Deposits, losses and income of investment companies

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-17 18:37

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

Investment deposit

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 allow you to save personal savings. This disadvantage makes investors look for profitable instruments, such as an investment deposit. It consists of two parts: a basic bank deposit and additional investments in mutual funds (mutual investment funds). The companies use these funds to trade on the stock exchange.

Pension non-state funds also receive investment income. The money transferred by the insured persons 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 an investment deposit. In the first case, the client independently manages all operations in the stock market. In the second case, the client transfers money for temporary use to the bank, but he himself chooses the instruments in which the funds will be invested. Also, the financial institution independently decides in what proportion to distribute profits. To start receiving income from investment activities, you need to start investing 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 resulting profit is distributed among investors, the company is left with a percentage of the manager's remuneration.

Benefits of deposits

Here are some of the benefits of such deposits:

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

Cons of deposits

Flaws:

• In case of early termination of the contract, you can withdraw only the entire amount of the deposit (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 a commission to the management company.
• The maximum term of the contract with the Criminal Code is 12 months.
• No interest is accrued on the deposit part of the deal. It is impossible to replenish the initial deposit amount.
• Prolongation of the contract is not provided. You can only open a new account.
• Profit is accrued at the end of the contract. 13% tax paid on income.

For whom?

After analyzing all the advantages and disadvantages of the deposit, 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 losing funds, and individuals who want to invest their last money.

Where and how can I open an account?

You can become an investor by opening an account with a bank or an investment company. These organizations have different requirements for potential investors. 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 Russian treasury). The amount of the deposit must not exceed the investment in the mutual fund, otherwise the transaction will beunfavorable for the UK. When investing a large amount of funds, an additional income statement will be required.

What does IC do?

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

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

The income of investment companies may include not only profit from transactions in the stock market, but also a commission from conducting brokerage operations. After all, only those who have a license to do so can become a member of the RZB. 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. In order to place funds on the stock market, an IC needs to use the services of intermediaries or purchase a brokerage license.

Income of investment funds also includes profits from mergers and acquisitions. The acquisition of one company by another takes place to unite interests, to form an influential market participant. ICs are acquired by other organizations for the purposeresale. The fact is that in the event of a merger, the price of the company's capital is lower than the market price. If you sell it in parts, you can make a profit.

How to choose an IC?

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

Analyze as much information as possible on the company's website. In particular, pay attention to the period of activity and the date of registration. Usually this data is published on the main page or in the “About Us” section. The first ICs in Russia appeared in 1992. If the site indicates an earlier date or it is not available at all, then it is better to exclude the company from monitoring.

The registration document must also be published on the site. His absence is a wake-up call.

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

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

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 reporting to make sure that you are not cooperating with MLM (multi-level marketing), but with IC. If these documents are not presented on the site, then they must be prepared by the company's employees at the request of the client.

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

IC Costs

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

Structure of investment spending:

• mandatory (for example, the purchase of securities, the cost of transferring money);
• indirect (eg pre-deal consultation);
• hidden (for example, expenses caused by the early termination of the contract withcustomer);
• unreimbursed (all other costs).

IC Ratings

According to all of the above parameters, experts compiled a list of companies that actively developed during 2018 and earned a good reputation.

Name	Directions
"Russ-Invest"	Broker services, online trading, foreign exchange, venture capital investments, etc.
"TeleTrade"	Forex, synchronous trading, investments, etc.
Simex	Online deposits
"GH - Kapital AM"	Investments, brokerage
E3 Investment	Real estate investment

These companies consistently generate high returns on investment projects.

Where to invest?

In 2017, it was possible to earn 7.22% of the initial amount on deposits in mutual funds. Bond and equity funds showed good growth dynamics. The reduction of the key rate by 2.25 p.p. caused an increase in prices for securities.

The most profitable investments turned out to be deposits in euros, issued in rubles. For 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 earn money on real and speculativemarkets can invest in IC. Three companies showed the best results in 2017:

1. "BCS". Financial group "BrokerCreditService" for 22 years of existence has become the leader of the Russian market of brokers. More than 250 thousand people have already used the services of the IC. 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 choose an asset or purchase ready-made investment solutions.
2. "FINAM". JSC "IK FINAM" is the largest broker in the Russian market. More than 400,000 clients have evaluated the quality of trust management, investments in mutual funds, products with guaranteed returns. The company invests all funds invested in "Deposit+" in federal loan bonds, which bring up to 29% per annum. Only clients who have invested 300 thousand rubles can use the service. for 12 months.
3. "VTB Capital". The largest IC manages the funds of legal entities and individuals, including PF, charitable foundations, insurance companies and self-regulatory organizations. The list of assets is very wide: from bonds to structured 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 assess the effectiveness of the project. For example, an investment brings in $100. And how muchwas invested? $1,000 or $10,000? Feel the difference?

Annual return

Dg=D × 365 / n, where

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

Income of investment companies from speculative transactions:

Ds=(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 under the simple interest scheme, that is, pay profits on a monthly basis. Or add the amount of accumulated interest to the fixed capital. In the first case, the simple interest formula is used:

Dg=Total profitability of the projectNumber of periods.

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

Dg=10%4 (quarters of the year)=40%.

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

Dg=((1 + Yield / 100%)n - 1) × 100%.

For example, IC pays interest quarterly:

Dg=((1 + 10% / 100%)4 - 1) × 100%=46, 41%.

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

Variable rate

In practice, the profitability of IC in the long run varies. The same asset for the year can bring both profit and loss. To calculate financi althe result of the transaction, the formula is applied:

Dg=((1 + D₁ / 100%) × (1 + D₂ / 100%) ×…× (1 + D_{n / 100%) - 1) × 100%, where}

D₁, D₂, D_{n - IC profitability for the month/quarter;}

n - number of periods in a year.

For example, investing in stocks brought:

• I quarter - 15% profit (100% + 15%);
• Q2 - 5% loss (100% - 5%);
• QIII - 45% profit (100% + 45%);
• IV quarter - 5% profit (100% + 5%).

Yield for the year will be:

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

If the initial investment is $1000, then at the end of the year the profit will be $663.3.

How to protect NPF investment income?

In 2018, a program to protect NPF clients 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 savings fund for three years, then all income received is guaranteed by the state. But in the event of an early termination of the contract, the net investment income “burns out”. How can this situation be avoided?

There is always an intermediary between the client and the PF - a bank, a broker, an agent. It was through them that the majority of Russians learned about the possibility of accumulating pension savings. The sales scheme is based on agents. The latter receive 1.3-1.5 thousand rubles for an attracted client. Therefore, the obligation to inform insured persons about the risk of loss of investmentincome from pension savings falls on the agent. Will a person want to enter into 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 customer acquisition model, the latter are obliged to study the terms of the contract in detail.

Conclusion

Investment costs and returns are very hard to predict. Although the company conducts a detailed market analysis before entering into a deal, 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 large investor. Despite the significant risks, the 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.