Stock market: how to make money on stocks?
03 / March / 22
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Stock market: how to make money on stocks?
Investing in stocks is profitable and dangerous. We figured out how to manage to make money in the stock market, not lose all the initial capital and not remain in debt to brokers.
What is the stock market
The stock market is a financial market in which you can enter into transactions for the sale of shares, bonds and other securities.
How to make money on stock market stocks?
And very simple. You need to find a conscientious broker (securities trader) and choose the right stocks. That's all. The peculiarity of this type of investment is that if all of the above is done incorrectly, you can not earn but lose. And sometimes even the entire amount of investment.
"Profitability on the stock market is two or three times higher than on bank deposits, that's for sure. But it all depends on how you" entered "the market, how" came out ", and how lucky you were ..." , - says the head of the information and analytical department.
According to brokers, for a balanced distribution of risks on different securities (also called investment portfolio diversification) you need to have a dozen different positions, and to get a high profit you need to work with at least 50-100 thousand $ for each position. It turns out that a good return can be expected from a private investor who operates in the amount of 500 thousand to 1 million $. Of course, you can invest from 150 thousand $ in two or three positions, forming your investment portfolio of shares of two or three companies. But in this case, the level of risk will be outrageous, and the cost of intermediaries and the payment of taxes can completely nullify all earnings.
Stock market: who ate the money ?!
If the amounts of initial capital we mentioned did not frighten the reader, we can proceed to the description of how to actually "enter" the stock market, and how much it will cost. In Ukraine, it is impossible to buy and sell securities without a license to trade in these securities. Therefore, the investor, first of all, needs to enter into an agreement with such a trader (broker). "It is necessary to find a broker with whom a person will feel comfortable - with whom you can speak" in one language ". In fact, this is enough to start working in the market," - said the director of investment company Dragon Capital Dmitry Tarabakin.
The meaning of cooperation comes down to the fact that the client instructs the trader to buy or sell certain securities, while listening to the advice of a professional, and can act independently at his own risk.
Of course, such a "tandem" will cost money. Traders set the level of commission depending on the volume of transactions. Thus, when conducting an operation in the amount of up to 50 thousand $, an individual will have to pay the broker from 0.3 to 1% of the transaction value, but on average - not less than 150 $. When working with securities in the amount of 50 to 100 thousand $, the trader's commission will be from 0.5 to 1%, but on average - not less than 300 $.
Choosing the right broker with the lowest commission is the first task of a private investor. However, you should be careful here - if there is a tariff dumping, there is reason to doubt the reliability of the trader. Therefore, in addition to the commission should take into account other characteristics - the activity, number and volume of transactions made by the trader, working time in the market and so on.
In order for a private investor to be able to buy and sell securities through a trader, he also needs the services of a custodian or registrar. Stock market participants advise individuals to use the services of a custodian, as the rates of registrars are currently "biting". "The average storage fee for the registrar is 1% of the contract amount. There were even precedents when the storage fee was 4%. After that, the law established that the fee should not exceed 2%. The custodian's fee for storage of securities is 5-150 $, depending on the volume of the transaction, plus a commission of 0.0001-0.001%.
On the average on the market at work with the capital in 100-150 thousand $ the rate of the commission for storage makes 0,0001-0,001%.
However, this one the cost item is not the largest. It is also necessary to take into account the custodian's commission for moving the person's securities. It is an order of magnitude higher than the storage fee and varies between 0.001-0.01%. Payment of all these commissions is made monthly. Let's not forget about the subscription fee - on average up to 50 $ per month will have to be paid to the custodian to be considered his full-fledged client. True, there are custodians who do not require a subscription fee, but this is rather an exception. We should not forget that in our country the income received by individuals in most cases is taxed. Investment income (income from stock trading) is no exception. The rate for this type of tax is 18% of the income received for each share.
On average, it turns out that at least a third of the profits go to pay for the services of intermediaries and taxes. With an initial capital of 50 thousand $, at least 5-8% of this amount will have to be paid for the maintenance of one operation alone.
So far, the high cost of service does not allow an individual to fully profit from stock trading. Due to the lack of really working electronic document management, we are obliged to fill in a lot of documents for each "breath and sneeze" of the investor, which are forced to submit to various regulatory and regulatory bodies. we can reduce prices for services and lose customers among individuals, "complains one of the leaders of the stock company.
Stock market: buy shares.
The problem of high tariffs of intermediaries is a matter of time.
"The stock market is interested in individuals bringing their money and reviving work on it. Therefore, the main group of its participants is lobbying for a system that will allow the online trading platform to work with securities. Then the rates may be lower. This change may be the signal that will bring individuals to the stock market, "- predicts the director of investment company" Kinto "Sergei Chernenko. As world practice shows, the costs and initial capital of an investor in online trading are much lower than individual brokerage services.
Meanwhile, "funders" advise with a small capital (up to $ 30 thousand) to buy and sell shares not too often. "Because the amount is relatively small and the transaction costs are decent, it is unlikely to be traded often. Therefore, you need to form your investment portfolio for three, preferably six months".
In order to choose the object of investment, you need to carefully study the situation in the stock market, in particular, analytical reviews of the stock market, such reviews are regularly issued by traders. It is clear that traders are advised to buy shares during the downturn, and sell - at the peak. This is a universal rule. The challenge is to correctly identify this peak and get the maximum profit, as well as not to accumulate unnecessary shares cheaply during the recession.
For short-term speculation, fundraisers are advised to turn to "blue chips" (a list of which is available on the PFTS website). Both long-term and fast-growing stocks are interesting for long-term investment, but are not yet among the leaders. By the way, when assessing the prospects of shares of the second tier, novice investors are often wrong - because of the inability to analyze the financial condition of the issuer and predict its rise or fall.
In any case, without the advice of professionals here can not do. Shares are an active type of investment that requires serious involvement in the process and constant monitoring. And, of course, decent money, the loss of which in which case you can easily survive.
Stock market: where stocks are traded
Shares and bonds are traded on the so-called secondary stock market. Only licensed securities traders have the right to buy or sell shares. For general convenience, the securities are translated into electronic (non-documentary) form and are in the form of electronic records in special accounts. Accounting and storage of these securities is a legal requirement for the market. It is carried out by the so-called custodians and registrars. They are most often played by banks, securities dealers or specialized companies.
For your safety, we have compiled a complete list of unscrupulous brokers.
