchanges only after verification of reliability and solvency. As a result of the collection and analysis of information on the actual, and not the declared state of affairs (according to regulated documents, based on the analysis of management reports and as a result of personal checks conducted by specialists at business sites), investors receive all the necessary information on development prospects and possible risks Enterprises of potential borrowers.

2. Guarantees of recoverability. Borrowers' obligations to investors are secured by third party guarantees or collateral.

3. Risk management. Depending on your preferred approach to risk management, you can choose high-yield projects with a lower rating of reliability and solvency or invest in a business that has high stability ratings but with less favorable loan rates. Also, you can issue loans only for part of the requested amount as part of a group of other investors.

Mutual funds. Depending on the type of fund (bond funds, blue chips, real estate, etc.) and the style of investment of the management company (for example, the company prefers shares of fast-growing enterprises), This type of investment can be attributed to both balanced and aggressive investment instruments. The main advantages are that you do not need large initial investments, your money is managed by professional managers. The main disadvantages are:

1. The complexity of choice. Currently, there are over 30,000 mutual funds in the world, which often leads to the fact that only the professionals can choose the fund that is most suitable for your purposes.

2. Lack of guarantees. Under the law mutual funds have the right to speak only about the level of profitability of previous periods. As a consequence, the ratio of profitability and risk can be any, since the profitability is not fixed, and the recovery of funds is not guaranteed.

3. Additional costs. Management companies charge a commission of up to 5% on entry and exit, as well as for service in the form of an annual deductible interest that is paid to the management company, even if the fund suffers losses.

PAMM accounts. One of the most aggressive investment tools. Here there is both the possibility of a quick and high-yielding earnings, and a high probability of losing all invested funds in a very short time. Even if you carefully select the manager of your account (trader), which had high profitability indicators in the past, this does not guarantee you safety and profitability of the investment.

Summary

At present, profitable investments of own funds are available to virtually everyone, regardless of the amount of initial capital. You can manage most online investments, which also expands your range of opportunities. If simultaneous management of all investment instruments seems too difficult for you, it is recommended that you choose balanced tools, such as investments in business. By investing in projects of different companies (both high-yield and high repayment guarantees), you get an effective portfolio, managing only one investment tool.