The question of where it is profitable to invest money for the current year is of interest to millions of our compatriots. A few years ago, the majority of the population preferred either bank deposits or keeping money in foreign currency. Today, more and more Russians are paying attention to alternative ways of investing and increasing their savings. A significant part of citizens invest in more efficient instruments: stocks, bonds, exchange-traded funds, insurance programs. Such investments allow you to receive a higher level of income.
Each of them has its own advantages and disadvantages. Some are suitable only for very wealthy people, others are widely available. Investment methods differ in profitability and reliability. We emphasize that actively advertised tools are often very risky. Rough investments in them can lead to serious losses and even a complete loss of their savings.
In this article, we will consider various investment options: from traditional to innovative, from the most reliable to the most risky. Some of the options discussed below will bring income only at the end of the investment period, others will allow you to receive quarterly and even monthly profits.
28% * in the first year *** Income is calculated from the amount of the annual contribution and consists of:
15% cashback from Bank Soyuz and 13% in the form of a social tax deduction provided for by the tax code
** Income from the second and subsequent contributions: 7% cashback on a virtual card and 13% in the form social tax deduction Bank deposits
Opens our top, the most common way of saving money in Russia. For many years, bank interest rates were quite high, which is why many Russians kept their money in bank deposits. However, over the past few years, the Central Bank rate has been steadily declining. As a result, the profitability of bank deposits often does not even cover the purposefully suppressed inflation rate (officially – about 4%).
It is widely believed that deposits are the most reliable way to save savings. This is partly true, but only applies to the largest banks. At the same time, profitability on deposits in systemically important credit institutions is not at all high. So, from September 2020 to January 2021, the maximum interest rate on deposits in the top 10 largest domestic banks was in the region of 4.32-4.53%. Therefore, keeping money in them is simply unprofitable.
Interest rates are slightly higher in little-known private banks. Here you can find offers from 6-7% per annum and above. But the level of risk will rise sharply. Too many small banks have come under regulatory sanctions in recent years and lost their licenses. Even if, thanks to the deposit insurance system, you return your deposit (up to 1.4 million rubles), you will lose a lot of time and nerves. Moreover, you will most likely have to forget about the profitability of investments – to return your own.
So, putting money at interest for a year in a bank is not a good idea. When choosing a large backbone organization, you will have to be content with low interest rates. Investments in smaller banks with slightly higher returns are associated with an increased level of risk.
Another limiting factor is the maximum amount that will be returned in the event of a bank bankruptcy. Today this limit is 1.4 million rubles. An additional disadvantage is the introduction of a tax on income from deposits of more than 1 million rubles.
Currency and foreign exchange deposits
Many Russians habitually keep some of their money in foreign currency. Over a fairly long period, this tactic is often effective – in the medium and especially long term, the dollar and the euro usually grow against the ruble. However, with short-term investment in foreign currency, the probability of getting a loss instead of income is too high.
The reason is that the volatility of exchange rates is too high. The chart of almost any currency is a broken line with numerous ups and downs.
Interestingly, in 2020, investments in euros and dollars would pay off well. Over the year, the dollar rose in price against the ruble by more than 20%, while the euro showed an increase of over 30%. However, in 2019, currency rates fell, in 2016-2017 – too. Therefore, investing in foreign currency in order to receive income in a year is very risky. The probability of guessing here is similar to that in a casino.
Interests on foreign currency deposits are extremely low, so the level of potential profitability in rubles is almost the same as keeping a dollar or euro in a safe. And here it is also necessary to take into account banking risks.
If the bank loses its license, you will receive a maximum equivalent of 1.4 million rubles, so you should follow a simple advice: open a foreign currency deposit in one bank for an amount significantly less than 1.4 million rubles. – with a margin for possible growth in the rate of the selected currency.
You can profitably invest in gold in various ways: buy bars, coins, jewelry, open a metal account, invest in an index ETF, and even stocks of gold mining companies. In most cases, income will depend on fluctuations in the price of the metal. At the same time, it is necessary to take into account the need to pay taxes in a number of cases, as well as the different level of liquidity for the listed investment options.
In general, the situation with gold is similar to the currency. In the long term, gold usually rises in price. At the same time, there have been periods in history when the fall in its prices dragged on for many years and even decades. This asset has been unstable in the last 5-10 years as well.
Investors usually actively invest in gold during times of crisis. This is exactly what happened in the first half of 2020. Against the background of the stabilization of the situation, the growth stopped and in the second half of the year there was a slight drop in prices. At the end of the year, investments in gold showed good returns. However, over the past few years, the return on investment in gold has often been negative.
In general, gold (like other precious metals) is poorly suited for short-term investments. When investing your funds for 1 year, the probability of getting a loss is too high. You also need to understand that gold is better suited to someone who thinks how to save money, and not how to increase it.
Real estate is traditionally considered a good investment tool. Housing and commercial properties rise in value in the long term. Additionally, you can earn income through rent. There are several common options for investing in real estate:
- purchase of commercial properties with lease;
- purchase of apartments for rent;
- purchase of apartments in new buildings at the construction stage with subsequent resale;
- purchase of apartments with a rough finish, subsequent renovation and resale.
There are also sublease options, investments in real estate mutual funds based on this ETF market, etc.
If the task is to make a profitable investment for a year, it is worth considering buying an apartment with subsequent resale. A simpler option is to purchase housing at the excavation stage. By the time of delivery, the apartment rises in price by about 25-30%. However, if you want to get income in 1 year, this method is unlikely to fit in terms of time.
Another option is to buy a house with a rough finish in a new building with a deadline of 3-9 months. After completing the renovation, you can get a good income from the resale of the apartment. The described tactics will make it possible to steadily make money on investments in new buildings.
The main disadvantage is that significant sums of money will be required for effective investments. It is also worth considering the high risks: possible problems for the developer, instability in demand, low liquidity (it is not always possible to sell an apartment quickly).
Renting out real estate will allow you to receive about 8-12% per annum. An additional plus is the receipt of monthly rental income. However, to fully recoup the investment, it will take about 10 years or more.
Insurance programs in 2021
In terms of profitability, insurance products often exceed bank deposits, and in terms of reliability they are not inferior to them. At the same time, insurance programs are characterized by a number of advantages. For example, the product “Avantage Invest” is distinguished by the following features:
- guaranteed income (5% per annum);
- the conclusion of a life insurance contract;
- legal inviolability of investments (as opposed to bank deposits and most other investments);
- 100% guaranteed payments.
Shares are classified as high-risk financial instruments. By purchasing the papers of a particular company, you become the owner of a part of the business. Subsequently, you are entitled to receive dividends and can resell your shares on the exchange.
Equity investment income has two parts:
- dividends (not all companies pay them);
- differences in purchase and sale prices.
Dividends are paid once a year or more often. The decision on their payment is made by the dividend council.
A particularly high income can be obtained through the resale of shares that have significantly increased in value. Some securities have been growing steadily for decades. Others are characterized by strong volatility.
By guessing with the purchase of specific stocks, you can earn significantly more than with careful investment. But the risk is much higher here. In February-March 2020, the quotes of most stocks sank heavily due to the outbreak of the pandemic. Investors suffered losses for half a year. Only in the second half of the year, the quotes of the stock exchange indices returned to their January values.
At the end of the year, the main stock indices showed growth. The Russian stock exchange index rose by 13.5%. The American S&P 500 – by 16.5%. At the same time, the ruble yield of foreign shares for a Russian investor is even higher – due to the weakening of the ruble.
Shares are a promising investment option for a year. But it is worth remembering the high risks. Another nuance – to buy shares, you need to open a brokerage account on the stock exchange. Here you can buy securities only through an intermediary.
Bonds are actually debt obligations. When you buy a bond, you credit its issuer, which guarantees you the payment of its value after a predetermined period. The bondholder receives coupon income on a regular basis.
Earning on bonds annually can be due to the difference in their value. These securities are more reliable than stocks and generate income slightly higher than deposits.
There are government, municipal and corporate bonds. The most reliable are federal loans and OFZs. The yield on them is slightly higher than bank deposits, at the level of 5-6.5%. Citizens can buy “people’s” OFZ (OFZ-n) directly from banks. In this case, you will have to pay considerable commissions, which will reduce their profitability. The rest of the bonds are traded on the exchange. Corporate can generate income at the level of 6-8%, but the risk of acquiring them is higher.
There are also Eurobonds, or Eurobonds. They are denominated in foreign currency and usually have a low yield – at the level of 2-3%. Due to fluctuations in exchange rates, their ruble yield can be both significantly higher and generally negative.
If you are choosing where to invest your money for a year, bonds are not the best option. The income from them is slightly higher than the bank deposit. At the same time, the level of risk increases and the liquidity of investments decreases.
Traded ETFs are a relatively new investment vehicle. These funds are based on certain assets, which they follow with high precision. It can be gold, bonds, stocks of various sectors of the economy, countries or regional markets.
Various ETFs are based on a wide variety of indices, instruments and assets. They are characterized by approximately the same risks as for the assets they follow (stocks, bonds, precious metals, economic sectors, oil prices, real estate, etc.). Investing in even the safest index funds carries a certain amount of risk.
Particularly popular are index ETFs based on leading stock exchange indices such as the S&P 500, Nasdaq, and others. Their advantage lies in their wide market coverage. Due to diversification, the level of risk is significantly reduced. Although, during periods of crises, similar indices also sag (this is exactly what was observed in the first half of 2020).
ETFs are traded on an exchange in a similar way to stocks. Investing money in such funds for a year is quite profitable (especially in index funds). However, there are still few such proposals in the Russian Federation. And to buy them in the West, you need significant funds, plus quite high commissions there.
Mutual funds and trust management
There are several types of mutual investment funds (mutual funds). Exchange-traded (BPIF) are traded on the exchange and, in their essence, differ little from the ETFs discussed above. Open-ended and closed-end mutual funds are more common. Such funds accumulate investors’ funds, which are then managed by the respective company (MC).
Potentially, mutual funds are capable of generating a fairly high income. Some funds show tens of percent yield per year (up to 25-30% and higher). However, it is very difficult to determine in advance which unit investment fund will be more effective. Often, funds “shoot” at some stage, and then their results plummet.
Among the disadvantages is the need to pay significant commissions (often very high). Because of this, the investor’s income is noticeably reduced. Even if the mutual fund has worked at a loss, the commission specified in the contract will be removed from the depositor.
Companies that accept clients’ funds in trust work on a similar principle. Here, too, the amount of the commission is negotiated in advance, as well as the investment strategy. She may be more aggressive or conservative. The level of potential return, as a rule, is inversely proportional to the degree of risk.
Investment insurance with capital protection in 2021
Since mutual funds and trust management in general are characterized by a high level of risk, programs with capital protection are gaining popularity among investors. The principle of operation of such programs is quite simple.
The funds invested by the investor are divided into several segments. Most are invested in tools with maximum reliability. The smaller one – into more risky assets with high potential returns. As a result, the invested funds are protected from losses, while maintaining the potential for obtaining significant profits.
Similar products are offered by the Ingosstrakh-Life company. The Vector program implies two variants of the financial strategy. It is based on the division of the invested funds into two parts: guarantee and investment. The first is invested in reliable assets with guaranteed returns. The second is in potentially high-yield stocks and other instruments. Among the advantages of such an investment, it is worth highlighting:
- • 100% money back guarantee; • obtaining additional investment income; • possibility to return 13% of investments due to tax deduction; • legal protection of the invested funds; • conclusion of a life insurance contract.
Thanks to the combination of these advantages, investment insurance with capital protection is rapidly gaining popularity.
Forex, margin trading and PAMM accounts
Forex is an international currency market that includes many separate exchanges. Trading on the market is carried out using leverage, which sharply increases both the profitability of operations and the degree of risk. A similar principle applies to margin trading in other markets (for example, futures).
For a novice investor, leveraged margin trading is a sure way to significant financial losses. The market is designed in such a way that successful traders earn exactly from the funds lost by other participants. Considering the above, an analogue of trust management has been created on the Forex market – PAMM accounts.
An investor transfers his funds to a trader who carries out margin trading. The annual yield of some accounts reaches 60-70% and higher. Among the advantages, we also note the possibility of earning monthly income.
However, the degree of risk is very high here. It is impossible to guarantee the constant profitability of the account, therefore, you should not invest significant amounts in PAMM accounts. When choosing where to put money for a year, it is better to consider such accounts only as an auxiliary tool. Tip: invest no more than 5-10% of your investment portfolio in them.
A very risky instrument with a high level of volatility. There are already thousands of different cryptocurrencies, and their number is constantly growing. They are characterized by serious fluctuations in quotations with significant periods of drawdowns.
The most capitalized cryptocurrency (bitcoin) in 2017 collapsed several times, “burying” the investments of millions of people, so this tool should be treated with extreme caution, but in this case the charts show that high risk is sometimes justified, and it can turn out to multiply the money several times once.
Advice: if you decide to invest in cryptocurrencies, it is better to limit yourself to small amounts. All cryptocurrencies, together with PAMM accounts and other high-risk instruments, should account for no more than 10% of the investment portfolio.
In this article, we covered the popular investment strategies for 2021, with a focus on short-term investments. The correct answer to the question of where to invest money for 1 year depends on many factors. The important thing here is the amount of your available funds, your financial goals, the desired profitability and the acceptable level of risk.
The article did not consider the types of investment designed for long-term investments. For example, collectibles (rare cars, coins, wines, paintings, antiques). They can only be successfully earned for long enough periods of time.
Another important area of investment is your own development and education. We believe that you also need to invest in your health (and the health of all family members). However, these important topics are outside the scope of this article.
In conclusion, here are some useful tips.
- Never invest critical funds for yourself, especially borrowed funds. Invest only money that you probably will not need during the investment period. It is advisable to pre-form for yourself a safety cushion – a financial reserve in case of unforeseen circumstances.
- Reinvest income. After returning your investment with a profit, re-invest. Thus, you can consistently earn on investments, increasing your capital.
- Invest regularly whenever possible. The more often you invest, the more you can accumulate over time (compound interest works here). Ideally, if you can secure yourself a stable passive income.
- Diversify your investments. Invest in different assets. The best option if you have a large part of your portfolio invested in reliable instruments, and a smaller part in more risky and potentially highly profitable instruments. If this is difficult for you, use ready-made investment programs.
- Better to invest in industries that you are well versed in. This advice is often difficult to follow. After all, few novice investors are well versed in stocks, ETFs and other exchange-traded instruments.
A good solution would be to use insurance investment programs with protected capital. These products are specially selected to generate income while guaranteeing investment retention.
And the very last piece of advice. Choosing where to invest money in short-term investment, it is necessary to strike a clear balance between the desired level of income and reliability. After all, it is better to earn a little less than to risk unjustifiably and incur losses.