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Stock Investment Tips

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Trading Psychology

Most of the trader's mistakes are just the result of problems with psychology. Let's look at a couple of examples:

•    Premature market entry. Emotions overwhelm the trader, he does not wait, for example, for the chart to rebound from the trend line or the formation of a reversal Japanese candlestick. It seems to the trader that if he waits for the final formation of the signal, he will not be able to profitably enter the market. Usually the consequence of such trading is a series of losses.

•    Failure to cut losses. The trader either does not set a stop loss at all, or constantly moves the SL as the chart approaches it. The problem is still the same - greed, inability to admit one's mistakes and cut off losses. A triggered stop loss should not cause you to panic. If you did everything in accordance with the rules of the trading strategy, then you did everything right. Not a single TS allows you to trade without losses!

•    Excessive trading frequency. And in this case, the psychology of trading comes to the fore. The inability to cope with their own emotions leads to the fact that the trader sees lost profits almost behind every candle. Sooner or later, self-control is lost and deals are made as you like, but not according to the rules of the trading system, just to be in the market.

•    Overstating the stop loss. Another feature of human thinking. It seems impossible for a trader to work with small stops, it seems that the chart will immediately knock him out, so the stop value is deliberately overestimated. Do not do this, if the strategy specifies, for example, a stop loss of 20 points, then set it to 20 points.

How to overcome your habits and form the right trading psychology?

1. Separate emotion and chart analysis

We proceed from the fact that you have a trading strategy and you work only on it. Previously, on history, you were convinced that it consistently makes a profit over a long period of time.

You must learn to ignore emotions. If the conditions for entering the market are met, then make a deal. You must become like a trading robot, which acts strictly in accordance with the algorithm embedded in it.

In specialized literature, you can find such a term as "analysis paralysis". This phenomenon lies in the fact that a trader simply loses the ability to think clearly and make informed decisions due to a drawdown in the account.

The psychology of a trader is designed in such a way that any loss is perceived extremely painfully. In this situation, we can advise you to remember that Forex statistics are made up of many transactions. And the fact that at the moment there is a small drawdown on the account does not mean anything. This happens to everyone without exception.

2. Don't be afraid to lose profits

Along with the inability to cut off losses, traders have such a problem as the inability to let profits grow. Remember, when the chart goes against you and you constantly move your stop loss, it still continues to move in a losing direction. The same is observed with profitable trades.

Because of the fear of losing the profit already received, the trader cannot soberly assess the prospects for the subsequent movement of the chart. In each candle, he sees a sign of an imminent market reversal. As a result, the nerves fail, and he closes the deal with a profit, but the amount of this profit is significantly less than what he could have received. Again, this is about the psychology of trading.

How to deal with it? Use a trailing stop and partial profit taking. For example, on a fixed profit in points, you close half of the deal, and transfer the rest to a trailing stop. Or manually transfer SL following the price at local extremums.

3. Watch how your physical condition affects trading

A trader's mindset for trading is a fragile thing and can easily be disrupted by external factors. For example, you didn’t get enough sleep, you don’t feel well, there are troubles in the family or at your main job. The psychology of trading also includes these factors, there are no trifles in this matter.

You can recommend:

•    Don't neglect sleep. Make a schedule for yourself, do not try to sit all night long in front of the monitor in order to look for entry points into the market.

•    Pay attention to physical activity. Going to the gym, swimming pool, cycling, with a dog - no matter what you choose. The main thing is that you do not sit at the monitor for days.

•    Balance your diet. Your well-being, and hence the focus on trading, depends on this. It is difficult to think about the market if, for example, you are haunted by hunger;

•    Rest, it's important. Efficiency and sobriety of perception of the surrounding reality largely depends on how well you rested. So get yourself a hobby that will become your outlet.

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How to trade without proper skills: the joint review of the HeartBeat copy-trading service

Automation of the exchange trading is possible either through the use of trading robots that perform transactions according to predetermined algorithms, or through the use of services for autocopying someone else's trading strategies. One of them is the HeartBeat copy-trading platform.

About the platform

HeartBeat is a service for auto-following trading strategy of the experienced traders. The platform was developed by the company SCALE TECH, registered in 2019 in New York. The service itself was launched in February 2021. Currently, about 30 signal providers are registered on the platform and about 50 trading strategies are available for copying. In total, the number of HeartBeat users is over 1,500 from all over the world.

Functionality

HeartBeat is a multi-currency social trading platform. With its help, users can copy transactions with various types of assets, including cryptocurrency. In order to connect to someone else's trading strategy, it is enough to have a trading account and go through the registration procedure on the service. Up to 10 trading strategies can be connected to one account. Trades will be copied automatically, but the trader has the ability to independently close individual positions, place and adjust the values ​​of stop orders. You can do this in your trading terminal. Also, a trader can become a provider of trading signals himself. To do this, you need to register on the service and set the parameters of your trading strategy. After verification by the moderator, it will be available to other users for copying.

Social trading conditions

The HeartBeat copy-trading service integrates with the user's trading terminal and allows you to copy transactions with any assets. The service does not set a minimum deposit. However, it should be noticed that if there is an insufficient amount of funds on the deposit account, not all transactions of the managing trader can be copied. Therefore, it is recommended to have at least a thousand dollars in your account. The size of the commission for connecting to trading signals of managing traders is set individually by them. Basically, this amount does not exceed $ 20 per subscription.

Choosing a managing trader

The choice of a trading signal provider is based on a number of parameters. These include: the number of subscribers to the strategy, the ratio of profitability and loss-making of operations, traded, assets, the volume of the strategy's net profit, the maximum drawdown level, etc. If you wish, you can compare several strategies to choose the most suitable one. The most effective and profitable strategies are listed in the top. In addition, successful traders have distinctive badges in their profiles. A trader who has 100 followers receives an asterisk icon. Those who made only break-even trades for the whole quarter are awarded the crown. The cup is assigned to the trader with the maximum monthly ROI.

Conclusion

HeartBeat is a service for copying deals. The platform allows experienced managing traders to join the trading strategy for a conditional fee. Or become a provider of trading signals yourself. Autocopying transactions allows even inexperienced traders to trade on the stock exchange. Therefore, social trading services are gaining more and more popularity today.

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Volatility in simple words

Financial markets do not stand still, they are constantly in motion. To do this, it is enough to look at the chart of almost any financial instrument – quotes are rising, then falling, then fluctuating in a sideways range. To assess the activity of the market – the dynamics of price changes – and such an indicator as volatility is called.

Volatility is the range of changes in the price of a financial instrument over a certain period of time (day, week, month, etc.).

Simply put, volatility shows how much the price of a financial instrument can increase or decrease over a certain period of time. You can estimate the amount of volatility in % or in points (the minimum unit of price change).

The stock market is considered one of the most volatile, and changes in the share price of various companies are most often measured as a percentage. For example, if a stock was worth $ 100 at the beginning of trading and rose (or fell) by $ 10 during the day, then the volatility was 10%. Stocks of large companies usually show daily volatility in the range of 5% - 10%, second-tier stocks and low-liquid stocks can show volatility in the region of 20%, 50%, and even more than 100%.

In the Forex market, the dynamics of changes in quotations of currency pairs in percentage terms is less significant, but the volume of trade here is significantly larger. The volatility of currency pairs is usually calculated in points. For example, the USD/JPY pair is moderately volatile and on average passes 50-70 points per day, and the GBP/JPY pair is more volatile, and its average daily range is 100-150 points.

How to use volatility in trading?

Volatility is primarily used to assess the trading opportunities of a particular financial instrument. Traders earn money on price movements, so highly volatile instruments are preferred for trading. The more actively a financial instrument moves, the more opportunities a trader has to make money on this movement.

Long-term investors are more cautious about volatility, because they usually work without Stops, and increased volatility entails higher risks. Therefore, a balanced approach is more relevant for investors when choosing an instrument with moderate volatility, while it should have weighty fundamental or technical prerequisites for long-term movement.

On the exchange, you can directly trade volatility using futures and options. For this purpose, various volatility indices have been developed, one of the most well-known is VIX. This index is calculated based on the American stock index S&P 500. VIX is also sometimes called the "fear index" – in moments of panic in the market, it grows, in moments of calm it decreases.

When trading Forex with the help of volatility assessment, you can choose the currency pairs that suit you. In my opinion, the average daily volatility provides three main benchmarks for trading:

The predicted movement is a benchmark for Profit in points.

Risk limitation is a guideline for a Stop in points.

The increase in volatility is a confirmation signal about the beginning of a new trend.

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The History of Rising and Fall of Bitcoin

The History of Rising and Fall of Bitcoin

It is difficult to predict the future of Bitcoin and other digital currencies. It is possible that such a large and active market for Bitcoin might create some unforeseen consequences. This is especially so if there are defects in the bitcoin algorithm or with the technology as a whole. On the other hand, it may be that predictions about the future are not far-reaching or dependent on precise…

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Types of investment strategies in the stock market

Investing in the stock market is potentially a much more profitable investment compared, for example, with a bank deposit, but at the same time much more risky. In order not to lose all their money instead of the expected income, the investor must choose the right investment strategy.

What is an investment strategy?

This is a sequence of actions of the investor, a carefully developed plan for the distribution of funds for the acquisition and sale of assets in order to make a profit.

You don't have to reinvent the wheel to find your strategy. Among the existing ones, there are those that have been working reliably for many decades and even centuries.

What are the types of investment strategies

Some investors believe that there are only three types of strategies that affect the result: aggressive, moderate, conservative. However, all of the above speak only about the level of risks when investing, many other important aspects with this approach fall out of sight. In order to invest correctly, you should consider all the actions of the investor that may affect the final result.

Any practicing investor knows that there is a direct relationship between the level of risks and the level of profitability. The higher the risk for a particular investment of money, the more profit an investor can potentially expect. And vice versa: the lower the risk, the lower the yield.

Aggressive, moderate or conservative

Using an aggressive strategy, the investor hopes for a profit that cannot be lower than 45-50% per annum. In some rare cases, it can be several times higher than the above values and reach 100%, 300% and even 1000% per annum. A classic example of such an aggressive financial instrument is the undervalued securities of third-tier companies. It is clear that when financing such high-risk instruments, the probability of losing investments can approach 90-100%.

Investors using a moderate strategy expect a more reasonable level of profitability in the amount of approximately 20-45% per annum. They invest their capital in more reliable assets, for example:

securities of highly reliable companies;

high-yield mutual funds or ETFs.

With a moderate strategy, the risk level remains quite high, and such investments cannot be considered absolutely safe.

A conservative investment strategy has the lowest return. Depending on various circumstances, it can be 10-20% per annum. Adherents of such a strategy invest their money in the most reliable tools, it can be:

OFZ;

gold, platinum and other metals;

the most conservative mutual funds.

trading on dividends.

The undoubted advantage of such a strategy is the minimum possible level of risks. However, not everyone is satisfied with the level of profit.

Short-term or long-term

Investment strategies may differ in terms of implementation.

Short-term investments are investments of capital for a period of up to 12 months. This allows you to save money in conditions of inflation and even make a profit in a relatively short time. And in the event of a jump in quotations, the investor's capital may increase dramatically.

Short-term investment instruments in the stock market include, for example:

OFZ;

stocks;

precious metals;

Mutual funds.

The profitability of short-term transactions most often fluctuates around 3-20% per annum.

Long-term investment involves investing capital for a long time - a year, two, three or more. Some investors believe that the investment horizon can reach up to 20-30 years. The most important condition for this is the stability and reliability of the issuing company.

The potential profitability of such an investment is about 20-30% per annum, which promises a good profit in the long term.

Independent or trust management (DU)

Investing may differ in the way assets are managed. If the investor has some experience and free time, he can act independently. In the absence of both, a management company can dispose of assets on his behalf.

Self-investing has a number of advantages, these are:

minimizing the costs associated with investing;

no restrictions on investment objects;

independent investment decision-making.

There are also disadvantages:

the need to spend a lot of time analyzing assets, which does not guarantee its quality;

inconvenient taxation.

Remote investment with the help of a management company has the following advantages:

professional analysis and asset management;

the possibility of broad diversification with small assets;

more profitable and convenient taxation.

Disadvantages of the method:

high commission in favor of the Criminal Code, appraiser, auditor, etc.

Passive or active

These strategies also differ depending on the investor's goal.

A passive investor collects and holds a diversified portfolio of securities. He is not trying to raise profitability by buying the most profitable securities individually. The easiest way for him to invest in indices is a set of assets of the largest and most stable companies in the industry or country. Such a strategy guarantees effective diversification of investments and profitability close to the profitability of the index.

Nevertheless, many investors choose an active strategy to earn more. They try to keep abreast of market trends, look for and buy undervalued assets, try to guess the optimal timing of operations. Their portfolio consists of carefully selected papers, each of which, in his opinion, must necessarily "grow".

Depending on the assets

The investment strategy may vary depending on the asset in which funds are invested, the reliability of the issuer, the economic and political situation in the country and in the world, the personal qualities of the investor and much more.

So, buying shares, he can safely wait for the payment of dividends or earn on the increase in the exchange rate value, or he can engage in high-risk speculation.

Investing in bonds, especially government bonds, you can safely expect a coupon payment and a small profit on the maturity date, or you can buy high-risk securities of small companies in the hope of a high profit and lose all investments.

Investing in the currency, you can make a small profit for years, and then suddenly earn a lot quickly and as a result of economic or political upheavals.

Cryptocurrencies, according to experts, are very volatile. They are able to increase in price many times, but it is not necessary to invest in them more than 10-20% of the available assets, because they can fall just as much. There is nothing but demand behind them, so they can be compared with an elementary pyramid, and in case of a drop in demand, cryptocurrencies can cost several times lower.

Is it worth copying other people's strategies

It is always profitable to learn from the mistakes of others, so it is useful and necessary to study other people's ways of investing. There is nothing wrong with imitating successful investors. This is what not only beginners do, but also experienced traders.

What determines the choice of strategy

The choice of an investment strategy depends on many factors. These are capitalization, goals, investment horizon, attitude to risk, and so on. To achieve success, most likely, you should not stop and focus on only one of the strategies. You need to skillfully combine the most suitable ones and expect to make a profit.

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Forex Trading

What is Forex

Real Forex has nothing to do with different pseudo-platforms, where anyone can get to in a couple of clicks. This is an international currency market where different currency pairs are traded. The direct entrance of an individual there is closed.

There are major players in the market: central banks of different countries, international corporations, offshore dealing centers, ordinary banks and Forex dealers. The volume of transactions of several tens of millions of dollars is a common thing here.

A trader - a trading participant and an individual - can get there only through an intermediary - a Forex dealer or a dealing center. A Forex broker gives access not to the Forex market, but to the stock exchange.

Who uses Forex and for what

Central banks of different countries buy and sell currency in huge volumes on Forex in order to adjust the exchange rate of the national currency.

International corporations use the market to exchange revenue for their own currency or national currency - for the currency of the country with which they need to pay for the goods.

Banks use the market to make money, they buy and sell currency, getting a spread - the difference between the purchase and sale price.

Offshore dealing centers and Forex dealers provide traders with access to the exchange and earn money from transactions with them. Despite the similar functions, there is a huge difference between them.

What you need to start trading Forex

To trade on the market, a person needs to choose a Forex dealer and conclude a contract with him. Then you need to download a trading terminal, open an account and transfer money to it — that's it, you can make transactions.

A trading terminal is a special program for trading on the market, through which you can buy and sell currency. As a rule, this is a MetaTrader 4 or a MetaTrader 5. The dealer will provide the program for free, you just need to download and install it. You can trade both from a laptop and from a mobile phone.

First, you can practice on a demo account — this is a virtual account that completely repeats the real one, the so-called simulator of real trading. You need it to familiarize yourself with the application interface and practice making transactions with virtual money before investing real money. Each dealer has its own starting virtual amount, for example, Finam Forex has 500 thousand rubles.

You can open a demo account without any documents and contracts on the company's website by simply filling out a questionnaire. The dealer will send an email with a username, password and a link to download the program.

If you need a real account, you will need a scan of your passport. They may ask for more SNILS and INN. The list of documents from different dealers is different, you need to look at it on the dealer's website. You can open an account online or at the company's office.

Forex Risks

Forex trading is associated with high risk. You can make good money there, but it's also very easy to lose money. Many people go there to trade with leverage — this is when a broker lends money. With a leverage of 1:100 and with $200 in the account, a trader can buy currency for $ 20,000. If the price goes up, then the profit will be from $20,000, not from $200.

Quotes fluctuate every second, and all fluctuations will also be from $20,000, not from $200. For example, if the price has decreased by 1%, then at $200 it is only $ 2, and the investor still has $198 in stock, and at $20,000 it is already $200 — all the money with which the trader came to the market initially. As a result, with a drawdown of only 1%, the dealer will forcibly close the deal in order not to lose his money that he lent, and will return it back to himself. And the trader will be left with nothing.

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Diversification: maximum benefit from different instruments

Diversification will help reduce losses when some securities fall, and benefit from different instruments.

Investment diversification is the allocation of funds in a portfolio between different asset groups (stocks, bonds and other instruments) in order to reduce risks.

An investment portfolio is a set of assets that have been collected in such a way that the income from them corresponds to the goals of the investor. It can include any assets that generate income. These are not only stock market instruments — stocks, bonds, shares of exchange-traded funds, options, futures. You can include precious metals, currencies of different countries, bank deposits and real estate in the portfolio.

The essence of diversification is investment

Modern portfolio theory is a method of asset selection, the purpose of which is to get maximum income with minimal risk. At its origins is the American economist, Nobel Prize winner Harry Markowitz. In 1952, he published an article entitled "Portfolio Selection".

To get a higher return, you need to choose investments with more risk. Their cost can both rise sharply and fall sharply. However, you may not want to invest in such securities. It all depends on how much risk you are willing to take.

According to modern portfolio theory, risk can be managed through diversification. If you combine high-risk asset types with others, you will get a balanced portfolio. The overall risk will be lower than that of individual instruments. For example, instead of buying only stocks, you can combine them with bonds.

The theory suggests that it is necessary to select assets that have little or no correlation with each other, that is, they behave differently in the same situation. Let's say the price of some securities increases with the rise in oil prices, while others, on the contrary, fall. So an investor can protect himself from market volatility and significant losses, because the profit on one paper will compensate for the loss on the other.

Rebalancing the portfolio will help to maintain the level of risk in the long term. For example, initially, by value, stocks occupied 70% in your portfolio, and bonds - 30%. But some stocks have risen in price, and now they occupy 80%, and debt securities - 20%. To return the portfolio to its original state, you need to rebalance it. For example, sell some of the shares that have increased in price and reinvest the funds received, or buy bonds.

Pros and cons of diversification

Positive:

Reducing the overall level of risk, that is, the likelihood that you will lose a significant amount of money. Diversification reduces the specific risk associated with a particular company. If some stocks in the portfolio fall, then others can grow and reduce losses;

The opportunity to invest part of the funds in potentially profitable, but risky assets in which you would not invest all your funds. In a diversified portfolio, they will not increase the overall level of risk;

Protection against volatility in the market, that is, when the prices of securities change a lot, they jump up and down;

In the long run, a diversified portfolio can help increase overall profitability.

Minuses:

Diversification does not protect against systemic risks, that is, those that affect all securities. This is the risk of the collapse of the entire financial system. For example, when one bank failed to fulfill its obligations and defaulted, and a cascade of other defaults followed;

The more assets in the portfolio, the more difficult it is to manage. It will take a lot of time to do this;

The more you buy and sell various assets, the more commissions you pay. Excessive diversification can also reduce profitability. For example, if there are 10 stocks in your portfolio that are actively growing, and the other 40 are either falling or not showing the desired results;

Protecting against risks and losses, diversification limits the opportunities to earn in the short term. For example, you have invested in the shares of five companies for ₽20 thousand, in total - ₽100 thousand. The securities of one company increased by 50%, and the initial amount of investments increased from ₽20 thousand to ₽30 thousand. As a result, you earned ₽10 thousand on the difference, but if you invested all your funds in these shares, you would have made a profit of ₽50 thousand.

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Stocks or bonds: what to choose for a novice investor

What are stocks

A share is an equity security that provides its owner with a share in the company's capital. By buying shares of the company, you get the right to participate in its management, as well as a part of the profit.

Shares can be ordinary and preferred. The former give the owner the right to vote at the shareholders' meeting, but the payment of dividends on them is not guaranteed. The latter do not give the opportunity to participate in voting, but their holders have a preferential right to pay dividends.

Advantages of investing in stocks:

you don't need a lot of capital to start;

potentially high profitability;

the opportunity to participate in the management of the company;

high liquidity (the ability to quickly buy or sell a stock at a price close to the market).

high market risks - stocks can both become more expensive and cheaper;

the dependence of quotations on external factors.

What are bonds

A bond is a debt security issued by a company or a government agency to obtain an additional source of financing. By buying a bond, the investor actually lends money to the issuer that issued it. The issuer, in turn, undertakes to return to the investor the value of the bond (nominal value) and the interest for using the funds (coupons).

As a rule, the yield on the bond is fixed — that is, you know in advance the amount and date of payments. The term of the bond is also known in advance — it can be 1, 2, 3 years or more. Depending on the issuer, debt securities are usually divided into state, municipal and corporate:

Government bonds (OFZ) are securities issued by the Ministry of Finance. By buying them, you are actually lending money to the state, and you receive income at a fixed rate. At the same time, the state acts as a guarantor of the return of your investments.

Municipal bonds are debt securities issued by the subjects of the Russian Federation. As a rule, they have a higher yield than OFZ due to lower liquidity.

Corporate bonds are debt securities of companies. The potential profitability and risks for them are higher than for OFZ. The most reliable corporate bonds include securities of Sberbank, Russian Railways, Gazprom and other companies with state participation.

Advantages of investing in bonds:

low risk;

the opportunity to receive a stable and predictable income;

the ability to adjust the ratio of risk and reliability by investing in OFZ and corporate bonds;

bonds are suitable for both short-term and long-term investments.

Minuses:

low interest rate;

the holder cannot influence the policy of the companies.

How the profit on shares is formed

Income from investing in stocks can be obtained in two ways: in the form of dividends and the difference between the purchase and sale price. The term and procedure for payment of dividends is determined by a decision of the general meeting of shareholders or the company's charter. If the company has not made a profit or needs the money for other purposes, it can refuse to pay dividends.

The essence of the second method of generating income from shares comes down to the rule "buy cheaper — sell more expensive". However, it is not easy to implement this strategy: stocks are constantly rising and falling, and not every investor can choose the best time to buy or sell them.

How the profit on bonds is formed

The income from investing in bonds can be coupon payments, an increase in the market value of the paper, as well as, under certain conditions, a return of the nominal value.

Coupons. The main type of income on bonds. The issuer pays the owner of the securities interest on a regular basis for the use of his money. All conditions for the payment of coupons, as a rule, are known in advance.

Market value growth. By analogy with stocks, the value of bonds can change, and with an increase in the price, the paper can be sold profitably without waiting for the date of return of the nominal value.

Profit on the return of the nominal value. Such income will be received by those bondholders who purchased them at a reduced cost (with a discount).

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Investor's portfolio - principles of formation for beginners

The main question for novice investors is how to build an investment portfolio. It is important to learn to understand the principles of asset selection based on the goals set. How to avoid basic mistakes when investing and save the portfolio from unforeseen losses in the future - this is in the article.

Portfolio investments

In simple words, an investment portfolio is a set of assets with a different ratio of risk and return. Despite the fact that the main goal on the stock exchange is to make a profit, diversification helps to minimize the risk of losses. Below we will consider only liquid assets in the investor's portfolio.

Types of investment portfolios

The main goal of a portfolio investor is to create an optimal balance of risk and return on their assets. Let's consider the following ways of forming an investment portfolio.

According to the degree of risk

There are three types of investment portfolio.

Protective

It is formed from assets with reduced risk: bank deposits, mutual funds, real estate, highly reliable bonds and shares of the largest companies with regular dividend payments.

Agressive

The portfolio is interesting for those who want to get a significant income in the shortest possible time. A distinctive feature of this type of portfolio is the placement of more than 50% of all funds in shares. Despite the fact that an aggressive strategy can show an impressive return to an investor, the probability of a complete loss of invested funds also increases significantly.

Balanced

The most optimal investment option is a balanced strategy. The portfolio should be formed mainly from government and corporate bonds with a high credit rating, shares of the largest companies, and only a small part of the funds should be directed to the purchase of high-yield assets.

By the asset management method

The main methods of managing financial instruments are as follows:

- passive control,

- active control.

Key features of passive investing:

- there is no need for constant involvement in tracking market

- quotes; low risk;

- the potential yield is not much higher than the rate on bank deposits.

The basic principle of management is to buy and hold.

As for active management, this method boils down to constant monitoring of market trends and frequent changes in the portfolio structure.

According to the method of making a profit, there are two types.

Growth Portfolio

It is recommended to buy stocks for which a significant increase in their quotations is predicted. The main way to make a profit is to sell shares in the future at a more expensive price.

Income portfolio

The corresponding portfolio is created to receive regular profits. The investor needs to pay attention to dividend stocks and coupon bonds of highly reliable issuers.

By deadlines for achieving goals

There are short-term, medium-term and long-term portfolios.

Short-term

The investment horizon is 1-2 years.

The portfolio is formed mainly of highly liquid assets that can be quickly sold. It is necessary to concentrate on the dividend stocks of the largest companies and growth stocks, bonds, currency and bank deposit.

As for the bonds, they can be sold before the maturity date. Therefore, an investor can include both short-term and long-term bonds in the portfolio. Regarding the bond issuer, it should be said that government bonds are a priority, but corporate bonds can also be purchased. The only condition is that the bond must be low-risk.

Medium-term

It is formed for a period of 1 to 5 years.

The medium-term portfolio already allows for the possibility of including risky instruments with increased income, but more than 50% of assets should still be in the form of reliable securities with moderate returns.

You can add investment fund units and structural notes.

Long-term

It is formed by a passive investor for a period of 5 years or more. The approach to asset purchase is based on the search for promising companies with a projected cash flow of dividends. The investment attractiveness of a security is a more important factor than its degree of liquidity.

You can include shares of state-owned banks, insurance companies and metallurgical concerns. Among the bonds, one can consider ruble bonds of the above-mentioned companies, Eurobonds and long-term government bonds.

What assets can be included in the investment portfolio

The optimal combination of certain assets is related to the goal pursued by the investor in the stock market. Below are the most popular assets that should be included in your portfolio.

Stock

Pros: potentially high profitability, the opportunity to participate in the management of the company, high liquidity.

Cons: not guaranteed profit, strong volatility, the influence of external factors on the market value of the security.

Bond

Positive: fixed yield, low volatility, high liquidity.

Cons: low profitability, with an early sale, a loss is possible.

Currency

Pros: a more reliable and stable exchange rate, protection against devaluation (depreciation of the national currency against a foreign one).

Cons: lack of passive income and guaranteed profit from the exchange rate difference.

Precious metals

Positive: high liquidity, durability.

Cons: low profitability, lack of passive income, unpredictability of the exchange rate.

Mutual FUND

Pros: diversification of assets, no need to independently analyze the securities market.

Cons: profitability is not guaranteed, possible mistakes when investing on the part of the management company.

Profitable real estate

Pros: passive income, a variety of choices.

Cons: high start-up capital, low liquidity, additional costs.