What is the difference between a deposit and a deposit and which is more profitable? Rates on deposits and deposits. Is it possible to live off income from a deposit? How to increase income from a bank deposit
Let's figure it out: deposit or deposit - which is more profitable? Let's say you've finally collected all the required amount of money and now want to take it all into storage. After all, there is no point in having money lying around at home, and besides, you can quickly waste it, since the funds will always be in front of your eyes. How is money stored in a bank? Experts tell you about deposits and deposits, but you don’t understand how they differ from each other. To understand this, we recommend that you read this article.
It often happens that before taking his money savings to a banking institution in order to receive income, a person is interested in the difference between a deposit and a deposit. After all, in theory, both types of investment perform the same functions. But it is worth knowing that in fact, a deposit investment has a more comprehensive concept, and a deposit is considered one of its varieties.
So, what is the difference between a deposit and a deposit?
What is a contribution?
The concept of “deposit” means a specific amount of money that is deposited with the bank to generate income in the future. Such investments are divided into urgent and in demand. Time deposits of individuals imply one caveat: a strictly fixed expiration date for storing funds. You will withdraw your money along with the interest income accrued to you for keeping it in the bank at the end of a specific time period. Demand deposits do not have a specific expiration date, that is, at the time of drawing up the agreement, the end time for storing funds is not indicated. We will consider deposits of individuals below.
Advantages and disadvantages
The advantage of the latter deposit option is that you always have access to your funds and, if you wish, you can withdraw all or only half of them at any time. However, it is worth knowing that time deposits have a higher interest rate. This is explained by the fact that banking institutions must maintain their stability while storing funds. If you decide to open a fixed-term deposit for individuals, the bank will be firmly confident that for a certain time specified in the agreement, it can use the depositor’s money. A deposit in demand form does not guarantee stability at all, and for this reason the interest rate here is much lower.
The concept of a deposit investment
Let's consider the deposit. What is this in simple words?
A deposit is a type of storage of funds in a bank. But in addition to cash, deposits can include gold, securities, assets, and silver. That is why deposit investment has a broader concept, implying the storage of various types of values in order to generate income or without it. In banking parlance, a depository is a place where clients' valuable financial assets are stored.
Underwater rocks
If we return to the concept of deposits, we can find that various organizations that are not related to the banking type offer their services for storing funds. The only difference between these institutions and banks is that they only announce a high interest rate. But before you happily grab your money and go to these organizations, you must remember that only banks can legally store funds, and all types of banking activities are required to be licensed. So think carefully about this before taking your money to such a dubious institution.
Reliable protection
To date, the banking system has been subject to changes more than once. Now every owner of a cash deposit is protected from losing his money. For these purposes, a special deposit insurance organization has been developed. Therefore, you don’t have to worry about your money disappearing somewhere. If you need to make an investment, do not be afraid and take the money to a banking institution for safekeeping. This way you can protect yourself from all sorts of scammers involved in money fraud, and ultimately get a good income from storing funds.
Deposits for individuals
If a person has a sufficiently large amount of money, then he wonders where to store the money. There are people who seem to still be living in the distant nineties and to this day keep their savings under their mattress. In principle, this is the most stable and reliable way to store money. But, unfortunately, this is not so much unprofitable as it is dangerous. The current banking system gives one hundred percent guarantees to its clients that in the event of bankruptcy or liquidation, funds will still be returned to depositors.
It is better to store funds in banking institutions. You need to make them work for you.
How to open a deposit? What is this in simple words? People ask these questions every day.
Deposit investments for individuals are the most optimal solution for storing money. They differ in:
- storage period;
- the size of the discount rate (refinancing rate);
- circumstances depending on the situation.
For example, if the storage period of money is several months, then the interest rate will be low. The income from invested money also decreases when the contract states that you have the right to withdraw some part of the amount at any time. It is very profitable to open a deposit in national currency for a long period of time without the right to withdraw the amount.
In this case, the bank will be sure throughout the entire deposit period that your money will not disappear anywhere. But due to the unstable economic situation, manifested by the constant depreciation of the national currency, it is best to purchase euros or dollars and open a deposit in this currency. But you should not forget that the interest rate of such currencies is lower than that of Russian rubles.
Deposit rates
Another important question. The deposit rate is the percentage of remuneration that the client receives under an agreement with the bank. It is also worth remembering about capitalization, which is an important characteristic of bank deposits. This is not just interest on the deposit. The more often it occurs, the higher the amount to be received at the end of the deposit period. This makes it possible for a deposit investment, which has a lower interest rate, but has capitalization, to increase a larger amount than for a deposit with a higher interest rate, but accrued every six months or even a year. It is important to distinguish between the interest rate and the real income for a certain period. It is necessary to correctly evaluate the tempting marketing offers of banks, which in reality turn out to be just advertising.
Possible options
Here is a list of investment options for individuals:
- A classic deposit is considered an investment option that does not imply the possibility of making an additional deposit and withdrawing money ahead of schedule.
- A deposit that allows you to replenish your account, but does not allow you to withdraw money ahead of time.
- A deposit that allows you to deposit and withdraw funds at any convenient time.
Which bank to open a deposit in and which type to choose is up to you to decide. But before making this important decision, you need to understand one thing: the more free control over management the owner of a cash deposit is given, the less income he will receive in the end. The essence of a deposit is the opportunity to earn money on interest. From this point of view, it is better to choose the classic deposit option. If you expect to gradually replenish your account, then choose the second investment option - with the possibility of carrying out incoming transactions.
Deposit investments for individuals are a very simple and convenient way to earn money. If the interest rate is 6% per annum, then it is easy to calculate how much money you will lose if you keep it at home rather than in a banking institution.
What is the difference between a deposit and a deposit interests many people. Our article answers this question in detail.
What is the best way to store money?
Due to the fact that the economic situation in our country is very unstable, many people are wondering in which currency it is better to store funds. Real experts say that today the most reliable and profitable way to invest are precious stones.
The value of silver, gold, bronze and platinum increases every year. Therefore, if you have gold bars in your reserves, then you have a unique chance to get excellent interest.
Gold and foreign exchange deposit
The most popular deposit option in the form of jewelry is a gold and foreign currency deposit. You can make an investment in the following way.
You take a silver or gold bar to the vault of a banking institution. There, special specialists carefully check the precious metal, determine the presence of defects, cracks and chips. Gold is a soft material and can be easily damaged. It is best to store metal in a cloth bag. Ingot examination is not free at all, but it quickly pays off. The only drawback of this method is that you will be required to pay taxes for the entire storage period.
Virtual deposits
Gold and foreign exchange deposits are also virtual. This means that you must pay the required amount of money for the metal and enter into an agreement with the bank indicating that you are the owner of the bullion. But the interesting thing is that the amount in the deposit agreement is written in grams. Many people invest this way. In addition, in this case you do not need to pay taxes.
A gold bar can be presented as a gift or bequest. Anyone would appreciate such a thing.
Now you have learned the difference between a deposit and a deposit. In fact, everything turned out to be very easy and extremely clear if you understand the basic rules of investing.
The problem of confusing concepts often arises. The deposit is called a deposit and vice versa. The problem is that the overwhelming share of banking terminology came to us from the English language, and there is no word “deposit” there. There, everything deposited in the bank is called a deposit.
In Russian banking practice, a deposit is called a deposit deposit. But, it should be understood that a deposit as a whole is a broader concept, meaning anything transferred for storage, for example, to customs in order to secure obligations.
Now you need to understand what is the difference between a regular bank deposit and a deposit one.
Differences between a deposit deposit and a bank deposit
The key difference is the subject of the transaction. A deposit can be any valuable thing transferred to the bank for safekeeping, including money, securities, and precious metal bars.The deposit can only be cash for the purpose of saving and generating income.
Thus, any deposit is a deposit, but not all deposits are deposits.
Banks often equate these concepts if they only accept money for deposits. Documentary opening of a deposit is carried out by drawing up an agreement between the bank and the depositor.
There are two types of deposits:
- on demand, when the depositor is given the right to withdraw money from the account at any time (reduced interest rate);
- time deposits are the placement of funds for a certain period without the right of the depositor to withdraw funds at an earlier date (increased interest rate, early withdrawal is possible with a significant decrease in the interest rate).
In fixed-term contracts, the conditions are much broader; they indicate:
- term for placement of funds;
- procedure for early termination of the contract (early withdrawal);
- conditions for partial withdrawal;
- possibility of additional contribution and its minimum amount;
- mechanism and timing of interest payment (quarterly, annually, at the end of the designated period, with or without capitalization, simple or compound interest).
It should be noted that a deposit agreement can be concluded not only with a banking organization. Typically, non-bank financial institutions do not have an insurance reserve. This represents a huge risk on the part of investors. The advantage is on the side of the banks, because they, based on Russian legislation, provide a guarantee for the return of deposits in the event of their bankruptcy or revocation of their license.
Types of deposits
There are three types of deposits:- classic (without the possibility of replenishment and/or early withdrawal of funds);
- deposit with the possibility of replenishing the account;
- a deposit with the opportunity not only to replenish the account, but also to partially withdraw it ahead of schedule.
Constantly and most importantly guaranteed, receiving a certain income every month is the dream of any investor. Money works without your participation or any effort and brings even more money. How to achieve this? The answer is you need to know where to invest money. Of course, the amount of profit will directly depend on the amount of funds invested. And let’s say, for novice investors, the profit received from their investments will be relatively small. But you have to start somewhere. After all, the very fact of generating very attractive. In order for income to grow, you need 2 things: periodically invest additional money and constant investment. In law - over time, even the most modest capital can turn into a fairly impressive amount, the profit from which will give you a significant financial flow in the form of monthly income from the funds placed.
Where can you invest money to receive a constant monthly income?
We buy with different coupon payment dates. It is on these dates that you will be accrued profit. You can create a portfolio of bonds in such a way that profits are transferred to your account every month. Typically the coupon duration is 91 or 182 days. Every 3 months or six months, the profit from the purchased bond will be credited to your account.
Advantages. Higher profitability. Clearly predicted and fixed income. High (you can instantly sell bonds without losing accrued profit).
Flaws. The probability of bankruptcy of the issuer that issued the bonds. For blue chips this probability is low. For OFZ (federal loan bonds) and municipal bonds it is practically zero. Usually (although very rarely) so-called third-tier companies (junk bonds) go bankrupt. Avoid buying them and everything will be fine.
4. Dividend shares
. Buy ones that consistently pay dividends. And not just dividends, but... On average, on the Russian market this size is 3-6% of the value of shares. There are companies (but they are few) whose dividends are slightly higher and amount to 8-10%. Judging by the latest payments, these are Surgutneftegaz, MTS and M-video.
The profitability, of course, is still small, but if you consider that you are buying a piece of a working (and successful) business, then with the further development of the company, the profit will also grow.
For example. The price of shares in the stock market is very volatile. They can “walk” within 20-30% throughout the year, both up and down. At the beginning of the year, SurgutNeftegazP shares cost almost 50 rubles per share, then the price fell almost 2 times within six months, to 28 rubles. Considering that the average yield is 10% per share (at a price of 45 rubles) or 4.5 rubles, if you bought at the “bottom” at 28, you would provide yourself with a future profitability of 17% per annum. And if the company’s profit continues to grow, then the annual profitability will easily exceed 20%.
Advantages. By purchasing a “piece of business” in the form of dividend shares, you will have the right to count on a share of the company’s profits. You can find it, thereby obtaining an even higher annual return. As the company develops, profits will increase, which means dividends will also increase.
Flaws. Uneven payment of dividends. The lion's share of payments occurs in the second quarter. Some companies pay dividends twice a year. High volatility in the stock market. Shares purchased may drop significantly in value. But if you are focused (several years), then this will give you the opportunity to purchase additional shares at bargain prices.
Finally
It is possible (and even necessary) to receive passive income every month. There is nothing complicated about this. The listed methods are available to everyone. And don't forget. Divide your funds into several parts and use them to make a profit in each way. This will, of course, reduce the overall profit, but you will greatly reduce the risks when investing.
Under what conditions can I open a deposit account in rubles? Which banks offer the best interest rates on deposits? How to calculate the profitability of a deposit?
Hello, dear readers of the HeatherBober business portal!
2. What criteria can be used to classify a deposit deposit - 3 main characteristics
It should be noted that by investing money in a savings bank, you also protect your funds! All amounts up to 1.4 million rubles are insured unconditionally. Therefore, you can lose your savings by making deposits only in the event of a global financial cataclysm.
Let's consider how you can classify deposits for a more convenient and effective choice of financial investments.
Sign 1. According to the period of storage of funds
We divide our investments into urgent And demand deposits. The criterion in this category is time. You invest money for a certain period with your own rewards.
A time deposit does not allow withdrawal or replenishment of the invested amount. Such investments are made for a strictly defined period and interest. If you want to withdraw your savings ahead of time, most likely, your interest rates will be reduced, or even a fine will be imposed.
Example
Pensioner Denis Ivanovich made a deposit in the bank for exactly one year, so that in a year he could use the accumulated interest to buy building materials. But bad luck, he needed money to repair his car before the end of the deposit. What to do? He went to the bank to collect his money.
At the bank, the manager nodded his head in understanding, shrugged his shoulders and began to process a refund with the minimum interest rate.
Demand deposits are also issued for a limited period, but with much lower savings rates. This is due to the fact that you can withdraw the required amount from your account at any time or completely close the deposit.
In order to attract customers, many banks are opening universal services. Such hybrid deposits have a fairly high interest rate (up to 12% and higher depending on the currency), but have a limited potential for withdrawing funds in demand. Most often this is some kind of non-reducible deposit amount.
Sign 2. By type of task
1) Savings deposits
The contribution is made in anticipation of a large purchase: a car, an apartment, a yacht. Perhaps you want to save a certain amount for a trip or simply need a small capital to finance a project.
Very often, such programs already exist within banks and sometimes have their own names depending on the purposes for which the funds are saved (car deposit, apartment payment). The point of a deposit is that you make contributions, accumulating the amount of money you need.
2) Settlement deposits
Focus on financial activities, saving, spending and replenishing deposits. A distinctive feature is that there is a certain minimum balance on the deposit. Usually the lower deposit threshold is small, and you practically have the entire deposit amount.
You use all the services of the bank, you can use a current account at your own discretion, the only drawback is a certain period of time (most often from 15 to 20 days) when the invested amount can be withdrawn in full, except for interest (usually does not exceed 1%).
Designed for target customer groups. The deposit is made based on the accumulation of interest on the remaining amount from the replenishment. Let's imagine that you open a deposit into which your salary is credited. Interest is accrued on the portion of the amount that you have not spent in the current month.
Closing his time deposit, Denis Ivanovich drew attention to the bank’s special offer and asked whether it was possible to re-issue the deposit on other terms.
The bank accommodated the pensioner and gave him another deposit, from which he could withdraw the amount of money he needed, and interest was accrued on the balance.
4) Metal inserts
Gold money. In this deposit you turn your savings into precious metals. Just buy the desired weight of noble material and monitor its market value.
Interest on these deposits is accrued extremely rarely. Income is usually made up of fluctuations in the price of jewelry.
Sign 3. By type of funds
And the last group of contributions, at first glance, is quite simple, but it’s worth taking a closer look at it.
Usually people make deposits in national monetary units, but during financial fluctuations they run to banks, withdraw their money and buy currency, which they sell again a little later, ultimately receiving the same original amount.
We divide deposits into:
foreign exchange (usually opened in euros or dollars);
ruble (have maximum interest rates);
multicurrency (the deposit is made in euros, dollars and rubles, there is the possibility of free currency conversion).
Interest on all deposits is accrued in the currency in which they were opened. For multi-currency deposits, accounting is kept for each currency separately.
When drawing up a new contract, the manager asked in what currency Denis Ivanovich would like to open his new account?
The pensioner scratched his ragged beard and decided to impress the manager with his wisdom:
There are two types of money: ours and not ours, but you can mix it too!? Make me a multi-currency! I will organize a small Forex on my account!
3. How to calculate the return on a deposit - 5 simple steps
If you decide to open a deposit, let's count how much profit it will bring us! You can go to the bank’s website and use a special remuneration calculator.
If this option causes mistrust or difficulties, then we contact representatives of the financial institution to clarify the scheme for calculating interest.
As Ostap Bender said:
Since there are some banknotes floating around in the country, there must be people who have a lot of them.
It is profitable for someone to borrow money, spend it, pay back the interest and put something in their pocket. And we will begin to count the profit that we will receive when opening a deposit.
Step 1. Specify the interest calculation scheme
Accruals occur daily, but the actual amount is usually indicated once a month.
Interest on the deposit can be calculated simplified or with. A simple scheme looks like adding the annual rate to the original amount, provided that we do not withdraw funds from the account.
It's a little more complicated with capitalization. In this case, interest is calculated on the deposit amount plus interest accrued for the previous period.
Step 2. Multiply the initial deposit amount by the annual rate
Let's play with the calculator and take 10,000 rubles for the initial amount. To see your net profit for the year using a simplified scheme, multiply by the annual rate (take 15%). Total, 10,000*15%=1500.
Step 3. Calculate income capitalization
The more often capitalization occurs, the more profitable is the deposit? Yes, but not always. With frequent capitalization, the annual rate decreases! And ultimately, the effectiveness of the deposit is leveled out.
To calculate capitalization, we need to add the interest received to the original amount and recalculate the interest again.
Example
Vitya opened a deposit for a period of one year and received a bonus from the bank in the form of a monthly capitalization of his deposit. The initial amount in the deposit account was 100,000 rubles and when closing the deposit, Victor expected to see 112,000 in his account.
Our investor was surprised to find 112,682 rubles in his account! Oh, Vitya, Vitya, you forgot that you received capitalization as a gift!
Step 4. Determine the effective rate
Please note that the effective rate only works when the deposit is capitalized and provided that previously accumulated interest is not withdrawn from the account. Thus, when calculating capitalization, we will be able to accumulate interest on the amount already added.
As we already know, when making a deposit we are told the interest rate. To find out effective rate(the percentage at which final calculations are made), we need to determine the number of capitalizations. The effectiveness of the bet will be proportional to this number.
For example, with an initial deposit amount of 10,000 rubles and an interest rate of 12%, you will receive 10,098 rubles in the first month and with monthly capitalization, the next interest will be accrued to you exactly on the last amount.
The rate with such a settlement system will increase its effectiveness to 12.06%, for the next month to 12.12% and so on until the deposit period expires.
Step 5. Calculate the final profit
S =N *(1+(Y *J /100*T )) A
- S - total amount;
- N - initial amount;
- Y - interest rate;
- J - number of days in the capitalization period;
- T - deposit term, number of days;
- A - number of capitalizations.
Screw this math! It could be simpler and clearer.
Let's make 3 different annual deposits of 1000 rubles each and compare the results:
So it becomes clear that before making a contribution, it is advisable to independently determine its profitability and look for alternatives to the proposed programs.
4. Who offers the best conditions for deposits - review of the TOP 3 banks with favorable terms of cooperation
Let's look at the leaders in attracting investment in Russia.
What interest rates for deposits do banks offer us and how they differ, read on.
has been working in Russia since 1990. The largest bank in the Sverdlovsk region, the leader in its region in terms of deposits. It has representative offices in more than 43 regions of the country.
The reliability of the bank is confirmed by the Deposit Insurance Agency, the National Rating Agency at the “AA” level, which indicates the highest creditworthiness of the organization. The Ural Bank for Reconstruction and Development is a multiple winner of Russian social achievement awards.
The leading financial organization in the Urals offers its clients profitable deposits of up to 11% per annum. Various bonuses and discounts, additional services await bank depositors.
You can get plus 1% to the rate by opening a deposit in the Ural Bank. Leave your phone number on the company’s website and they will call you back within 20 minutes to clarify the features of the deposit for the program you are interested in.
Deposits are easy to manage using online banking. Online payments are available to customers to pay for various utility and entertainment services. On the company’s website you can participate in all sorts of promotions and competitions with attractive prizes.
The largest bank in the Russian Federation. It has branches in all major cities and territorial districts of Russia. Serves all segments of the population and forms of business, providing the widest range of banking services.
On the company's website you can familiarize yourself with the terms and conditions of bank deposits and immediately register your investment. You can choose a deposit that is convenient for you online. A 24-hour consultation and feedback service will help you clarify the nuances and features.
Having a deposit in Sberbank, you enjoy various bonuses and discounts in the socio-economic sphere of activity of Russian citizens.
The joint stock company was founded in 2000. It provides a wide range of financial services and occupies a leading position in the agricultural sector of the economy. The Bank is developing investment and lending programs, focusing on the interests of citizens living in rural areas.
The bank operates in all regions of Russia and provides clients with the opportunity to manage their accounts from anywhere in the constituent entities of the Russian Federation. On the company's website you can view all available investment programs and ongoing promotions. If necessary, open a deposit remotely by submitting an application via the Internet.
5. How to open a deposit account correctly - 5 golden rules for a depositor
Opening a deposit is always associated with certain fears and risks. It seems that this is a very troublesome task - to go somewhere, to count something, and is the game worth the candle?
Let's look at how to invest your money with maximum efficiency and simplicity.
Rule 1. Do not choose a deposit solely based on the interest rate
The main criterion when choosing a deposit is the interest rate. The higher the bet, the more you can earn. But it is worth remembering that the bank has the right to change the interest rate depending on financial troubles.
Deposit rate is not Snickers, size doesn't always matter!
Apart from the interest rate, there are other factors that must be taken into account. In particular, the same capitalization that I wrote about above.
Rule 2. Make a choice in favor of banks with foreign capital
Such banks are stable and reliable. They have a longer service life, which allowed them to reach the international level. The capital of such banks, placed in foreign exchange reserves, is more stable to shocks.
The vast majority of institutions with foreign capital are subsidiaries of foreign banks represented on the Russian market. Due to sanctions and pressure on the Russian economy, it is much easier for such organizations to exist in the economic field of activity and at the same time offer attractive investment programs.
Rule 3. Divide funds into several deposits in different currencies
It would be reasonable to divide the contribution into several parts. This will allow you to freely convert money, managing exchange rate risks and leveling inflation processes.
Most multicurrency deposits are made in three units: rubles, euros, US dollars. Other currencies are used much less frequently, but still have their place.
A few notes about deposits in different currencies:
- distribute currency evenly across all categories;
- pay attention to the minimum deposit amount;
- if you are saving for a trip, make a deposit in the currency of the country where you are going;
- when plans and circumstances change, do not forget about.
Rule 4. Trust your funds only to banking institutions
Resolutely refuse various types of financial companies, credit unions or private borrowers. The commercial activities of such persons are not regulated by law, which means you risk losing your money and being left with nothing.
Imagine the situation: you have collected a certain amount and, with the help of a broker, invested it in shares of a young company. Literally 3 months later, your company patented an incredible original product, the demand for which excites the public.
Quotes have soared, and now, each share that you bought for 10 rubles apiece costs 100. Not bad, considering that you bought a package of 100 shares. Your company is having an incredibly successful year and now you have received your dividends, which were enough to buy, say, a car.
Not a bad situation, isn't it? And most importantly, it is quite probable. Of course, such successes are worthy of making a film based on their script, but nevertheless they occur quite often. They may not make their heroes incredibly rich, but they do provide a good income. Most often, this happens because investors do not invest large sums, but only some financial masses invest cautiously. When such an investment becomes successful, the shareholder laments, “Why didn’t I invest more?”, although it is quite clear that he is already in good profit.
Investment goals
Our hypothetical situation, although it is a real fairy tale, still willingly demonstrates the principle of competent investment. In this case, our hero chose a young and promising company, which brought him success.
Finding an investment that can generate 10x returns is extremely difficult. Perhaps for some people this would be a real final chord, after which they would calmly go drink cocktails on warm beaches, forever forgetting about the money race that we go through every working day.
Of course, your work can bring you a lot of pleasure and sincere joy, but passive income never hurts. It is the creation of cash flow that does not require regular time expenditure from you that is the goal of investment.
If you want to build yourself a financially carefree life, then investing in securities will be what can open the way for you to this life. But first, you have to figure out how this investment turns into financial freedom.
Creation of money rivers
The mere fact of purchasing securities or shares does not guarantee anything. If you bought a bond or other stock exchange certificate, then congratulations on starting your investing journey. Or is it better to feel sorry for you, what if your purchase turns out to be defective?
In order to buy only the right securities, it is important to understand what an asset is. An asset is a tangible or intangible value that brings you very tangible profit. An asset can be expressed in terms of real estate, copyright or brand ownership. Securities will be an asset only if they are profitable.
Return on securities
The cash flow received by the owner of the security shows how profitable a particular stock/bond is. Yield is the amount of money received by the legal holder of the security.
A commodity has two ways of producing money. The first of these is income from direct ownership. The time spent holding a security is often referred to as the holding period.
The amount of money earned during the holding period also becomes one of the parameters of the calculated profitability. Money earned from the very fact of ownership is the classic purpose of their purchase. Depending on the type of central bank, the financial mass is generated from different sources.
Owning shares means receiving dividends. This word has already been mentioned, and if you do not know, then dividends are a percentage of the total profit of the company that issued the share, received by its holder at the end of the reporting period in proportion to the size of the block of shares held.
The return on shares consists of the increase in the market value of shares and dividends. The profitability of certificates of ownership shows what income in percentage or nominal terms the receipts brought. Revenue in a general sense is calculated as the amount of profit divided by the amount of invested funds. Since you can get not only a profit but also a loss on shares, the return can be negative.
Dividends on shares
Since dividends are a derived amount from the company’s earnings, the presence of this very earnings will determine the quantitative amount of money from dividends. Roughly speaking, if a company has no profit, then there is no money for shareholders.
But these problems only affect common stockholders. These are the most common ownership slips. The owners also receive dividend amounts - a part of the profit and the right to vote at the meeting when certain issues are resolved.
But privileged tickets do not provide the right to vote. But the revenue from them is always stable and fixed. Such owners will receive their hard-earned money at the end of the year even with a negative balance. The company must repay these debts by any means, even by taking out a loan. Otherwise, she is forced to declare bankruptcy. When purchased, privileged certificates are, of course, much more expensive than regular ones.
- Dividends per share (DPS) is the amount of the premium paid per share of the issuer in the established units of account.
- DPR (Dividend payout ratio) is a share derived from the company’s net profit, covering the payment of funds under ordinary or preferred receipts.
- dividend yield
Make money on debt
Another classic investment tool is . A bond is a document denoting the debt obligation of the person who issued it to the person who repurchased it.
Bonds are issued by commercial enterprises, banks and the state. The standard bond model represents the receipt of income from the exercise of one’s right to repay it on behalf of the issuer who issued the certificate.
It is understood that the person who borrowed the debt, that is, who sold the bond on the primary market, returns the money to the buyer. At the same time, they are paid a certain amount - the interest rate of remuneration.
It is the interest rate that fixes the primary income on the bond. It is reminiscent of the lending process, where the investor takes the place of the bank, and, say, the bank that issued the bond takes the place of the borrower.
Secondary market
Both of the financial products in question are available for resale on the secondary market by the owner of the security. In this way, the main market for capital investments is formed - the purchase/sale of assets at one price and sale at another.
The differences in these prices are called quotes. In essence, a quote is an indicator indicating the cost of one group of goods and the change in this very cost during a specified period.
Resale of securities is possible in almost all cases, except those where it is prohibited by special methods. Such assets are called non-current assets. Often these are certificates either from closed societies or bound by private agreements.
Reselling is the most popular method of generating income. There are several conditions for a successful enterprise: first of all, the price per share must rise, and at the same time be higher than at the time of purchase. Changes due to inflation may be deducted.
Secondly, it must be in demand, especially when it comes to over-the-counter trading. Thirdly, the sale must be officially registered. Records on the stock exchange, securities accounts and accounting department of the issuer are what the parties to the transaction require.
Resale is available for both equity securities and debt obligations. It is worth noting that the “rich” investor is required to pay tax on the profits received as a result of these operations.