Deposits, losses and income of investment companies

When free money appears in your wallet, you can think about investing. For long-term investors, business plans are developed, and the payback period of projects is calculated. The average Russian is more difficult to determine the direction of investment. The task is not only to generate income, but also to minimize the risk of losses.

Investment contribution

Many Russians open bank accounts. With a deposit, you can get a stable, but small income. In the best case, the amount of interest will cover inflation and will save personal savings. This drawback forces investors to search for profitable instruments, for example, investment deposits. It consists of two parts: a basic bank deposit and additional investments in mutual funds (unit investment funds). These funds are used by companies to trade on the stock exchange.

Non-state pension funds also receive investment income. Money transferred by the insured is used to purchase securities. The income received is distributed between the fund and the client.

Features

Do not confuse an individual investment account (IIA) and investment contribution. In the first case, the client independently manages all operations in the stock market. In the second - the client transfers the money for temporary use to the bank, but he chooses the instruments in which the funds will be invested. Also, the financial institution independently decides in what proportion to distribute profits. To begin to receive income from investment activities, you must begin to invest at least 100 thousand rubles. However, the company does not guarantee net profit. As a result of operations, you can get both profit and loss. The essence of the operation is that the company accumulates funds from the capital of several investors, invests them in the stock market. The profit is distributed among investors, the company remains the percentage remuneration of the manager.

Benefits of Deposits

Here are some advantages of such contributions:

• After the expiration of the contract, the client is guaranteed to receive the amount of the initial deposit.
• Revenues from projects exceed the interest of bank deposits.
• To conclude an agreement, it is enough to submit a passport, application and invest money.
• If an urgent need arises, then at any time you can break the contract and return the invested funds.

Cons of deposits

Disadvantages:

• In case of early termination of the contract, you can withdraw only the entire deposit amount (even if you need ⅓). Interest on the transaction is not charged.
• If the transaction turned out to be unprofitable, then in addition to the loss of investment income, the client in any case pays the commission of the management company.
• The maximum duration of the contract with the management company is 12 months.
• Interest is not accrued on the deposit part of the transaction. It is impossible to replenish the initial deposit amount.
• The extension of the contract is not provided. You can only open a new account.
• Profit is accrued at the end of the contract. 13% of taxes are paid on income.

For whom?

After analyzing all the advantages and disadvantages of the contribution, we can conclude that investments and investment income are suitable for people who like to take risks, earn money from the stock market, but are limited in time. Or novice investors who do not yet have trading skills. The tool is not suitable for conservative investors who do not allow the possibility of loss of funds, and people who want to invest the last money.

Where and how can I open an account?

You can become an investor by opening an account with a bank or investment company. The requirements for potential investors in these organizations are different. Only adult citizens and residents of the Russian Federation can open an account and receive income from an investment company (tax payments must go to the treasury of Russia). The deposit amount should not exceed the investment in the mutual fund, otherwise the transaction will be unprofitable for the management company. When investing a large amount of funds, an additional income statement is required.

What does IR do?

An investment company is an organization that invests in assets in order to increase them. Funds can be either own or borrowed from banks and investors. Unlike mutual funds, investment funds have legal registration and a license; their activities are regulated at the legislative level.

Before investing in order to generate income, investment companies analyze the market: market conditions, the price dynamics of the asset, the political situation are examined, and the exchange rate is monitored. That is, all indicators that can affect the price are analyzed.

The income of investment companies may include not only the profit from transactions in the stock market, but also the commission from brokerage operations. After all, only those who have a license for this can become a participant in the securities market. Brokers act as intermediaries between the market and investors. They provide access to quotes and guarantee the security of transactions. They charge a fee for these services. To place funds in the stock market, an investment company needs to use the services of intermediaries or acquire a license for broker operations.

Investment fund earnings also include mergers and acquisitions. The acquisition of one company by another takes place to unite interests, to form an influential market participant. IR is acquired by other organizations for resale purposes. The fact is that during the merger, the price of the company's capital is lower than the market. If you sell it in parts, you can make a profit.

How to choose IR?

The success of operations depends on the choice of an investment company. For a long time, there are organizations on the Russian market that are steadily developing and making profit for their investors. To choose the right company that will manage the money, it is important to consider a number of factors.

Analyze the maximum information on the company website. In particular, pay attention to the duration and date of registration. Usually these data are published on the main page or in the section "About us". The first IRs in the Russian Federation appeared in 1992. If an earlier date is indicated on the site or it is absent at all, then it is better to exclude the company from monitoring.

A registration document must also be published on the site. His absence is a warning signal.

A small number of investors indicates that the company has recently appeared on the market, has not yet gained experience in conducting profitable operations. Therefore, it is better to pay attention to organizations with a large number of investors.

The more ways a company provides a deposit and withdrawal of funds, the more comfortable and profitable it will be to cooperate with it. Some investors prefer bank transfers, others prefer cards, and others prefer electronic systems.

Although no company can name the net investment income from the transaction, it must indicate the approximate percentage. The average return on transactions for each asset is displayed on the site.

Open reporting. The number of fraudsters in the financial market is constantly growing, especially during times of crisis, when people are looking for ways to make money. Therefore, before concluding a transaction, you should familiarize yourself with the company's statements to make sure that you are not cooperating with MLM (multi-level marketing), but with IR. If these documents are not presented on the website, then they must be prepared by the company’s employees at the request of the client.

Check the contact information on the site: office addresses, phone numbers, email. An open company additionally demonstrates information about managers, their photos, ideas.

IR costs

Having figured out how the income of investment companies is formed, we turn to the issue of costs. Investment expenses are expenses incurred by a legal entity in the course of business. These costs are the purchase of assets and the formation of a portfolio with the required rates of return. By purchasing a security, the investor pays its face value, the services of a broker and a bank for the transfer. These are variable costs. Permanent assets include rental of premises, other administrative payments, salaries of employees of ICs, etc. The investments themselves are classified as direct expenses, since they are the main activity for ICs.

Investment Cost Structure:

• Mandatory (for example, the purchase of securities, the cost of money transfer);
• indirect (for example, consultation before the conclusion of the transaction);
• hidden (for example, expenses caused by the early termination of the contract with the client);
• unreimbursed (all other expenses).

IR Ratings

For all of the above parameters, the experts compiled a list of companies that have been actively developing during 2018 and have earned a good reputation.

These companies consistently bring high returns from investment projects.

Where to invest?

In 2017, it was possible to earn 7.22% of the initial amount on deposits in mutual funds. Good growth dynamics were shown by bond and equity funds. A decrease in the key rate by 2.25 pp caused an increase in securities prices.

The most profitable investments were deposits in euros, issued in rubles. Over the year, the return on investment was 8.76%. This is due to the high dynamics of the exchange rate (from 63.8 to 69.1 rubles).

Everyone who wants to make money in the real and speculative markets can invest in IR. In 2017, three companies showed the best results:

1. "BCS". Brokercreditservice Financial Group, over the 22 years of its existence, has become a leader in the Russian brokers market. Over 250 thousand people have already used IC services. High reliability is also confirmed by the maximum rating of the AAA National Rating Agency. Clients of FC “BCS” can use the services of a personal consultant to select an asset or purchase ready-made investment solutions.
2. FINAM. JSC IC FINAM is the largest broker in the Russian market. More than 400 thousand customers appreciated the quality of trust management, investment in mutual funds, products with guaranteed profitability. The company invests all funds invested in “Deposit +” in federal loan bonds, which bring up to 29% per annum. Only customers who have invested 300 thousand rubles can use the service. for 12 months.
3. VTB Capital. The largest investment fund manages funds of legal entities and individuals, including PFs, charitable foundations, insurance companies and self-regulatory organizations. The list of assets is very wide: from bonds to structural products. However, only mutual funds are available to a private investor.

Calculation of investment income

The rate of return is determined in relative terms, that is, it shows how much income one invested monetary unit will bring. By absolute values, it is impossible to evaluate the effectiveness of the project. For example, an investment brings $ 100. And how much was invested? 1000 dollars or 10,000 dollars? Feel the difference?

Annual return

Dg = D × 365 / n, where

• D - the total profitability of the project;
• n is the number of days in the billing period.

Income of investment companies from speculative transactions:

= (Final cost - Initial cost) / Initial cost × 100%.

Example. The company invests $ 1,000 in stocks. After 30 days, he sells them for $ 1,300. Profitability will be:

D = (1300 - 1000) / 1000 × 100% = 30%.

Fixed income

ICs can accrue income according to the simple interest scheme, that is, pay profit on a monthly basis. Or add the amount of accrued interest to fixed capital. In the first case, the simple percent formula is used:

Dg = Total project profitability * Number of periods.

For example, if a company pays 10% for a quarter, then the annual income is:

Dg = 10% * 4 (quarter a year) = 40%.

In the second case, the compound interest formula is used:

Dg = ((1 + Profitability / 100%) * n - 1) × 100%.

For example, IR pays interest on a quarterly basis:

Dg = ((1 + 10% / 100%) * 4 - 1) × 100% = 46.41%.

That is, under the same conditions, the income from an investment project in the case of reinvestment of profits will be higher.

Variable rate

In practice, the return on investment in the long run is changing. The same asset for a year can bring both profit and loss. To calculate the financial result from the transaction, the formula is applied:

Dg = ((1 + D ₁ /100%) × (1 + D ₂ /100%) × ... × (1 + D _n / 100%) - 1) × 100%, where

D ₁ , D ₂ , D _n - profitability of IC for a month / quarter;

n is the number of periods in a year.

For example, investment in stocks brought:

• I quarter - 15% profit (100% + 15%);
• II quarter - 5% of losses (100% - 5%);
• III quarter - 45% profit (100% + 45%);
• IV quarter - 5% profit (100% + 5%).

Profitability for the year will be:

((1.15 × 0.95 × 1.45 × 1.05) - 1) x 100% = 66.33%

If the initial investment amount is $ 1,000, then at the end of the year the profit will be $ 663.3.

How to protect investment income of NPFs?

In 2018, a pension fund client protection program began to operate on the pension market. Its purpose is to protect clients' funds from financial losses of early termination of the contract. If the client transfers the PF savings for three years, then all the income received is guaranteed by the state. But in case of early termination of the contract, net investment income “burns out”. How can this situation be avoided?

Between the client and the PF there is always an intermediary - a bank, broker, agent. It was through them that the majority of Russians learned about the possibility of accumulating pension savings. The sales scheme is built on agents. The latter receive 1.3-1.5 thousand rubles for the attracted client. Therefore, the obligation to inform the insured about the risk of loss of investment income from pension savings lies with the agent. Would a person want to sign a contract for 5 years if he finds out about the loss of income? Most will refuse. Therefore, not all agents notify clients of potential risks. As a result, the Central Bank, PFR and NPF regularly receive complaints from insured persons. Although the conflict lies in the model of attracting customers, the latter are required to study the terms of the contract in detail.

Conclusion

Investment costs and revenues are very difficult to predict. Although the company conducts a detailed analysis of the market before entering into a transaction, the economic situation can change dramatically. In addition, one should not forget about force majeure circumstances, for example, an urgent return of capital by a major investor. Despite significant risks, net investment income usually exceeds the profit from the deposit. Therefore, it makes sense to invest in ICs that have proven themselves in the market.