But most developed countries of the world have higher credit ratings:
- USA - AAA
- Japan - AAA
- Britain - AAA
- China - AA
- Australia - AAA
Thus, the outflow of capital to countries with higher credit rating contributes to the reduction of investment risks.
High investor capital protection
Investment risks are reduced not only due to the country's higher rating, but also due to the investor's capital protection system. In Russia, the investor's savings are protected only on bank deposits. The amount of deposit insurance provided by the Deposit Insurance Agency in the event of a bank failure is 1.4 million rubles. Accounts with brokers in case of bankruptcy or fraud are not protected in any way (more: What to do if the broker goes bankrupt?).
In foreign countries, the investor's capital protection system is more developed and provides higher protection. In the US, insurance bank deposits limited to $250,000. Brokerage accounts are insured by SIPC (Securities Investor Protection Corporation) to the amount of $500,000 (including $250,000 in cash). In European countries, insurance of bank accounts is up to 100,000 euros, brokerage accounts - up to 20,000 euros.
Investments in Russian Insurance companies, for example, in accumulative or investment life insurance, are also not protected in any way in case of bankruptcy of the company. The only hope is reinsurance companies. The protection of savings in foreign investment insurance companies that work with Russians is 90-100%, depending on where the company is registered and what protection scheme is applied in that jurisdiction.
The development of the financial industry
The modern Moscow Exchange (formerly MICEX) began its work relatively recently - in 1992. The three largest stock exchanges in the world began to work much earlier: London - from 1801, New York - from 1792, Tokyo - from 1878. Foreign stock markets have a much longer history.
The same applies to financial instruments. For example, the oldest mutual fund in the United States, Massachusetts Investors Trust, which still exists today, began operations in 1924. Exchange-traded funds (ETFs) appeared in 1993. In Russia, the first analogues mutual funds- Mutual funds appeared only in 1998, foreign ETFs - in 2013.
The foreign financial industry has a longer history of existence, during which it has been able to accumulate a lot of experience, develop legislation and regulation of the industry. For example, in Russian legislation there is still no such thing as an exchange-traded fund (ETF), so all ETFs on the Moscow Exchange are issued in other countries.
Large selection of financial instruments
The degree of development of the financial industry also affected the number of available financial instruments. Only about 300 shares are traded on the Moscow Exchange Russian companies and about 1000 bonds. About 500 more US shares are traded on the St. Petersburg Stock Exchange. The number of Russian mutual funds for 2018 is 1,300, of which only 287 are open. The value of assets under management of all mutual funds is 763 billion rubles. The number of ETFs on the Moscow Exchange is only 14.
In the United States, the number of companies whose shares are traded on the stock exchange is approximately 5,000. The capitalization of the US stock market is 32,120,702 million dollars. In total, more than 40,000 shares are traded in the world, the total capitalization of the world's stock markets is 79.214 trillion. Doll.
There are 9,000 mutual funds in the US with $19 trillion invested in them. dollars. The number of mutual funds in the world is about 114,000. The number of ETFs in the US is 1,700, around the world about 4,700, 3.42 trillion are invested in them. Doll.
Capitalization of the Russian stock market 623 424 million dollars, Japan 6 222 825, France 2 749 314. Share Russian market shares in the global capitalization does not exceed 2%.
Thus, the Russian stock market occupies a very small place in the world, and overseas markets provide a much larger selection of financial instruments. Unlike Russian brokers, which in most cases give access only to Russian exchanges, foreign companies allow you to buy financial instruments on dozens of exchanges in different countries ah from one account. Therefore, most foreign financial instruments will be available without any problems.
Available asset classes through funds
The limited number of funds in Russia affects the availability of foreign assets. Through Russian funds, you can invest only in a very limited list of foreign assets. Through foreign funds, the number of available assets is much greater.
Table of availability of foreign assets through Russian and foreign funds
Low commissions of foreign funds
Investors in foreign funds incur fewer costs. Due to the fact that trillions and billions of dollars have been invested in foreign funds, management companies can take less commissions. The amount of assets under management of Russian management companies is much smaller, so they are forced to take a larger remuneration as a percentage of NAV in order to earn a profit. 0.1% of a billion dollars is more than 1% of a million.
Average fees of funds
The annual remuneration of the management company in mutual funds is on average 2-5%, in foreign mutual funds 1-2%. ETF fees that are available in Russia are 0.5-0.9%. Commissions in most foreign ETFs are tenths or hundredths of a percent and do not exceed 0.5%. Since the most large funds are located in the US, US index ETFs have the lowest commissions. The list of ETFs with the lowest fees can be seen below.
There are dividend-paying funds
Almost all Russian funds do not pay dividends. All dividends and coupons that the fund receives, it reinvests within the fund. Thus, in order to receive income, the investor has no choice but to sell part of the securities, or to form a portfolio of stocks and bonds himself.
Unlike Russian funds, foreign funds can both pay and accumulate dividends. That is, the investor has the opportunity to make a choice and form a portfolio of funds of the desired type. If the fund pays dividends, there is no need to sell the fund's shares to generate income.
These are not the only differences between Russian and foreign investment funds. You can read more about their comparison HERE.
No language barrier
One of the common myths about foreign investment is the need for a good knowledge of English. Indeed, the main language of most foreign companies is English. However, knowledge of the English language is not required in all cases. Some foreign companies are focused on an international audience, including clients from Russia. Therefore, they have websites in Russian, translated documents, and even Russian-language support or representatives in Russia.
Therefore, if the use of English is a problem, one of the foreign companies that supports the Russian language can be chosen for investment. For example, this is the American broker Interactive Brokers or the investment insurance company Investors Trust.
The only problem may be studying information about foreign stocks, bonds and investment funds. Information about them is only in English. In this case, you can use online translators or contact financial advisor which will help to create investment portfolio.
Easy account opening procedure
plus foreign investment also, there is no need to travel anywhere to open an account in a foreign company. You can open an account with a foreign broker or an insurance company remotely. In the case of a brokerage account, you need to register Personal Area and fill out a web form on the broker's website, and then send electronic scans of two documents for verification.
In the case of an insurance company, the account is opened through a representative of the company, who will help to correctly fill out the necessary forms and documents and send them to the insurance company for consideration.
In most cases, verification of documents and opening an account takes place within one to two weeks. The only exception here are foreign banks, many of which require a personal visit to the bank.
Cons of foreign investment
Limited choice of companies
Unfortunately, not all foreign companies work with Russian citizens, so the choice is very limited. And over the years, the situation has only worsened. The number of foreign brokers where a Russian citizen can open an account today has decreased over the past few years. Brokers Ameritrade, TradeKing, Charles Shwab, MB Trading, OptionsXpress and others have stopped opening accounts for Russians. However, there is still a choice among foreign brokers (more details: Investing through a foreign broker).
The same applies to foreign investment insurance companies. In recent years, their number has also decreased: Generali and RL360 have stopped opening accounts for Russians.
To the credit of all these companies, it is worth recognizing that clients from Russia who already had open accounts were not affected in any way. They continue to work as usual. Therefore, if your plans include opening an account abroad, then you should think about it now, before the number of foreign companies has decreased even more.
Required initial amount
Many overseas companies have minimum deposit requirements for opening an account. For foreign banks, it can be from 50,000 to 1 million euros, depending on the bank.
For foreign brokers, it can be up to $10,000, however, some brokers may not have a minimum deposit requirement. However, brokers may charge regular commissions, which will be high for small amounts like 1-2 thousand dollars. Therefore, for small amounts, a foreign broker must be selected more carefully with an eye to tariffs.
In investment insurance companies, deposit requirements differ depending on the type of program. Savings programs with regular contributions have a minimum contribution of 100-500 dollars per month. However, in practice, it is recommended to invest in such programs ranging from $300-500 per month or more. Another type of program - with a large one-time contribution - requires much more: 30,000 - 75,000 dollars.
Russian brokers and management companies in terms of opening an account are less demanding on the amount. Many brokers do not impose any deposit requirements for opening an account, while others have a small one - about 30-50 thousand rubles. As for management companies that offer mutual funds, the entry threshold for them in most cases is 5,000 - 15,000 per fund (in some management companies more or less). For trust management capital will need a larger amount - several hundred thousand rubles.
Higher commissions
As mentioned above, the commissions of foreign funds are several times less than the commissions Russian funds. As for the commissions of companies through which investments are made, the opposite is true here.
Commissions for servicing in a foreign bank depend on the selected service package and can range from several tens of dollars / euros / francs per year to a thousand or more, depending on the options. Commission for storage of assets 0.1-0.5% of the amount of assets. Commissions for transactions with securities - 0.2-2% of the transaction volume, but at least 20-30 euros or dollars. Investment consulting - 0.15-0.3% of the portfolio.
For Russian banks, depending on the package of services, the service can be free or cost several thousand rubles a month.
From foreign brokers minimum commission per transaction starts from 1-2 dollars and depends on the number of securities purchased. The broker may also charge an inactivity fee, which can range from $10 to $20 per month. The commission for inactivity is reduced by the amount of commissions for completed transactions. Some brokers do not charge it at all or stop charging it if the amount on the account exceeds a large amount. Other fees may also apply, such as a no-delay market data fee.
AT funded programs unit-linked annual policy maintenance fees can be up to 3%. However, at the same time, bonuses are provided - additional payments from the insurance company for the duration of the program and the amount of contributions. The longer the term of the program and the contributions, the greater the bonuses, which reduce the overall costs of the policy. Changing funds in the portfolio is free up to 15 times a year.
In programs with a large one-time contribution, annual commissions can be 1-2%. But starting from the first year, they gradually decrease and within 5-8 years they can reach 0%. There is only a fixed commission for the policy. The transaction fee is fixed and amounts to 20-30 dollars. No commission is charged for currency exchange.
Russian brokers have much lower commissions than foreign ones. The transaction fee can be 0.03% -0.1% of the transaction volume. Many brokers do not have a minimum commission per trade, while others have it around 30 rubles. Market data is free. Service fee may be absent or range from 10 to 150 rubles per month. Often it is reduced by the value of completed transactions.
The need to submit tax returns
Foreign companies are not tax agents for Russians, so citizens of the Russian Federation are required to submit their own tax returns to the Federal tax service Russia and pay tax at a rate of 13%. The obligation to file a tax return arises if income was received on the account in the past year. Therefore, in most cases, a tax return must be filed annually.
The only exception is unit-linked policies. Under the law, income received within the policy does not need to be declared. The obligation to pay tax arises when the amount withdrawn from the policy exceeds the amount deposited. Since policies usually open on long term, you may not need to file a tax return for many years.
In the case of foreign banks, the number of reports increases: citizens of the Russian Federation who are in Russia for more than 183 days a year must notify the tax office of their foreign bank accounts within a month after they are opened and closed. It is also necessary to report annually on the movement of funds on the account. You do not need to notify the tax office of your brokerage accounts and unit-linked policies, unless the brokerage account is opened with a foreign bank.
In the case of working with Russian companies, everything is much simpler. Report to tax office don't need it yourself. Russian companies in most cases are tax agents, that is, they themselves file for their clients tax returns and withhold taxes.
No tax incentives
Russian legislation provides tax incentives for investments: benefit for long-term holding of securities and tax benefits available on individual investment accounts. But they are available only for securities traded on Russian stock exchanges, and therefore do not apply to foreign investments.
The only exceptions are unit-linked policies, which are life insurance policies. Tax incentives apply to them - the tax must be paid only on income that is received in excess of the refinancing rate.
As can be seen, investments abroad have enough advantages to be considered as a good alternative to purely Russian ones: low investment risks, investor capital protection, big choice instruments, low commissions. The disadvantages include higher requirements for the initial investment amount and the need to pay taxes on your own. But these shortcomings are not an insurmountable obstacle, which means that investments abroad are now available to many.
There are three common ways investment abroad. You can invest in foreign assets through:
foreign bank
foreign broker
foreign insurance company
Due to the large entry threshold foreign bank for the Russian investor, the second and third options can be recommended. However, in the case of small capital, you can pay attention to Russian, which may contain foreign securities, as well as Russian brokers and sub-brokers. In this article, I briefly summarize all the options with which Russian investor may acquire foreign assets.
Through mutual funds:
Actively managed mutual funds
By Russian legislation prohibition on holding foreign securities for mutual funds no. Since the overheated Russian market has stalled since 2008 (and the share of Russian equity assets is only about 1% of the world market), a sufficient number of mutual funds with foreign assets have appeared in recent years - although the first attempts were limited to fractions of a percent. This is due, among other things, to the fact that it was not very clear how to formalize the storage of such securities in the Russian depository. However, by 2011 this problem was completely solved:
An additional advantage of such mutual funds is the investor's income from the devaluation of the ruble, which is especially felt in the last two years. Because of this, an investor could receive a ruble income higher than inflation in a stagnating and even falling foreign market - as, in fact, happened at the end of 2015.
Passive mutual funds
On foreign exchanges
Some Russian brokers offer direct access to the foreign market: for example, BCS or Otkritie Broker. In this case, you should obtain the status of a qualified investor - usually this is a certificate from the Federal Financial Markets Service or assets worth several million rubles and experience in trading on the market. Entrance from 10 thousand $. Brokers are tax agents, i.e. automatically withhold tax.
Through stock shops
Some brokers, such as Freedom Finance, online shopping services - where stocks (Russian or American) can be bought with a few mouse clicks - i.e. how common goods on ebay or amazon. So there is no need to learn trading terminal broker. The reverse side of this "lightness" is quite high commissions service - in addition, there are only selected promotions and no diversified products.
Through Russian sub-brokers:
I wrote about the possibility of entering the international market through sub-brokers (Cypriot subsidiaries of Russian brokers). Sub-brokers, although not tax agents, may cause increased taxation, and in the event of bankruptcy of either a direct foreign broker or a sub-broker, conflicts with a refund are possible. Cyprus protection in the form of insurance Cysec Foundation after the crisis of 2013, it looks more like a formality. The entry threshold through sub-brokers can vary greatly: for example, for WhoTrades Ltd. - the Cypriot branch of Finam - it is only $ 200, while the Cypriot daughter of BCS has $ 10,000. You will be charged a $15 commission for withdrawing funds from the latter.
Through foreign brokers:
With direct access to foreign exchanges through a foreign broker (today, several American and 2-3 European brokers are available to Russians), the investor gets at his disposal a full range of foreign assets, starting with the purchase of individual stocks and bonds. For several reasons, this method has an advantage over those discussed above - for example, American brokers investment accounts up to $500,000, while Russian brokers have insurance Money there is no client at all. For a portfolio investor, diversified products are primarily of interest - these include:
Mutual Funds
Unlike Russian mutual funds, most large mutual funds have agreements with large American and European brokers, thanks to which mutual fund units can be purchased both directly through the management company and through them. A detailed article on mutual funds can be found. Commissions of such funds are usually less than Russian mutual funds and do not exceed 1-2%; The history of mutual funds dates back to the 20s of the last century, while the first mutual funds of the newly revived Russian market appeared only in 1997.
Exchange-traded funds
Exchange-traded funds can be conditionally considered an advanced version of mutual funds - largely repeating their essence, exchange-traded funds compare favorably with transparency, increased liquidity and lower commissions. For today it best tool portfolio investment, and the number of funds (several thousand) allows you to make a portfolio even for the most demanding investor. The main disadvantage for a Russian can be considered the purchase amount of at least several thousand dollars, so that broker commissions (the funds themselves are cheap and usually cost several tens of dollars) do not greatly affect the total amount of the portfolio.
Through an insurance company:
Cumulative type
Funded programs are primarily suitable for large amounts and with an emphasis on accident insurance (illness, death). Such programs are also recommended for people with complete risk intolerance - the accumulation of capital in such programs is in a straight line, i.e. in the same way as with a bank deposit. However, the yield is not encouraging - it is about 2-3% per annum in foreign currency, and the mechanism for generating income is opaque for the investor. Large companies of this type usually have international ratings, the assets of some of them are reinsured in other companies. An example of an American funded insurance company available to Russians is National Western Life.
Investment type
This type includes companies operating according to the unit-linked method (the English investment method). For the Russians in this moment There are three such companies available, two of which I have made extensive reviews of. In short, the essence of the services provided is that companies offer an investment product within the legal framework of insurance, which allows you to get preferential taxation income. However, the investor himself chooses investment products and is responsible for the result. This moment is a stumbling block for the work of programs in the legal field of Russia - therefore, the work of unit-linked companies in many countries of the world is carried out through financial consultants.
As assets where you can invest, the mutual and exchange-traded funds discussed above are offered. At the same time, compared to foreign brokers, you can invest in a unit-linked company from $100 per month (at least $300 is recommended), although the choice of available funds will be less than that of a major foreign broker. The disadvantage is that the minimum required amount accumulated in the initial period remains in the program until the end of the investment. The advantages compared to the accumulative type of insurance include a higher expected return - over a distance of 10 years it should be 2-4 times higher, although you will have to “pay” for it by waiting for the inevitable drawdowns in your account. In this case, the insured is usually from 90 to 100% investment deposit depending on the method of capital protection in the company.
Direct:
An option for a professional is to go abroad and directly purchase, say, the desired property there. Or, in the same place, personally agree on depositing a large amount into a company of interest to you on the terms, for example, of receiving increased dividends. Options, although possible, are very difficult in practice. Therefore, I believe that what has been written above is quite sufficient for investing in foreign assets in a variety of industries (stocks, bonds, real estate, metals, the commodity market).
It is difficult to make a diversified portfolio of Russian instruments. Main exchange turnover fall on the paper no more than a dozen issuers and a couple - a trio of futures. Asset prices are highly dependent on the political environment, which has clearly not improved in the past few years. As a result, to form a long-term portfolio of Russian shares very difficult.
Therefore, investors make a choice in favor of foreign securities. You can invest in them through a broker, bank, mutual fund or insurance company. This article discusses each method in more detail.
Through Russian brokers
Russian brokers allow you to trade foreign securities from the S & P500 index on the St. Petersburg Stock Exchange.
On the Moscow Exchange, through ETFs, you can invest in Eurobonds of Russian companies and shares included in MSCI indices.
Access to the Moscow and St. Petersburg stock exchanges can be obtained by any investor - you need to choose a suitable Russian broker.
Another option, almost never seen in practice, trade foreign instruments through a Russian broker who has opened an account with a foreign prime broker.
Technically it looks like this. The Russian broker himself becomes a client of the broker of the country where a qualified investor needs access. That is, he acts as a sub-broker. The money of all his clients trading in a particular country is in the account of a foreign broker.
The clients of the Russian broker have access not only to shares from the S&P 500 index, but also, for example, about three thousand American securities on US exchanges. This requires the status of a “qualified investor”.
Investing through a Russian broker is easy. You can open an account at the broker's office or remotely. From the documents you need a Russian passport, TIN and bank details.
Russian broker - tax agent clients. When withdrawing money from the account, the broker, if there is income, withholds personal income tax and transfers funds to the tax authority.
Be prepared for currency revaluation - foreign securities are traded in foreign currency, but profits for taxes are fixed in rubles. The volatility of the exchange rate can seriously affect it - not always in your favor.
Long term investors can get tax deduction. This will require IIS and three years, during which the funds will be in the account.
The state controls brokers, but does not insure funds. Licenses for Russian brokers are issued by the Central Bank. Unlike bank deposits, brokerage accounts in the Russian Federation are not insured, therefore, in the event of fraud by a Russian broker or its bankruptcy, the state will not return the money to you.
In some countries, such as the US, brokerage accounts are insured. But legally, the client of a foreign broker is not you, but your sub-broker. If something happens to a foreign broker, the insurance payments will be received by the Russian one, and then distributed among the clients. Not the fact that everyone will receive the full amount.
Through foreign subsidiaries of Russian brokers
Some Russian brokers have affiliated companies abroad - usually in Cyprus due to the peculiarities tax regime. They allow unqualified investors to invest in a wider range of foreign instruments than Russian brokers.
Investing is a little more difficult than through a Russian broker. The process of opening an account is about the same as that of a Russian broker. You don't need to notify the IRS. But with the help of a broker, you will have to fill out a declaration and pay personal income tax.
Foreign subsidiaries of Russian brokers, as a rule, do not provide direct access to the exchange. They act as sub-brokers - they connect you with a prime broker who is already executing your orders on the exchange. Therefore, commissions for sub-brokers are usually higher than when working with prime brokers.
Most foreign subsidiaries of Russian brokers are registered in Cyprus. Issues licenses and controls them CySEC.
Brokerage accounts in Cyprus are insured for €20,000 if the broker is part of the ICF (Investment Compensation Fund) organization. Therefore, in the event of bankruptcy or revocation of the license of such a company, you will be compensated.
If you are a client of a Cypriot broker, but work on an exchange in another country, the conditions are different. In some other countries, such as the US, brokerage accounts are also insured. But legally, the client of the local broker is not you, but your sub-broker. If something happens to a foreign broker, the Cyprus broker will receive insurance payments, and then distribute them among clients. Not the fact that everyone will receive the full amount.
Through foreign brokers
Another option to buy foreign securities is through a major foreign broker. It will provide access not only to the most liquid instruments, like the Russian one, but also to less popular ones.
Investing through a foreign broker is a process of medium complexity. Required documents may vary by country and broker. Most likely, you will need to confirm the identity, place of residence and financial position. Many brokers have requirements for minimum amount On account.
Unlike foreign subsidiaries of Russian brokers, "pure" foreign companies do not always have a Russian version of the site and Russian-speaking support. Be prepared to discuss emerging issues in a foreign language.
You do not need to notify the tax office of opening an account with a foreign broker. You will have to fill out the declaration and pay personal income tax on your own.
The broker gives direct access to exchanges in their country. Unlike buying foreign instruments through a Russian broker, there is only one intermediary between you and the exchange. Therefore, the fees for this method are lower.
Reliability varies by jurisdiction. Issues licenses and supervises brokers by the financial regulator of the country in which they operate. The risks of this jurisdiction are added to the risks of the companies themselves. In case of disputes, it is worth remembering that you will have to sue in this country and according to its laws, which can be very costly in terms of time and money.
In some states, brokerage accounts are insured. These include the US, England, Germany, Switzerland and other EU members. Therefore, if a broker from these countries goes bankrupt, you will receive compensation. Her maximum size depends on the country. For example, in the USA it is $500 thousand, and the broker must be a member of the SIPC (Securities Investor Protection Corporation) organization.
Through foreign banks
Banks offer their clients investment services within Private Banking. big banks usually give access to even uncommon tools and offer structured products.
With this method, you can combine work with securities and Banking services- for example, to get a loan secured by a portfolio.
Investing through large foreign banks is difficult and expensive. To become a Private Banking client foreign bank need a significant amount. For Russian clients, the threshold for entering the top 5 banks by Forbes versions- from 3 million dollars.
To open an account, you must notify the tax service of the Russian Federation and confirm the origin of funds. Given the geopolitical tensions, this may not be enough - they can refuse to open or freeze assets even if there is confirmation.
At the same time, the bank may not have a website in Russian and Russian-speaking support. Be prepared to discuss emerging issues in a foreign language.
In the process of working with open account explicit and hidden fees usually higher than with other types of investment. At the same time, the investor can be actively offered a certain portfolio or financial products of the bank and related companies.
You will have to pay taxes on your own. Unlike Russian brokers, foreign banks will not draw up a declaration for you.
Funds are protected. bank accounts are usually insured if the bank is part of an investor protection organization operating in the country. But when concluding a contract, this must be checked - insurance may not apply to non-residents. The amount of insurance depends on the specific country.
Through Russian mutual funds
Some Russian shares investment funds invest in foreign financial instruments. They invest in ETFs or directly in foreign stocks, bonds and other securities.
There is no list of such funds, but there are general lists of Russian mutual funds. A fund's investments in foreign assets can often be guessed by the name, if it contains a region or the words "global", "emerging markets" and so on. You can find out exactly where a particular mutual fund invests in the rules of the fund. They are published management company(UK).
Investing through a fund is easy. Buying a share in a mutual fund allows you to invest in securities without opening a brokerage account. At the same time, you can invest a small amount, which is good for novice investors.
The registrar will control the funds. If the fund specializes in US tech stocks, you can't use your share to buy German government bonds. And not for all securities there is a mutual fund. Therefore, investing through a fund is not suitable for those who want to manage their own money and have access to a large number tools.
Funds are not insured. Investments in funds, unlike deposits, are not insured by the state. If the management company of the mutual investment fund loses its license or goes bankrupt, the funds will be transferred under the management of another company. But the state does not guarantee the return of shareholders' funds if the management company uses them to solve its financial problems.
Through insurance companies
We are talking about investment life or health insurance. The process is usually this: an insurance policy is bought. The funds with which it was purchased are invested by the insurance company in the assets selected by the client. The list of possible instruments can be narrow or extensive depending on the company and the tariff.
If the client survived or was not injured until the end of the policy, the amount invested in the policy and the income from investments are returned to him. Otherwise, the insurance payment is transferred to the client or the person chosen by him.
Alexander Butmanov, managing partner of the fintech company DTI Algorithmic:
“You are legally buying a policy, but in reality it is a hidden trust agreement. Your property (money) goes to the insurance company and is ostensibly invested independently of you. The company, as it were, “on its own behalf” does what you “do not ask” it, but actually does everything that you tell it to.
At some point, regulation may change, and such insurance is recognized as a hidden trust. Then you will have to report to the state accordingly. But so far there is no such thing.
Russia also has investment insurance, under which you can enter foreign instruments. But the choice of foreign securities, I think, is much less than Russian.”
Buying a policy from an insurance company is simple, but you need to understand the details. It does not require large expenses, the documents require a passport and proof of residence.
You must carefully read all the conditions - what is included in insured events how income and insurance payment are formed, whether you can withdraw money ahead of schedule, and so on. At the same time, a foreign insurance company may not have a website in Russian and Russian-speaking support. Therefore, emerging issues will have to be discussed in a foreign language, which can lead to misunderstandings.
Buying a policy is a long-term investment. The policy is usually valid for several years or longer.
Investment insurance usually offers tax benefits. Their essence and size depends on the country. In Russia, personal income tax is paid only for income exceeding the refinancing rate of the Central Bank, and only at the end of the policy. Insurance payment not taxed.
The funds invested in the policy will disappear only if the insurance company collapses. Money invested in investment insurance cannot be confiscated, sued, or divided in a divorce. But in Russia and many other jurisdictions, they are not insured against the bankruptcy of an insurance company or the revocation of its license.
Remember
- Global financial markets more liquid and offer a greater choice of investment instruments.
- It is advisable to trade foreign securities through a broker or a bank, and inefficiently through a mutual fund or an insurance company. The methods differ in availability, reliability, number of instruments and commissions.
- Remember that only Russian companies and banks are controlled by the CBR. When operating in other jurisdictions, find out which organization issues licenses financial companies and what insures accounts.
- When choosing a method, think about the investment period. Insurance policies, shares in mutual funds and some brokerage accounts give tax benefits to long-term investors. However, early termination of such accounts may be limited or subject to high penalties.
In the next article, we will look at tax aspects investment. Subscribe
Many domestic investors are Russian investment assets with some degree of disbelief. In this case, we can talk about different investment objects. Our currency, real estate, companies and so on. Investing in foreign assets seems to them more reliable. This trend has intensified since economic crisis which began in Russia in 2014. As a result, investments in foreign companies.
At the same time, the vast majority of investors who decide to invest their money in such assets operate through stock market instruments. There they buy shares of foreign companies.
The easiest way to do this is in the stock market. In order to be able to use its tools, you must first complete a number of mandatory steps.
First of all, you need to decide on a brokerage company. It acts as an intermediary between stock exchange and an investor. Of course, you can buy securities directly from foreign companies, but this is a more time-consuming and costly way.
Some investors underestimate this stage of the investment process, and rightly so. After all, if you make a mistake with the choice, you can transfer your money to scammers. In this case, the matter simply will not come to the investment itself.
In this regard, we advise investors to work only with reputable, time-tested and large brokers. This will reduce such risks to zero. For example, it could be Alpari, FIBO Group or FxPro.
So after you have chosen brokerage company You need to make an initial deposit. Most often it minimum size is 100 US dollars or euros.
After that, the investor becomes a full-fledged trader who can make any transactions on the stock exchange. That is, from now on, you can directly invest in foreign companies.
Naturally, minimum deposit not enough to form even the thinnest investment portfolio with shares of foreign companies you like. To do this, the investor will need a capital of 2.5-6 thousand dollars.
Remember, investing in foreign stocks only makes sense in the medium or long term. long term. In other words, to earn a good profit, minimum term investment should not be less than a year. It is better if the investment period is 3-5 years.
The average annual return on such investments in foreign companies is 14-21%. Such figures show investments in the largest foreign companies, which are distinguished by the largest capitalization. On the stock exchange they are also known as blue chips. Such investments are considered conservative and less risky. For example, it can be Google, Apple, Microsoft, Coca-Cola and many others.
At the same time, investing in shares of undervalued foreign companies promises much higher returns. True, investment risks in this case will also be much greater.
Binary Options
Currently investing in binary options are a serious competitor to traditional forms of investment in shares of foreign companies. At the same time, it should be noted that investors of the classic old school do not like this financial instrument, considering it too risky.
At the same time, with the help of binary options, you can make huge profits in a short time. In fact, they are a prediction about where the value of the selected stock will move after a certain period of time. The term of such investments in foreign companies can vary from a few minutes to a year, and their profitability is in the range of 70-80% per transaction.
When the investor is correct in his forecast, he receives the profit indicated above. In the event that a mistake is made, the entire amount of the bet is lost.
Speculative trading
It is not necessary for an investor to buy shares of foreign companies for a long time. Many traders prefer to make money on speculative trading. They perceive this financial instrument as a golden mean between the formation of an investment portfolio and playing binary options.
The point of such investment in the stock market is to first buy shares of one or more foreign companies, wait for their value to rise and sell them at a profit for yourself. At the same time, it should be taken into account that the waiting time for a rise in the price of securities may take different time. In some situations, hours and even minutes are enough, in others it can take days, weeks and months.
Those investors who want to invest in foreign companies, but do not consider their level of knowledge sufficient for independent trading, can use the services of trust management. To do this, they can invest in PAMM accounts or mutual funds.
Investments are the basis of modern economic life. There are many places where you can invest your money. Let's take a look at how to invest in stocks. What do you need to know for this? How to choose a broker? Is it possible for ordinary citizens to buy shares Russian Federation?
general information
Many people have heard about it, but few people know how to invest in stocks. Why is this option attractive? First of all, it is the possibility of obtaining high profits. Of course, there are corresponding risks (but they are everywhere, even when opening a deposit in a bank). But maybe the fact that it is almost impossible to completely go bankrupt on stocks will give strength to act confidently. Of course, the risk of losing part of the savings remains, but, as they say, who does not risk does not drink champagne.
Earning opportunity
There are three directions here:
Regarding the advantages of working with securities, we can say the following:
- You can start with small amounts.
- The profit potential is quite large.
- Possibility of obtaining high income(higher than offered by banks when placing deposits with them).
Working with securities has its drawbacks:
- High risks. They can be leveled with the help of existing knowledge, but this does not guarantee their disappearance.
- Commission from the broker. There can be several options here: it is taken regardless of the result or only on the amount of profit (this is popular when he recommends investment objects to his clients).
Who is a broker and how to choose one?
We continue to figure out how to invest your savings in stocks. A broker is an ordinary intermediary that works between a client and an exchange. He takes responsibility for buying shares and also provides the people who trust him with data about the market in which he operates. Regarding the choice, we can say that there are numerous ratings that will give an idea of what should work and how. When familiarizing yourself with their characteristics, you must Special attention pay attention to such information as trade turnover, cost of services, the ability to interact in real time (for the client), a simple and quick procedure for registering relations, as well as additional information provided by the broker.
For beginners, their activities may be positively affected by the presence of free education, a low amount of money, holding webinars, as well as competent and adequate staff. It will also be good if there is a physically nearby office or branch. It is also necessary to pay attention to the ease of depositing and withdrawing money. When you have already made your choice, it will be useful to check whether the selected office is a “kitchen”. This is the name given to organizations that achieve their own goals at the expense of customers. They will not help you buy shares of companies, but only defraud all the money. It should be noted that there are quite a lot of scammers in this area, so you need to keep your ears open.
Where and how can the average person buy shares?
Let's find out how you can buy securities. For this we need a broker. Thanks to it, you can buy any shares of companies that are only available on various trading floors. stock markets Europe, USA, India, Australia, China or Russian Federation will be available for interaction. You will need to open an account with a broker, deposit money and select tariff plan, which provides access to the necessary trading platform. Then we select the securities we like, look at the rate and leave an application, informing in such a way that there is a desire to purchase them.
A convenient form of interaction is via the Internet using special programs. Among the popular samples, you can choose from QUIK and MetaTrader5. It should be noted that regardless of which purchase method is chosen, the shares will be presented in a virtual form. familiar to many paper form canceled long time ago. When someone purchases securities, two entries are made. One - in the company about a new shareholder (or a change in the share of the old one), the second - with a broker. Before investing in stocks, you must select them. To do this, you can follow the recommendations below.
Selecting an attachment object
It should be noted that there are many different approaches. You can use the advice of experts, technical or fundamental analysis or simply act at random, relying on your intuition. In this case, liquidity plays an important role. This is the name given to the ability to quickly buy or sell the required amount of securities.
But it would be most reasonable to study at least the basics of the fundamental and technical analysis and be guided by them in making their decisions. You can also study the value of shares and their change over a certain period of time (month, quarter or year). Initially, it can be problematic to do everything on your own. top level. But don't worry, get experience and you can talk about low risks in the future.
How to minimize costs?
The high cost of shares is good, but you also need to be able to reduce your spending. To do this, in most cases, it is enough to adhere to certain rules:
- When a transaction is made, its size should not exceed two percent of the account value.
- Build a differentiated investment portfolio. It will help to minimize possible risks.
- Decide on a trading style. You can try several options and choose the most suitable one. A strong influence in this case will have the initial capital, skills and free time that can be devoted to the exchange.
- Do not shy away from stop orders.
- If there is no desire, time or opportunity to manage your account personally, as good option trust may be appropriate.
Purchase of shares of leading Russian enterprises
Traditionally, blue chips are considered the most reliable. They are characterized by stability and prestige. Perhaps the reader of these lines had a desire to buy Gazprom shares. Well, know that it is quite possible. Moreover, you can buy not only Gazprom shares, but also the securities of many enterprises in general. Let's take a look at this list:
Very famous companies, right? Of course, it will be quite difficult to get a controlling stake in some enterprise, but you can start building a bright future for yourself and your children today. It should be noted that at the time of writing, the share prices of almost all enterprises continued to fall. Therefore, it can be assumed that they are at the lowest level (or near it). So now is the time to invest!
We have looked at how to buy shares of domestic enterprises, and now let's pay attention to foreign companies. After that, theoretical training will be given to get an idea of what you need to pay attention to when purchasing securities. By the way, when we invest in shares of Russian companies, we support the domestic economy. In the long term, this has significant advantages for us.
Shares of foreign companies
Often on the Internet you can find complaints that it is impossible to find a company thanks to which it would be possible to go beyond the borders of the Russian Federation. This is largely due to a number of features. But first, let's find out what you expect? Usually, when people talk about foreign companies, they become hostages to the stereotype of success. But after all, each enterprise is individual, and it is problematic to make money with this approach. So, it is necessary to understand that not all companies have access to big market, high yield, production facilities, availability of investment and other attractive qualities. The situation is the same as ours - there are units of very successful enterprises, investing in which is a profitable business. But this leads to high prices.
Someone is interested in how to invest money in stocks foreign companies, because he is ready to invest tens or even hundreds of thousands of rubles. But this is not enough, because the minimum goes to several million dollars! These words can be distrustful, so let's look at a few concrete examples. There is an international financial corporation, which deals with the financing of medium and long-term investment projects private sector. The minimum investment depends on the chosen project and ranges from $100,000 to $1,000,000. Agree, an ordinary citizen of the Russian Federation does not have such money lying around. Also, as an example, European bank reconstruction and development, in which investments can start from $500,000. The reliability of such investments is great. But at the same time, it must be taken into account that investments are made for at least 3 years (although a period of a decade is not the maximum). This, by the way, explains why they are not talked about as investment management companies.
Features of investing in foreign companies
Does the above information mean that the average person is closed to such an investment? No. Mutual funds help overcome this limitation. To do this, you need to choose a broker, replenish your deposit (however, here we are talking about the amount of 3-5 thousand dollars) and choose the investment period. Keep in mind the fact that in addition to companies with experience, you can also choose startups as an investment object. This is an attractive direction that pays off many times over. But at the same time, it is also very risky - for example, about 80% of start-up companies stop their work in the first year after the start of activity. In general, the yield does not exceed 20% per year (when working with mutual funds).
Also, as an alternative, you can consider not only investing directly in stocks, but also in binary options. Their essence boils down to the fact that a person predicts how the price of an asset will change. Thus, payments go for successful predictions. But there are many pitfalls and lovers of easy money here, so if you want to use this tool, you need to exercise considerable caution and be very attentive to the company (as well as delve into all the mechanisms of its actions).
Nuances
We have already covered many issues. And they constantly talked about how to work through an intermediary. Now let's figure out how to invest in stocks without a broker. If we talk about those securities that are not traded on stock exchanges, then there is no need for intermediaries. It's a completely different matter if they've already gone through the process. initial placement securities - IRO. Here, as a rule, work is possible only through a broker. Pay attention to one feature. The fact is that some "blue chips" can be purchased without resorting to the services of an intermediary. Good news, is not it? But there is one "but" here. This is only used when working with long term investment. By the way, banks can also offer a similar service. Of course, it should be taken into account that these financial institutions they will take a commission (prepare mentally for five percent), but in long term it's usually not that important.
By the way, if we touched on this topic, then let's find out in which stocks banks invest their money. After all, if these big financial institutions have money and send it to securities, then they also have professional analysts who weigh the risks. So let's pay attention to them. Let's say right away that there will be no specific names and titles. Just an outline general scheme. Thus, it is important to invest in valuable shares other banks, as well as enterprises that are actively developing. Moreover, the level of growth of the latter should be several times higher than the average for the country (or be equal to it, but this is only in relation to companies whose development is stable). They also invest in government bonds of different countries (but so that the profit exceeds the risks and expenses), corporate securities and shares of mutual funds.
Conclusion
So we figured out how to invest in stocks the right way. The information presented here is not enough to become a millionaire the next morning, but it is enough to get the theoretical minimum that is enough to start doing your own business along this path. After all, you always have to start from something, from some kind of zero, from the starting point. And every person is available long term investment into blue chips, which will allow you to create a base. The accumulation of capital in an honest way, alas, is a long-term business and takes a significant period of human life. Perhaps only children will be able to fully benefit from the seeds of commerce sown. But even this is more than enough to get started.
