How much can you earn by investing in stocks

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analysis of financial markets, how to buy stocks, how to make money on stocks, investing, investing in stocks, stories of successful people, investing in stocks for beginners, how to buy stocks, how to choose stocks, stock analysis, how much you can earn by investing in stocks

At the moment, this topic is very relevant, as the refinancing rate of the Central Bank is constantly changing and, basically, in the smaller direction, the interest on deposits in banks are becoming lower. Therefore, more and more people are thinking about where to invest money to get a stable, ever-increasing income.

Can a mere mortal make a million dollars? The majority, having read this question, will decide that it – rhetorical, and in a negative sense. But in fact it is not, here is a small example.

Take a small start-up capital of $ 1,000 and invest it for 55 years at 20% per annum (this is the average yield of the stock market). As a result, we get the following figures:

Number of years

Income

3

$1 728

5

$2 488

10

$6 192

15

$15 407

20

$38 338

25

$95 396

30

$237 376

35

$590 668

45

$1 469 772

50

$3 657 262

55

$9 100 438

 

So your $ 1,000 will turn into $ 1,000,000 in 38 years. And it does not need a large start-up capital, do not need to work hard. Now you realize that $ 1,000,000 is not such an unattainable goal. But there are questions – whether it is possible to earn faster, than in 38 years, and what for this purpose it is necessary to make?

After a small analysis of the stock market, you can see that you can trade shares during the day. The average yield of "intraday" operations is from 1 to 7 percent per day.

If trading during the day is tiresome for you, you can use The buy-and-hold strategy, which consists in buying shares of large companies – leaders of their segment, with good financial performance, quality management, paying dividends. If you choose the right company, you will receive dividends on a regular basis. The share price, all other things being equal, will also rise, which will allow you to sell the shares to get more than you spent on their acquisition, which will give additional profit. This strategy can bring good profits with the right approach.

But let's all in order.

Investing in stocks for beginners

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Before buying shares, you need to clearly understand why you are doing this. It is logical that you want to earn, but what amount and for what time? What will you do with your income? Perhaps you, our dear readers, have a question: "why is it so important to answer these questions before buying shares?". The fact is that you can buy shares of Severstal and receive 10 – 15% per annum, and you can buy shares of a biotechnology company for the development of pharmaceutical and cosmetic products and earn about 1000% per annum. If we analyze foreign companies, many experts believe that a good investment will be the purchase of shares of Google and Microsoft, but these companies are already worth billions of dollars, so it will be extremely difficult to grow by 2 times.

But a small confectionery, waste processing companies and other small companies need only to increase the market and they will already grow 10 times.

But, of course, investing in small companies is a risk. Although, as we know from history, and large companies go bankrupt.

So, let's start with the most obvious – it's dividends. Dividend yield, of course, is not very high, especially if we consider large companies, but as an example: Severstal shares. They recently could buy cheaper than 1000 rubles. for 1 share (for example, take the share price equal to 1 000 rubles.). Dividend yield on this share is approximately +17%, i.e. 170 rubles per share. Thus, having bought 64 shares for 1 000 dollars (about 64 000 rubles), you can get 10 880 rubles. It should also be noted that Severstal shares are able to grow well. Before the last dividend cutoff, the share showed a price of 1,100 rubles per share. Thus, buying shares of the company at the "correct" price, you will receive capital gains (before the sale it will be "paper") and in the form of a bonus – dividends. Plus dividends you can reinvest and next year you will get even more profit in monetary terms.

Using this type of earnings, you can have a stable income, which will increase annually. It should, of course, make a reservation that this is subject to the absence of crises, but even in this case, if the company is large, it is more likely not to go bankrupt.

How to buy, where to buy, who to sell

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Transactions with securities are regulated by law. All transactions are controlled and accounted for by special structures. The main participants of transactions of purchase and sale:

  • The exchange organizes trading;
  • Broker – provides individuals with the opportunity to participate in trading;
  • Depository – controls the accounting of ownership of securities.

In order to start trading securities, it is enough to choose a broker, open an account (IIS or brokerage account), Deposit the initial capital into the account and give an order to the broker to buy securities (by phone or via the Internet).

Brokers

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Many are afraid of brokers as fire, explaining that brokers will leave them without a penny, the other part of the people – completely trust them. Where is truth? Let's understand.

The work of a broker is similar to the work of a realtor for the sale of real estate. Imagine that a person who receives a percentage of the apartment you bought will show options that do not fit your criteria. Logical? No. So the broker, he needs to create for you all the conditions that you can carry out transactions. After all, he gets his Commission for it.

A good broker, as a good hairdresser, is more expensive, but going to an important event, you do not trust your hair student hairdresser? So here. Especially now, the broker is a whole team of financial analysts.

However, you should not trust the broker completely. Many financial analysts and brokers recently drove people "in short" on the shares of "Gazprom". What we saw? As soon as individuals have increased "shorts", there was a rapid increase in the price of shares of "Gazprom". Thus, most of the "short" were forced to close the "short" at a loss, and some even received a margin call.

Reference: short (abbreviated from English short selling) is the sale of shares or other investment instrument by a participant of the market, which he does not own, but takes time from a brokerage company, in anticipation of a decrease in exchange quotations. Margin Call – the circumstance in which the forced completion of the transaction by your broker is carried out. This happens when your account balance, which is required to maintain the amount of collateral for all active trades, is close to zero.

What to buy? When to buy?

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To properly assess the attractiveness of shares, it is necessary to master two types of analysis: fundamental and technical. Simple term:

  • Fundamental analysis – evaluation of the company by its financial indicators.
  • Technical analysis – evaluation of the dynamics of securities quotations.

In very simple words, the fundamental analysis answers the question "what is better to buy", technical – "when is better to buy".

The most liquid shares are the so-called "blue chips". The shares of these companies are reliable, and the business is stable. These shares are owned by giants. Shares of the "second and third" echelons are less liquid, but no less promising.  Here, companies are smaller, but sometimes they can give odds to the giants, because in order to grow 2 times, for example, Google, it will need to turn mountains, and retail stores – just open a few new stores. Therefore, it is better to have both.

Important! Do not forget about risk management – all the eggs in one basket should not be put. That is, the funds should be distributed to different "baskets". No need to invest all the money in the shares of one company, it is better to have in the portfolio shares of 10 companies than the shares of 1-2 companies.

The popular strategy of investing in stocks

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  • Buy and hold. The essence of the strategy is to acquire shares and own them in the future. The strategy is long-term, so you can not earn fast money, but with the correct assessment of the company's potential, you can get a good income.
  • Accumulation. This strategy is a bit more complicated. Its essence consists in constant accumulation, acquiring a certain number of shares and reinvesting dividends. Over several years of accumulation and reinvestment of dividends will bring a tidy sum.
  • Catch trend. This strategy is the most risky, but also involves the maximum income. Its essence lies in the correct market entry and exit. This strategy works especially well in a crisis. When the crisis, buy cheap, after the crisis – sell expensive. This, of course, a primitive description of the strategy, but understandable.

Naturally, the strategies are described in a simplified way, they are intended only to provide a basis for reflection, which can encourage serious economic analysis.

The history of well-known successful investors in the world

Let's take a closer look at some of the stories of successful investors in the world.

Stephen Cohen

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The story of Stephen Cohen is very instructive, especially for those who certainly want to succeed.

Stephen Cohen was born into a large family of a tailor and a piano teacher. Since childhood, he loved two things: playing cards and school.

After graduating from high school, Stephen entered the University of Pennsylvania, where he studied Economics and stock markets. He also played poker all the time. This determined his future life when he opened an account in a brokerage office with money intended for education. This risk has paid dividends.

In 1978, Stephen was invited to work in Gruntai, where he earned for the company 100 thousand dollars a day. After 6 years, he became the Manager of the investment portfolio, the value of which was 75 million dollars. In 1992, Cohen left the company and opened a hedge Fund with a capital of $ 20 million. To date, this hedge Fund manages a capital of $ 12 billion. During the year, the Fund's capital increased by 2 times, and by 1995 the company's share price increased by 400%.

Today, Stephen's company employs more than 600 people, and he still independently carries out transactions, making more than 15% of the profits of his company.

The principle of Stephen Cohen – making short-term profits, it is the complete opposite of Buffett.

Ingeborg Motz

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This woman's story forces us to consider, but rather whether we are making the effort to achieve your goal.

Ingeborga Motz was born in 1922. In just 8 years (already retired), this elderly lady has achieved incredible success in trading.

Ingeborga was born in a large family (there were 24 children in the family), where there was always not enough money. A woman often recalls her childhood and 54 years of lack of money.

Coming from a poor family, Ingeborg hoped that with marriage everything will change, but the stinginess of the spouse did not allow to feel another life. The husband practically didn't give money, didn't let to work. It was not until the 90-ies, until the presenter does not know that you can earn money by sitting at home.

By persuasion and scandals Ingeborg managed to convince her husband to give her shares of VEBA, the cost at that time was 40 000 marks. It was investments in shares that helped her earn the first 2 million euros in the future. The sale of these shares in the future brought her 100% profit, which was immediately reinvested in the shares of banks.

The principle of operation of Ingeborga Mootz – buy undervalued stocks at low prices, and then sell them at high prices.

MOTC itself the basis of its success calls intuition, which has repeatedly saved her and helped make a fortune. Every year she reviewed her portfolio, selling shares of some companies, buying shares of other companies. Ingeborg Motz believes that the most important thing is not to succumb to short-term fluctuations and not to count on rapid enrichment.

Linda Raschke

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A unique woman who earned a huge fortune by making trades her lifestyle. Even waiting for the birth of a child, she traded until the moment of birth, and then joked:

"I did not trade while giving birth, as it was 4 am, and the exchange was closed".

2 hours after the birth of her daughter, Linda made a deal that brought her a large sum.

As a teenager, Linda wanted to become a broker, but after graduating from College, she was unable to qualify for a stock broker. However, Linda was not going to retreat and was just watching the auction, gaining experience. This was noticed and she was offered to become a trader.

Ambitious Linda quickly won the respect and credibility. For 6 years of work in the trading hall Linda mastered the Philadelphia and Pacific exchanges. And, despite the failure of early in his career, profit Raschke grew. In 1986, Linda was in a car accident, because of what she had to leave the room and go to work in the office. It was in the office she realized that this kind of trade she likes more. So Linda set up an office in her apartment.

The basic principle of Linda rashke – the purchase of undervalued shares with subsequent sale. Part of the shares Linda always left in his portfolio, which allowed her to make a margin of safety for many years.

Linda is happy to talk about their successes and failures and never ceases to repeat that the desire to make money moves a person with the country by force, making it more successful and richer.

Peter Lynch

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He was born in 1944 in Boston. The family lived not richly, little Peter from an early age had to work hard. In 1954 in the family of Peter had a grief – his father died, so the boy had to earn everything he could: cleaning, garbage removal, supply of balls at city Golf club. After watching and listening to the rich golfers, the child formed a dream – to become rich, by all means.

It was from the conversations of rich Golf club players that the child learned unfamiliar words at that time: exchange, Fund, shares, exchange, capital. After graduating from high school with success, Peter went to College, then to the University of Urton, where he received a master's degree.

By the age of 20, Peter Lynch had accumulated the first capital – $ 1,000 and invested it in the airline's securities. Investments in shares brought him $ 10,000. In 1969, Lynch got his first serious work – analyst Fideliry. Unlike his colleagues, Peter worked hard, but he spent no more than 15 minutes a day evaluating macroeconomics. He did not like options and futures, preferring to analyze companies. It helped him to see the potential in companies like Taco Bell, Pier 1 Imports, and Dunkin` Donuts. In his opinion, success is expected by those companies that show a small but stable growth dynamics. The proof of this theory can be Chrysler, whose shares have grown 20 times in 15 years.

Investing $ 10 000 in 1977 to the Foundation, in which he worked, by 1990, Lynch earned 288 000 dollars.

At the age of 46, Peter Lynch became Vice President of the Foundation. Today Peter Lynch tells his students:

  • Never deviate from the rules;
  • Remember that mistakes are the way to success. He is lifeless who is faultless;
  • Do not draw premature conclusions from long-term investments;
  • Do not give in to emotions;
  • Without risk, there will be no financial well-being.

Instead of output

analysis of financial markets, how to buy stocks, how to make money on stocks, investing, investing in stocks, stories of successful people, investing in stocks for beginners, how to buy stocks, how to choose stocks, stock analysis, how much you can earn by investing in stocks

Investing in stocks is not as difficult as it may seem at first glance. The figures that were given at the beginning of the article prove that investing in stocks can increase your capital at times, and the stories of ordinary people – a direct proof of this. You may argue that all these people bought shares of foreign companies, and the Russian stock market is not so strong. This statement is partly true. If you are worried about this, you can buy shares of foreign companies, there is such an opportunity now.

If you think that you are late for the main growth of the market giants, then Yes, the existing giants have already grown, but after 10 years you will again read articles in which they will talk about the crazy growth of shares of companies of our time – remember, you are not late, today and every day there are new companies, among which there are

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If you have any questions, write them in the comments, our experts will be happy to answer them.

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