In the comments to my first column about the waste of money and the second about the housing turned a rather interesting discussion on different ways to invest savings. Most commentators agreed that the current interest rates on ruble deposits on the brink of official inflation and the currency has slipped almost to zero. Opinions on the question “What to do?” were strongly divided. As alternative instruments for saving and growing money have traditionally occupied the leading real estate, including foreign ones, mentioned mutual Funds, IMS, PAMM account, Forex, stocks, ETFs on foreign exchanges, bonds and even keeping the money in cash.
In this column I will share my perspective based on self-education, namely, reading books and investing their savings in a few years. I do not claim for completeness of the review, as I am not a specialist in investment. Too lazy to read all the columns — the essence of my strategy: The latter now seems to be a replica of Captain Obvious.
Three years ago, this view was not less controversial than the opinion about rental housing. For many years, the ruble was relatively stable, and are becoming accustomed to the 30 dollar and the Euro 40 rubles. The “home” inflation in these currencies was in times less, than in Russia: As a result, by 2013, cost of living Moscow has overtaken Los Angeles. From the point of view of my domestic knowledge economy, the explanation for this was not.
So I waited for the trick and did not trust the ruble — denominated saving for a Deposit no more than 30% savings. Although during the discussion of investments, this position looked weak — opponents shaking graphics courses and argued that the ruble and hryvnia — the best friend of investment. Argument, for example, was the fact that the exchange rate stable and interest on deposits many times more than dollars and euros. Someone even took a chance and took currency mortgages. Then came 2014, when oil prices dropped, foreign debtors took to the streets, and foreign investors have doubled the ruble equivalent of their savings.
But about all under the order. First, a little paranoia. I summarized my point in the column about spending, but it is quite applicable to the investments of savings. Not beneficial to anyone to have accumulated money. That you spent, meets a huge advertising industry, retail trade, restaurants and so on.
In fact, the whole economy thrives on consumption, and us to him actively pushing. Superiority behind the wheel of a famous automotive brand. Smiling people make repairs on the credit received. Happy family or beautiful woman can advertise anything at all.
Imagine a spread in a glossy magazine or a movie on television with an appeal not to waste money on nonsense. I cant imagine. Even if there is a psycho who will pay for such a “social advertising”, it is unlikely to be placed — it would make a mockery of “real” is in the neighborhood. If you suddenly earn more than you want to spend, then this difference too is competition. Only in this case the advertising message is not positive “buy us happiness” and negative is “your money is in danger, give them to us”.
Many dangers — inflation, thieves, all kinds of force majeure, and so on. In particularly audacious cases is financial instruments play on greed and lust for freebies, alluding to high returns and a carefree life on the interest. Studying the market and deciding where to invest the money, I proceeded from the following considerations: In the literature on personal Finance decided to set accurate measurable goals and go for it. Pension in the XX years with an income of xxxx dollars, buying an apartment for a certain amount and so on.
They say that without it there is no sense of motivation. Personally, I completely do without a clear financial plan. Distant and ambitious goal, I demotivate rather than inspire. Where am I and where a bright future?. Now specifics about this investment:
There will need to have a more thorough self-education as the process of investing through the broker significantly more difficult than opening a Deposit account. Guaranteed yield from the most of the tools missing, but the accounts of American brokers insured for the sum to 100 thousand dollars. That is due to the bankruptcy of the broker you do not lose money, but can lose them for bad investments. On the exchanges there are tens of thousands of investment options to suit every taste and appetite for risk. The main are:
Here the dynamics of the value in 25 years: It is seen that share price during this time increased by four times plus per year “drip” the dividends from the shares included in the index. See also two recent crisis in the American economy — the level of 150 dollars, the Fund took place in 2000, 2007 and 2013. Precious metals.
Many hold part of the portfolio gold is considered a classic “defensive” asset, which is often more expensive when everything else falls. Exchange-traded funds allow you to bind to the gold price of the portfolio without buying the metal itself. On the exchanges there are plenty of tools you can invest in precious metals, to try to speculate on exchange rates and oil futures. But, in my opinion, is not necessary. Well-composed investment portfolio provides a yield of a few percent per annum in dollars on long distance and allows you to distribute the risk in different currencies, countries, sectors and so on.
I see no reason to delve into the subject further, as the choice of specific instruments depends on many factors — the age of the investor, the presence of family risk appetite, the availability of alternative investments, and so forth. My portfolio consists of ten tools, mostly focused on companies in the US and Europe. Thats about it. In conclusion, for the patient I will answer some of the frequent comments by previous speakers and will mention books that I studied the subject.
“Its good to talk about money with a high salary and without a family, but a real person with a salary of 50 thousand and family all wrong. And you with fat besites and graphmaster”. First, the family is. I totally agree that her appearance is a significant challenge for budget. And at the time of family planning I did not have a high income.
I paid for the rent almost half the salary. In fact, plans for the establishment of the child was one of my motivations to save, to get out of debt and financial form. Not to be unfounded — here is the real schedule of my “balance” at the time. The numbers and date I deleted, but the trend is clear — Id just come out and make a new save after the birth of a child long worked.
And in the end turned out only when it was possible to increase income. “You do not consider inflation in their calculations, and calculations”. Inflation is a reality and it exists regardless of our decisions and desires. Whatever investment strategy you choose, the inflation rate will contribute to the real value of your assets and their profitability. I dont see the point as something special to highlight when comparing financial instruments.
In my opinion, only where it is really important in selecting the investment currency. Maybe Im wrong — write your views. I read with interest. “It is not necessary to invest the money necessary to spend it, otherwise they will eat inflation”. Do not devour.
Or rather devour, but part. Ten thousand dollars ten years from now will be less purchasing power than now. But certainly more than zero. When the return on the investment even at 3% APR you will likely retain the real value of their investments. “The best investment is the education of children, repair the house and so forth.”.
It is self-deception. All of the above expenses. Books: Thomas J. Stanley and William D Danko “Your neighbor is a millionaire”.
The main value is in the beginning of the study, describing the consumer habits of wealthy people, and in the part which discusses the help of the parents to their children and the impact of this assistance on the lives of children. Overall, the book reads hard and overloaded with repetitions and numbers. But there is an interesting Patriotic statistics. Quote: Russians account for only 1.1% of American households, but 6.4 percent of millionaire families.
According to our estimates, about 22% of all families headed is a native of Russia, have a net worth from one million dollars and above. There is a striking contrast with the English group in which only of 7.71% of households are millionaires. “Champions among ethnic groups”.
Savenok “Your money should work”. Russian compilation of Western sources, plus the authors personal experience in investment and business. In my opinion, one of the best sources of information in Russian language. The book has long been not printed, but Savenko has since published many other books on the same subject.
Kiyosaki “Rich dad — poor dad”. Controversial book, a lot of repetition. The views on the profitability of real estate I am the author of diametrically disagree. But hes a millionaire in the US, and I middle class in Russia.
And in real estate he made a fortune. Therefore, the weight points of view, we have different. Sometimes I wonder about financial education, consumer habits and, again, teaching kids money. The author of the rejection of wage work in this book is not near me.
Kiyosaki “the cashflow Quadrant”. One of the extensions “Rich dad” has a much more balanced approach to employment. Common sense — you can work for a stable income, but we must find ways to increase independence from wage work.