American economist Shlomo Benartzi, who has been studying financial habits of people for more than 20 years, only recently realized why it is easier for us to spend than to save.
“People emotionally perceive savings as a loss. To postpone something for tomorrow, today it is necessary to cut expenses”, – the scientist speaks.
But there is a nuance: if we are talking about investments, then higher income in the future becomes a good motivation for abandoning unnecessary spending in the present. Let’s figure out where the big money is “buried”.

Risk and yield

Investors in our country are about 1%. Even less. This is the sad statistics. But there are countless bank depositors. And this is quite understandable. Investments are protected by the state. In fact, savings in bank deposits could be called an absolutely risk-free investment (after all, they brought income even higher than inflation). At the same time, the exchange index, on the contrary, is trampled about in one place since the 2008 crisis. Yes, in recent years, it too has grown strong, but there is no trace of the super-profitability of the beginning and the middle of the 2000s. What is the point now to invest in stocks and bonds?

Market trends tend to change. Investments are becoming more relevant. Judge for yourself: rates on bank deposits are decreasing, and they no longer look as attractive as before. People are beginning to look at alternative investments, which can bring a higher income. And here the assortment is big: stocks and bonds of companies from different countries, mutual funds, individual investment accounts …
But for those who only think about investing in these tools, one must always remember the main difference between investments from bank deposits. They assume a risk. For example, the price of shares may rise by 5-10% in one day, but it may fall by the same amount. Although … the higher the risk, the higher the potential yield.

Five differences between investments from bank deposits:
– Profitability can be much greater than the deposit
– Quotations can both grow and decline. For comparison: the profitability of the deposit is fixed, that is, its value only grows (but still in very rare cases it exceeds inflation)
– The assortment of financial products is very large. Everything depends on the investment idea used. Deposits, as a rule, differ only in terms of time, type of currency and rate
– There is no state insurance in the investment product. Exception – investments in the purchase of government loan bonds, where there is a guarantee of the state for the repayment of both the bonds themselves and interest on them.
– When receiving income from investments, as a rule, it is necessary to pay income tax.


Investments are different – there is no single classification. As a rule, these are investments in the business of large companies. For the convenience of clients, various financial instruments were invented: stocks (income can be obtained from the growth of quotations and from dividends), bonds (fixed income is paid), unit investment funds (mutual funds managing stock and bonds), futures and options (derivative instruments invented for reducing risks, but now most often used for speculative purposes).
Investments are divided by the degree of risk. For example, bonds are low-risk assets. The average degree of risk is shares. And the highest-risk ones are derivatives.
In addition, investments can be classified depending on the type of income received. For example, there are investments with fixed income – these are bonds. They are not protected by the state, unlike deposits in the bank, but in most cases bring a higher income, and the risk of bankruptcy of any large company tends to zero. And there are investments designed to change the price of the asset itself. For example, you can hope for growth in stock prices, an increase in the exchange rate, the value of a futures or option.

Individuals pay personal income tax on income from investments in corporate bonds – the interest received from investments, and the difference in the price of buying and selling.

Choose your portfolio

“Tell me, where is the most profitable money to invest?” – this question is most often asked by financial advisers. But they have no clear answer to this and can not be.

The view on the formation of an optimal investment portfolio for each investor is different. For example, one is not against taking risks and trying to earn as much as possible. The goal of the other is to save as much as possible, with less income, but with less risk.
Experts believe that by adding various instruments to their investment portfolio – both with high risk and high yield, and with low risk and low profitability – it is possible to form the optimal portfolio in terms of “risk / yield”.
Most large investment companies offer their clients investments in virtually all types of financial instruments. But to enter the world of greater investment is better gradually.

Investment algorithm for “dummies” (read – depositors)
– Learn to save at least 10% of your current income (or better 20% – why trifle ?!)
– Create a reserve fund in the form of bank deposits in EURO and currency – to be sufficient for a period of 3-4 months, if you suddenly lose your job
– Start investing small amounts in mutual investment funds (mutual funds)
– Study the question: read at least two or three books on personal finances and investments (good, big choice) and go through exchange trading (but not Forex)
– Choose an investment company that will become your guide to the world of big finance and help create a balanced investment portfolio

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