Where to invest your money? Or your investment activities
Today we're going to talk about what assets you should keep your savings in in order to save and increase your money? In other words, we're going to learn how to keep our investment activities.
What is a long-term investment? What is an investment activity? Many people mistakenly believe that long-term effective investments are possible with amounts of a few million dollars. Let's turn to the definition of "investment activity:
Investment activities - investment and implementation of practical actions in order to make a profit and (or) to achieve another useful effect.
As you can see, there is no mention of the amounts invested, but the key is that these are practical actions to make a profit. But the larger investmentsThe more the task comes to the forefront preservation The second main motive is to make a profit, or to make a profit or to make a profit. And the second main motive is to make a profit, or increase of invested capital.
Investments come in three varieties:
Real investments - direct purchase of real capital in various forms. For example, the purchase of residential or commercial real estate.
Financial investments - indirect purchase of capital through financial assets - the purchase of company shares (not to be confused with the open stock market). The value of the shares and the volume of their issue corresponds to the real value of the enterprise. The holder of shares is actually a co-owner of the enterprise and receives a portion of the enterprise's profits as interest, dividends on shares, the amount of which depends on the volume of shares purchased and the profits received by the company.
Speculative investments - the purchase of assets solely for the sake of possible price changes. This includes buying real estate for resale, shares and other securities on the open stock market, highly liquid currencies, energy, base and precious metals.
Traditionally real estate was considered the most reliable object for investment. After all, it is always there and does not go anywhere. But this is a myth... After all, the value of real estate can fluctuate greatly, and 2008 is a prime example of how real estate has lost about 40-50% of value. And more importantly... Even when the price drop has just begun and you wish to sell the asset at the peak of the price, try to do it quickly enough and at the current price!
Investments in speculation
We turn our gaze to Highly liquid commodities. In buying them, we will adhere to the principles of the long-term investor - We will hold the purchased assets long enough, ignoring intraday price fluctuations, focusing solely on global price changes. But at the same time, we have the ability to get rid of the losing asset at the current price with one click of the mouse.
Let's look at a simple example passive investing. We have a start-up capital of 10,000$. We did not keep this money under the pillow, bank deposits are not very attractive either because of the low interest rate and the fact that if we withdraw the money prematurely, we lose the interest earned. We decided to invest our money in highly liquid assets. We buy: 1 contract for copper, 1 contract for Brent, 1 lot for Euro, 1 contract for gold and hold the purchased assets. Let's say we made these transactions with you in 1998, 12 years ago, and held the assets we purchased until today.
This is what the result will look like.
We received on average 19% per annum. Quite a good result, taking into account the minimal actions performed. But can it be improved? After all, the prices were changing in waves. Let's consider separately, for example, crude oil marketIt was the one where prices changed most dynamically and there were the greatest losses of profit.
Adding the simplest trend indicatorsimple moving average with a period of 52, will increase the efficiency of management of our investments at times, to be exact, up to 70% per annum. In my opinion, the result is more than good! Note, we are talking with you not only about currency trading, but also contract trading (CFD - Contract for Difference), i.e. the use of commodity and commodity markets for profit.
In this way we have, without noticing it, made ourselves investment portfolioand through the use of various tools - hedged their risks.