Hello, dear readers of the SlonoDrom.ru magazine! Almost each of us at some point thinks about where to invest money so that it works and brings monthly income.🙂
There are actually a huge number of investment options! Not all of them are effective, and what to hide are often simply fraudulent organizations whose only goal is to get money and hide with it forever. I know this first hand!😀
In this publication, I will try to tell you in detail about the most relevant and proven areas for investing money in 2020! And of course, in practice we will try to objectively figure out where it is more profitable and best to invest your money.
You will also learn about where you should not invest your money so as not to lose it!
And most importantly, I will share with you my life experience , concrete examples And useful tips , which will allow you to invest money correctly and receive high passive income!👍
Regardless of what amount of money you are going to invest: small or large, this article will be as useful as possible for you!
In addition, you will learn:
- What investment options are there, what are their returns and which one should you choose?
- Where can you profitably invest money on the Internet?
- How to invest money correctly so as not to burn out?
- And also about where it is better not to invest your money!
Sit back and let's get started! The article turned out to be a little long, because I tried not to miss anything important. I hope I succeeded!😉
1. What is important to know about investments?
First, what you need to know before investing your money anywhere is that you only need to invest your free cash ! Under no circumstances should you invest money that you desperately need, and especially do not get into debt, loans, or credits.
No one gives an absolute guarantee that you will increase your invested money! There is always a risk of losing money, even if it is a highly guaranteed investment (for example, government bonds or bank deposits).
You should always remember this, because investments can bring both profit and loss!
Secondly, before investing your money anywhere, you need to actually evaluate what exists risks and which one profitability can be obtained from one or another investment.
Typically the risk is proportional to the return, i.e. the higher the profitability, the higher the risks and vice versa. But this rule does not always work.
But in any case, those who do not take risks do not earn money. It is always necessary to take meaningful risks!😉
In order for you to decide for yourself whether or not it is worth investing in one or another investment option, we will analyze each of them based on the following most key parameters:
- profitability,
- risk,
- payback period,
- minimum investment amount.
We will also consider all the pros and cons of each investment option.
Third to reduce risks, it would be logical diversify your investments, i.e. distribute the entire investment amount into parts depending on the risk and invest in different assets.
For example, you can distribute it like this:
- conservative portfolio (bonds, real estate, precious metals...) - 50% of all funds;
- moderate portfolio (mutual funds, shares, business projects...) - 30% of all funds;
- aggressive portfolio (foreign exchange market, cryptocurrencies...) - 20% of all funds.
❗️Important:
There is no need to invest all your money only in instruments with very high returns, since in this case the risk of losing your money will also be very high!
On the contrary, many people strive to receive maximum income, but at the same time completely forget about risk. And as a result, due to greed, they are left with nothing.
Investment is all about risk management! First of all, you need to take care not to lose money. Profit is the second thing.
And if you have little or no experience in investing yet, then start investing with minimal amounts and avoid high-risk assets.
Read this article to the end, because at the end of the article you will learn about other important rules of investing!👇
2. Where is the best place to invest money in 2020 - TOP 15 profitable investment options
So, let's finally look at the options and decide where you can profitably invest your money so that it generates income!
I’ll immediately share with you, using my personal example, one rather profitable investment that allows you to receive much more than regular bank interest. 😉
PAMM account "Arslanov Fund" and its profitability
Another PAMM account in which I invested is ““, the largest account in Alpari, it manages more than 155 million rubles!
Although it does not show the same profitability (accordingly, it is more conservative, with less risks) as the previous one, nevertheless, for 5 years it brings investors “clean” income every year. near 60-80% . Agree, it’s very good! 😀
Another advantage of PAMM accounts is that the minimum investment amount is practically unlimited; you can start with at least 3,000 rubles.
I’m still just looking at other PAMM accounts, but in my opinion, these two accounts are currently the most reliable for long-term investing. If anything changes, I will immediately update the information in the article.
However, although you can earn quite significant sums in this way, you should not forget about the risks. Still, invest no more than 25-30% from the total amount of your investments (at the same time, also distribute risks among accounts, do not invest everything in just one account, choose at least 2 accounts).
More details about this type of investment will be described later in the article, so be sure to read to the end.
Now let’s look separately at each of the options where you can invest your money.
Option #1: Bank deposits/savings accounts
DESCRIPTION: The simplest and most accessible investment option for everyone is regular bank deposits. In Russia, the annual interest rate on them is on average from 4% to 8%.Deposit rates have been falling steadily downward in recent years and are likely to continue to fall in the future.
How to make money on stock growth - Google example
So in 3 years, Google shares have grown by more than 100%!
For these purposes, so-called “individual investment accounts” (IIA) are suitable, which, for example, can simply be opened in the same account (using this link you can invest 1 month without commission). By the way, they have a very convenient investment application and a fairly low commission, I use it myself.😀
☝️In addition, if you invest money for at least 3 years, you will be able to receive a personal income tax deduction (13%), i.e., in fact, you will not need to pay income taxes! Such preferential conditions were developed by the state to support and develop investment in the country.
But naturally, there are many nuances that need to be taken into account when investing in stocks. There are risks always and everywhere - you shouldn’t forget about them!
The biggest risk for stocks (for those who bet on their growth) is financial crisis ! The rest of the time, shares generally grow steadily and show good profitability.
In addition, you need to understand that the price of shares depends very much on the actions of speculators, rather than on the real financial position of the company in the market.
Alternatively, you can invest money in a group of shares, i.e. so-called indices (they show the economic situation in the country), for example:
- RTS (50 largest companies in Russia),
- S&P500 (500 largest US companies),
- NASDAQ (100 US high-tech companies).
If you do not want to invest personally, then there is an option to entrust your money to professional managers. I already mentioned how I invested in managers at Alpari at the beginning of the article! I will definitely tell you more about this direction a little later in this article!
You can easily invest in shares through.
CONCLUSION: With proper management, shares can generate good returns, several times higher than the interest rate on bank deposits. But at the same time they are considered riskier assets.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| 15-100% per annum (change in share price + dividends) | depends on strategy | 1-7 years | from 5-10 thousand rubles |
| (⭐️⭐️⭐️ - medium/high) | (⭐️⭐️ - medium/high) | (⭐️⭐️ - average) | (⭐️⭐️⭐️ - low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) With minimal/moderate risks you can get relatively high returns. | (+ ) High liquidity - at any time you can quickly sell shares and get money in your hands. Low entry threshold. | (- ) Knowledge required. Uncontrolled risk and “flirting” with the market can lead to significant losses. | (- ) In the event of a crisis, shares can seriously and quickly fall in price. |
Option No. 4: PAMM accounts, PAMM portfolios, trust management and structured products
DESCRIPTION: But this method is usually suitable for those who do not have the experience or time to understand all the nuances of trading in financial markets (stock markets, Forex, oil, gold...).That is, in this case, you entrust your money to traders - those who professionally trade in financial markets.
All you need to do is distribute the initial investment amount into parts (preferably at least 3-5) and invest in different managers.
PAMM account “Moriarti”, its profitability for 5 years was 135464% (click to enlarge)
💡 This PAMM account (trader) has over $2.5 million , its profitability over 5 years amounted to over 135 thousand percent.
However, it should be borne in mind that although accounts/portfolios have shown good returns in the past, there is always a possibility that they will be unprofitable in the future.
Therefore, I repeat, do not invest all your money in one trader! Distribute funds among at least 2-3 reliable managers who have been trading profitably for a long time. If the accounts are relatively new (less than 6 months), then divide the initial investment among 5-10 traders.
Constantly monitor the situation and get rid of accounts/portfolios that have been generating losses over a long period. This is the whole secret of investment!
For more information about what PAMM accounts are and how they work, you can watch a free training webinar from professionals in their field:
You can go to the Alpari website and get acquainted with Pamm accounts.
With larger initial capital, you can work with large stock brokers (for example Finam and BCS), which also provide various trust management strategies.
✅For example, you can give Finam in trust from 300 thousand rubles. Their website presents dozens of diverse strategies: conservative, moderate and aggressive.
Of course, both brokers and managers also cannot 100% guarantee that you will receive income.
I would like to tell you a few words about the so-called “structured products”, because they are also directly related to trust management. The income here, as a rule, is not the same as what PAMM accounts can provide, but nevertheless, structured products can bring significantly more than bank interest and bonds.
They are also intended for beginners who want to increase their money. Structured products can bring returns of up to 100-200% per annum with minimal risks (risk is strictly limited, there is capital protection - usually you risk only 10% of your investments).
The essence of structured products is that you also invest money in stock markets (more precisely in specific stocks, futures...), which experts expect will rise or fall in the future.
It is usually possible to invest in such products from 3000 dollars(some brokers have a higher minimum threshold) and for a period from 3 months.
I will give an example of trust management - the leader in trading turnover on the Moscow Exchange with maximum reliability AAA.
✅BCS offers investments in Gazprom shares with guaranteed returns 10% per annum(even if the price falls) and 100% capital protection. If the price of shares rises, then you can even get 14% per annum .
So there are only 2 options: you get either 10% or 14%. Consider that there are no risks other than the actual bankruptcy of the company. But it is extremely unlikely that the No. 1 company in the entire brokerage market in Russia will go bankrupt, it is similar to Sberbank declaring bankruptcy. Therefore, in this regard, there are practically no risks.
Investments are designed for a period of 3 months, which is also quite convenient. As a result, this option is an excellent alternative to a deposit, the rates for which are now significantly lower. The only downside is that the minimum investment amount is 300 thousand rubles.
CONCLUSION: Trust management combines convenience, moderate risks and medium/high returns. Especially suitable for beginners.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 15% to 200% per annum and above | depends on the type of strategy: conservative, moderate, aggressive | 1-8 years | from 500 rubles |
| (⭐️⭐️⭐️ - high/medium) | (⭐️⭐️ - medium/high) | (⭐️⭐️⭐️ - high) | (⭐️⭐️⭐️ - low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) By distributing funds among the most effective managers/strategies, you can get a good average return. Suitable for beginners. | (+ ) The minimum amount for investment (especially in PAMM accounts) is quite low. There is no need to engage in trading yourself. | (- ) Relatively high risks compared to bonds and bank deposits. | (- ) It is difficult to predict profitability, as there may be unprofitable periods. Managers need to be monitored periodically. |
Option #5: Bonds
DESCRIPTION: Where do you think the big banks invest their money? Mainly in bonds! Yes, they provide a small income, but with a high guarantee and reliability. Especially if you take government bonds.
Along with bank deposits, bonds are considered one of the simplest instruments for investment. But unlike bank deposits, the interest rate on bonds is significantly higher.
For those who don’t know, a bond, simply put, is an IOU. Only large companies and states can act as borrowers.
☝️ By the way, Sberbank and other banks sell national government bonds.If you invest money for 3 years, you can get an average return of 8.5% per annumX .
I agree, not very much, but the rate is certainly better than most bank deposits currently available. Moreover, in the future, deposit rates may decrease.
You can also consider bonds of large, reliable companies - their rates will be higher! For example, on Sberbank bonds the average yield is approximately 9,2%-12,2% per annum (depending on the term).
At the same time, you can invest large amounts of money in bonds, since the security of funds here will be higher than, for example, in bank deposits, where only 1.4 million rubles are insured.
I would also like to note that there are also bonds whose yield can be tens And hundreds of percent . But such bonds have a low credit rating (for this they are called “junk bonds”). Although they can generate fairly high returns, they are a very risky investment.
Bonds, just like shares, can be purchased without having to pay income tax (if you purchase them for a period of more than 3 years).
CONCLUSION: Bonds are suitable for those who seek to receive an average return with a relatively high guarantee.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 7% to 15% per annum (for risky ones from 30% to 100% and above) | depends on bonds (for government bonds - very low) | 7-12 years | from 10 thousand rubles |
| (⭐️⭐️ - medium/low) | (⭐️ - low) | (⭐️⭐️ - medium/low) | (⭐️⭐️⭐️ - low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) Optimal profitability combined with low risks. You can sell bonds at any time without losing income. | (+ | (- ) Relatively low yield compared to stocks and some other assets. | (- ) There is a risk of bankruptcy of the issuer (especially for bonds with a low rating). The lower the credit rating, the less confidence in it. |
Option #6: Forex
DESCRIPTION: Forex is essentially a foreign exchange market where you can buy/sell this or that currency.
This can be done both through banks and online with the help of specialized brokers (where, by the way, the commission is 10 times less).
Example!
For example, you purchased 10,000 dollars at the rate of 57 rubles/dollar - as a result, you invested 570,000 rubles in dollars. After a while, the rate reached 60 rubles per 1 dollar, and you sold dollars.As a result, after the exchange you received 600,000 rubles, and the income accordingly amounted to 30,000 rubles(of which the broker's commission is approximately 600-800 rubles).
You can trade on Forex either yourself or give money to professional traders to manage (this will be discussed in detail in the next section of the article).
When trading currencies on your own, it is very important to have trading experience And h knowledge of the foreign exchange market . It’s not worth going into the foreign exchange market just like that, in the hope of easy money (and that’s exactly what I did 🙂), as this usually leads to serious losses.
It is important to note that when trading in person, you need to follow a proven trading strategy, otherwise trading will most likely turn into a casino and lead to a sad result known in advance.
But on the other hand, if you observe risk (money management), manage emotions and trade exclusively according to strategy, then you can actually make good money on Forex. But this needs to be learned!
Although you can start on Forex with minimal amounts - from $1, you still need more or less serious investments (preferably from 100 thousand rubles), since even if you manage to increase the initial deposit by 10% per month (which is very good), the profit will not be that big.
In my opinion, one of the most effective trading strategies on day bars is Price Action. There are many articles written about her on the Internet - if you are interested, read them!
Among reliable brokers you can choose, for example, Alpari or RoboForex.
CONCLUSION: The Forex market is more unpredictable than the stock market, and therefore riskier. However, with skillful investing you can get high income. For those who are not ready to seriously study, this option is not suitable - it is better to consider PAMM investing. This will be discussed below!👇
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 15% to 100% per annum and above | depends on the strategy (initially has a high risk) | 1-7 years | from 100 rubles |
| (⭐️⭐️⭐️ - high/medium) | (⭐️⭐️⭐️ - high/medium) | (⭐️⭐️⭐️ - high) | (⭐️⭐️⭐️ - very low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) If you have an effective strategy, you can get high returns. | (+ ) Low entry threshold and accessibility. | (- ) High risks, especially for beginners. You can lose significant money in a short time if you don't manage your risk. 99% of beginners lose their money. | (- ) Training required: specialized knowledge and experience, as well as the ability to manage emotions. There is no guarantee that you will make a profit in any given period. |
Option No. 7: Own/partner business
DESCRIPTION:
And this, in my opinion, is one of the most profitable ways of investing, which can bring you hundreds or even a thousand percent of income!
Of course, in most cases, business requires personal presence. But on the other hand, a business can be automated or simply invested in someone’s business at the development stage.
Another option is to buy a ready-made business or open a franchise business (in this case the risks will be much lower).
Moreover, even if you have a small initial capital, you can still open your own business. Many people have opened a profitable business with little or no investment, so money is not the most important thing here, the main thing is desire and desire!😀
I myself started a successful business from scratch several times! By the way, if you look at the statistics, then among millionaires there are about 70-80% - these are entrepreneurs who started a business from scratch!
✅Please note:
You can turn your hobby into a business and never work again in your life, but do what you love! Perhaps this is the most preferable option!As Confucius said:
« Choose a job you like, and you will never have to work a single day in your life!«
Read about how to find your favorite job/work of life.
If you don’t yet have a stable source of income, then first of all think about creating a business, even if it’s small at first. The main thing in this matter is not to be afraid take the first step!
Think about it, maybe you've always wanted to open your own auto repair shop, hair salon, sporting goods store or handicraft store?
Here are some more useful tips:
- Start small (and with minimal investment) and gradually grow your business. At the initial stage of business development, do not invest a lot of money right away.
- Choose niches with minimal competition - they are easier to start in.
- If you have a small initial capital, then it may be worth trying a service business.
I will also give you several options from my experience on how you can start a business with minimal investment, I think you will be interested!👇
Examples!
It is not difficult to start your own business on the Internet. For example, you can provide services or sell goods through ad platforms (the most popular is Avito). This is exactly where I started! 🙂By the way, goods from China are now very popular, where the markup can reach up to 500-3000%. Including such products are successfully sold via the Internet (one-page websites).
Another area that does not require large investments and is not so difficult to start is a wholesale business via the Internet.
Moreover, in the case of wholesale and retail sales, the goods do not have to be in stock - you can work according to the dropshipping scheme. The main thing is to find clients (you can do this for free on message boards).
In short, the essence of dropshipping is that you work with a supplier who directly ships the product to the client. He sells his goods and earns income from this, and you receive your markup from the sale.
Read more about how to organize in a separate article!
CONCLUSION: A business can generate very high returns with minimal investment. In addition, business can be turned into something you love, something you are interested in and want to do!
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 30% to 1000% per annum and above | At the initial stage there is a high risk | from several months to 1-5 years | from 10,000 rubles (you can even start from scratch) |
| (⭐️⭐️⭐️ - high/medium) | (⭐️⭐️ - medium/high) | (⭐️⭐️⭐️ - high) | (⭐️⭐️⭐️ - low/medium) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) One of the highest returns among all investment instruments. | (+ ) It is easier for a business to find partners and/or co-investors. You can start without large investments, the main thing in business is the idea! | (- ) High initial risks. 7-8 out of 10 start-up businesses close within 2-3 years. Low liquidity - it is difficult to quickly sell a business. | (- ) You need to understand business and understand how it works, even if you invest money in “someone else’s” business. You constantly need to learn. |
Option #8: Mutual funds
DESCRIPTION: Mutual funds can also be classified as trust management, which we have already talked a little about.
Mutual funds are professionally engaged in investment activities, investing and managing the money of their investors (investing in certain stocks, bonds...).
Absolutely anyone can become an investor; to do this, you need to purchase a share (share) in a mutual investment fund. Depending on whether the mutual fund successfully manages investments, shareholders receive profit or loss.
It should be noted that the activities of mutual funds are regulated at the state level and, as a rule, they are prohibited from investing in high-risk assets. Therefore, they are considered more secure than the same brokers.
Mutual funds usually provide low income (usually from 15 to 30% per year), with little risk. Here is an example of the profitability of some mutual funds for 11 months:
Profitability of mutual funds for 11 months
However, mutual funds do not provide a guaranteed profit, unlike bonds and deposits; there are also often unprofitable periods.
But in general, if we take a period of 3-5 years, then many mutual funds show positive dynamics and make a profit (provided there is no crisis). Therefore, it makes sense to invest in mutual funds for a period of 1 year or more.
The minimum investment amount is from 1,000 rubles. You can buy shares online, including through certain banks, for example Sberbank.
If this type of investment is suitable for you, then it makes sense to choose not one mutual fund, but several, in order to distribute possible risks.
And make it a rule, before investing anywhere, including in any specific mutual funds, read the reviews of real people on the Internet, and also read what they write about them on forums. With this simple action you will protect yourself from unreliable and fraudulent organizations.
CONCLUSION: Mutual funds can be considered as an alternative to brokers, who also invest money mainly in the stock market. Provided there is no crisis, they usually also bring good profitability.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 12% to 30% per annum | moderate | 3-10 years | from 1,000 rubles |
| (⭐️⭐️ - average) | (⭐️⭐️ - average) | (⭐️⭐️ - average) | (⭐️⭐️⭐️ - low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) The average yield exceeds interest rates on bonds and deposits. | (+ ) Low entry threshold, as well as state control of the activities of mutual funds. | (- ) There is no guarantee that you will receive income. There is an additional “commission” (surcharge) for the purchase/sale of shares. | (- ) You will have to pay 13% tax on profits - many other investments have preferential tax conditions. |
Option No. 9: Microfinance organizations (MFOs)
DESCRIPTION:
Another type of investment is investing in microfinance organizations. The return on such investments averages from 12% to 30% per annum.
The minimum amount required to invest in an MFO must be no less than 1.5 million rubles (by law).
The longer the investment period, the higher the interest rate. The minimum period in MFOs is usually 3 months.
It should be noted that in this case there is no deposit insurance, and in general the risks are much greater than if you invest money in bonds or in a bank at interest.
If you still decide to invest in microfinance organizations, be sure to choose a proven company that has been operating on the market for more than one year.
⭐️ Good advice!
Look first at the “age” of the MFO, and not at the interest rate they promise you.After all, it is better to invest money in a reliable organization at a slightly lower interest rate than in a newly established MFO with a high interest rate.
Additionally, it would be a good idea to look at reviews and read articles on well-known information portals (for example, RBC) about this or that MFO.
If you want to know my opinion, then in my opinion, if you have investments of 1.5 million rubles or more, then it is more profitable and reliable to invest money in real estate than in microfinance organizations! 😀
And besides, I myself don’t take loans/loans (especially consumer ones) and I don’t recommend them to others!😉
CONCLUSION: MFOs in general provide 1.5-2 times more profitability than bank deposits. But there are also corresponding risks. And the entry threshold, to put it mildly, is rather large.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 10% to 30% per annum | moderate | 3-9 years | from 1 million rubles |
| (⭐️⭐️ - average) | (⭐️⭐️ - average) | (⭐️⭐️ - medium/low) | (⭐️ - high) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) High rate relative to bank deposits. | (+ ) Passive income. Minimal participation on your part. | (- ) Very high entry threshold. According to the law, MFOs are allowed to borrow from individuals from 1.5 million rubles. | (- ) Increased risk, since there is no deposit insurance - in the event of bankruptcy, no one will return the money. There is fraud. |
Option #10: Precious metals
DESCRIPTION: Another well-known type of investment is investing in precious metals, in particular gold. Moreover, such investments are highly reliable!
It is especially important to invest money in gold and other precious metals during a crisis, since this is where money migrates from the stock market.
Gold coins/gold bars can be purchased from almost any bank (Sberbank, Gazprombank) or from brokers (for example, Alpari).
Despite its high reliability, investing in gold is more suitable for preserving existing funds than for increasing them. In addition, such investments are designed for a longer term period of 3 years or more.
Gold prices - chart
❗️ Over the past 5 years, gold in rubles has increased from 1,600 rubles per gram to 2,400 rubles per gram.
The total profitability for the five years was 50% (on average gold rose by 10% per year) and such profitability was achieved thanks to serious depreciation of the ruble.
However, if you look at the dynamics of gold against the dollar, you can see that gold has dropped significantly in price since 2012 and is currently in a sideways trend.
CONCLUSION: It still makes sense to buy precious metals (gold) either in times of crisis or in the long term for the purpose of preservation.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 3% to 15% per annum (in a crisis the yield is higher) | Minimum | 7-20 years | from 1000 rubles |
| (⭐️ - low) | (⭐️ - low) | (⭐️ - low) | (⭐️⭐️⭐️ - low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) High reliability of investments. There is virtually no risk of gold depreciation. Easy to buy/sell at any time. | (+ ) Precious metals (especially gold) are a “safe haven”. Investments in them are suitable for preserving funds during a crisis. | (- ) Low profitability during periods of economic growth and development. Income tax is 13% on the sale of gold if the holding period is less than 3 years. | (- ) Relatively high commissions of banks/brokers when buying/selling precious metals, incl. gold. |
Option #11: Cryptocurrencies (Bitcoin)
DESCRIPTION:
Bitcoin has grown more than twice in recent years and, apparently, is not going to stop. New millionaires are already appearing who have become rich solely by investing in Bitcoin.
Of course, the best time to invest was a few years ago when Bitcoin was worth around 150-200 dollars.
Some experts say that in the future Bitcoin could be worth hundreds of thousands of dollars and even possibly reach $1 million.
Others argue that Bitcoin is about to collapse. But despite this, some states (including Russia) are thinking about creating their own national cryptocurrency, which suggests that the topic of cryptocurrencies will be very popular in the future, which means that Bitcoin and other cryptocurrencies will probably increase in price.
Moreover, while cryptocurrencies are showing a steady growing trend.
But you need to understand that any cryptocurrency is another bubble, since there is nothing real behind it and yet it is a rather risky investment instrument.
For example, Bitcoin can rise or fall by 10-25% - This is quite a common occurrence here. And in a year you can either increase your investment by 3-10 times or lose almost everything!
CONCLUSION: On the one hand, cryptocurrencies are too risky an instrument, but on the other hand, if they grow, they can bring huge returns. Whether it is worth investing in it or not, everyone decides for themselves, one thing is clear - it is definitely not worth investing all your money in them!
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 20% to 1,000% per annum | elevated | from 3 months to 1-5 years | from 100 rubles |
| (⭐️⭐️⭐️ - very high) | (⭐️⭐️⭐️ - very tall) | (⭐️⭐️⭐️ - very high) | (⭐️⭐️⭐️ - very low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) If cryptocurrencies grow, you can multiply your invested funds in a short period of time. | (+ ) As a rule, there is no inflation due to the limited amount of issued cryptocurrency. | (- ) Very high volatility of cryptocurrencies; in a matter of days they can both rise in price and seriously collapse. Low predictability. | (- ) Cryptocurrencies are not backed by anything, as this is another bubble. There is a complete lack of guarantees - if you lose money, no one will return it. |
Option No. 12: Internet projects (online business)
DESCRIPTION: The Internet is developing at a tremendous pace, at the same time providing each of us with the opportunity to earn money on this global network.
It is important to note that large investments are not always required to promote a particular project on the Internet. Some of the projects can be started with minimal investment or even from scratch.
The following directions are currently popular:
1. Websites. Information websites are created and filled with unique content.
With minimal investment it is possible to obtain high returns through advertising. Typically, the site begins to generate its first income in 4-6 months.
WITH 1000 visitors per day, depending on the topic, you can earn approximately 200-3000 rubles in a day. The spread is very wide, since the topic of the site determines how much income you will receive.
Making money on websites is suitable even for beginners, since you can write articles yourself, rather than order them from copywriting exchanges.
But still, at the beginning you will need to get to the bottom of it and understand the key details of such a business.
2. Social publics. Surely almost each of us is subscribed to some community on social networks (VKontakte, Facebook, Odnoklassniki...).
Meanwhile, the owners of such public sites also earn money mainly from publishing advertising posts. In public pages with millions of subscribers, the cost of one advertising post can be 2-7 thousand rubles .
Public sites pay for themselves very quickly with relatively small investments. Although the competition in public pages is high now, if you choose the right topic for the public, post high-quality and interesting content and develop the public, you won’t have to wait long for success!
3. CPA affiliate programs/traffic arbitrage. Their essence is that some business owners are willing to pay a certain percentage of the sale of their goods/services.
For example, if a person follows your affiliate link and opens a current account in a specific bank, then you can earn 2-3 thousand rubles.
If you know how to effectively attract traffic through advertising, then it is quite possible to get a high return on investment. However, as you probably already understood, the main investments here go specifically to advertising.
But in this case, experience plays the main role, without it you can’t go anywhere!
4. Online services. You can also invest money in creating an online service. These include various freelance exchanges, message boards, exchangers...
For example, projects that exchange electronic money (in fact, they are called exchangers) are very popular.
For example, if you need to transfer money from a Yandex wallet to a Qiwi wallet, then the easiest way to do this is with the help of exchangers. By the way, you can also purchase bitcoins using exchangers.
Exchangers, in turn, charge a small commission for the exchange (usually 1-5% ). Due to turnover, a fairly decent income is obtained.
5. Applications for iOS/Android. Since relatively recently, applications for Android and iOS have become very popular - this is a large segment of the market where a lot of money is circulating.
Therefore, if you have an interesting idea that will be in wide demand, then it might be worth trying to create your own application.
❗️ For example, applications for selling airline tickets are quite popular; here you can receive quite decent affiliate commissions from airlines.
Even if you don't know anything about how to create applications, you can create them for quite a bit of money ( 20-30 thousand rubles ) order on freelance exchanges.
Here, as elsewhere, the key role is played by the idea - the success or failure of the application depends on it.
6. Hype. HYIPs are in reality a financial pyramid that lives off the funds invested in it.
Such HYIPs offer very high interest rates ( 1-5% per day) on the invested funds, but of course they can function for only a few days or weeks after which they disappear without a trace.
There are HYIPs that “live” for several months or even several years, but the profitability on them is correspondingly several times/tens of times lower.
In any case, invest in such hype Very risky , because mainly the creators of these HYIPs and a small group of investors earn money - who managed to withdraw money with a profit before the HYIP turned into a “scam” (stopped paying out money).
And yet, I strongly advise you not to invest in HYIPs, especially if you don’t particularly understand this.
CONCLUSION: Online projects are a great option for those who want to make money on the Internet. With the right approach, Internet projects can provide high returns with a minimum investment.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 30% to 500% per annum | moderate | from 3 months to 2-4 years | from 500 rubles |
| (⭐️⭐️⭐️ - high) | (⭐️⭐️ - medium/high) | (⭐️⭐️⭐️ - high) | (⭐️⭐️⭐️ - very low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) High profitability. The investment can pay off very quickly. | (+ ) Some projects can be started with minimal investment or even from scratch, investing only your time and effort. | (- ) There is a risk that the project will not take off and will not pay for itself. | (- ) Knowledge will be required. You need to have a good understanding of the key nuances of online business. |
Option #13: Venture funds/investments
DESCRIPTION:
Venture funds are especially widely developed abroad; in our country they are not yet so popular, but nevertheless they are a fairly profitable investment instrument.
The essence of venture funds is that they invest money exclusively in projects that are at the development stage (startup) or even at the idea stage.
A distinctive feature of venture investments is their very, very high returns, they can bring in thousands of percent!
But on the other hand, only 1-2 out of 10 projects succeed and bring huge profits. But despite this, they usually more than recoup all investments in “failed” projects.
☝️ Real example!
Today's largest companies Apple, Google, Intel... and even the well-known Chinese online store Aliexpress (Alibaba) started with venture investments.Over 2 years, Apple shares have grown by approximately 5000 times! So if you invested at the start-up stage of your business, 100,000 rubles, after 2 years your fortune would already be 500 million rubles .
There are basically several ways to invest money in startup projects:
- crowdinvesting and crowdlending platforms (suitable for beginners);
- venture funds;
- investor clubs.
CONCLUSION: Yet venture capital investments are poorly developed in Russia. Yes, and often a large start-up capital is required, and among crowdinvesting platforms (where the entry threshold is not high) there are often scammers. Meanwhile, venture investments can bring very high returns!
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 40% to 3000% per annum | elevated | from several months to 1-3 years | from 10,000 - 100,000 rubles (to venture funds - from $500,000) |
| (⭐️⭐️⭐️ - very high) | (⭐️⭐️⭐️ - very tall) | (⭐️⭐️⭐️ - high) | (⭐️⭐️ - high/medium) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) If successful, you can get the highest possible return. | (+ ) It is not always necessary to invest large amounts of money at the start of a project. | (- ) Very high risks, most starting projects turn out to be unprofitable. | (- ) Fraud is widespread - investment platforms can turn out to be financial pyramids. |
Option #14: Art objects
DESCRIPTION:
Another unusual way to invest your money is in art. This is a fairly narrow and specialized market, however, it can bring good profitability.
It's no secret that certain works of art can cost hundreds and even millions of dollars. And if you really understand art, then you can earn hundreds of percent profit on investments.
❗️ The only important feature is that such investments often require large investments . And besides, to get a good return you need to invest for a long period ( decades ).
Like investing in precious metals, investing in art is not subject to inflation and will only become worth more over time.
And the crisis has virtually no effect on the value of art objects.
CONCLUSION: This type of investment is suitable for those who understand at least something about art and are ready to invest money for the long term.
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| from 20% to 100% per annum and above | minimum | usually from 1 to 3-5 years | from 100,000 rubles and above |
| (⭐️⭐️ - medium/high) | (⭐️ - low) | (⭐️⭐️ - average) | (⭐️⭐️ - high/medium) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) You can get relatively high returns with minimal risks. | (+ ) High reliability. Over time, art objects only increase in price. | (- ) Often, investing in art requires a large initial capital and involves long-term investment. | (- ) You need to be a specialist, have specific knowledge and experience. |
Option No. 15: Knowledge and personal development
DESCRIPTION:
No matter how incredible it may seem, the most profitable investment is always an investment in yourself (in the development of specific skills, abilities, gaining knowledge, experience...).
It is necessary to understand that, first of all, knowledge/experience, and not money allows you to earn and increase yours.
I think more than once you have heard stories about how most people who won millions in the lottery, after a few months or years, returned to the life they lived before (or even fell even lower).
In addition, often in order to learn something, no investment is required at all - the main thing is that there is a desire, and everything else will follow!
If you have free funds, then it makes even more sense to invest some of it in your development: attend trainings, webinars and seminars.
One of the most important differences between investing in knowledge is that no one can ever take it away from you. You can lose everything, but not the acquired skills and experience.
For example, in the USA they conducted an experiment: a professional real estate agent was left completely without money several times in different cities. And the result was always the same - after just a couple of months he managed to earn tens of thousands of dollars from scratch.
CONCLUSION: Therefore, if you don’t yet know where to invest your money, then the safest option is to invest it in yourself (at least part of it). And don’t forget that even a bad experience is also an extremely valuable experience! 👍
| Profitability: | Risk: | Payback: | Minimum investment: |
|---|---|---|---|
| endless | minimum | from several weeks/months | from 0 rubles |
| (⭐️⭐️⭐️ - very high) | (⭐️ - very low) | (⭐️⭐️⭐️ - high) | (⭐️⭐️⭐️ - low) |
| ➕ Pros and ➖ Cons: | |||
| (+ ) The most important and most profitable asset in the world is knowledge, skills and experience. | (+ ) No one can take away your knowledge and experience, and you will always be able to turn it into money. | (- ) For many, it is difficult at first to motivate themselves to study. | (- ) It is not always possible to immediately turn your knowledge into money - this requires time and experience. |
3. Golden rules of proper investing - TOP 5 tips
And now I want to introduce you to a few more very important investment rules that will help you manage your money correctly!
First, what I already talked about at the beginning of the article is not to keep all your eggs in one basket. This rule especially applies to you if you have a lot of money to invest.
Instead of investing everything in one tool, distribute the amount equally among several parts. For example, into 3 parts and invest them in real estate, shares, or a new business.
If you have very little money, then think about starting your own business.
Second— try to invest most of your funds (40-60%) in assets with the lowest risk; the optimal choice between profitability and risk, in my opinion, is real estate.
And remember that risk is what you need to think about first! Moreover, if you do not have experience and knowledge, then it is in no way worth it to go in on your own and invest all your money in high-risk instruments: Forex, stocks, bitcoins... hoping that you will quickly increase them.
Believe me, this is an already tried and tested path, on which a huge number of people have lost entire fortunes!
It will allow you to survive unfavorable times and find other sources of income.
Fourth- create passive income so that you can receive money even when you are not working.
Fifth- before investing your earned money in any specific organization, read reviews and comments about it on the forums. Make sure this is a real company and not a scam.
It will also be great if you learn to give 10% of your profits to charity.
✔️As Socrates said:
There is only one good - knowledge and only one evil - ignorance.
4. Where to invest money to earn money - specific examples
In this section of the article, I will tell you where, based on my experience, I would invest money if I had this or that amount of investment available!
I will not consider very risky investment options in these examples. Let's consider only conservative and moderate-risk investments.
- Where to invest 100,000 - 200,000 rubles?
100 - 200 thousand rubles is not such a large amount, so I would most likely invest it in starting my own business or in the business of my friends. And I would allocate 10-20 thousand to attend trainings and seminars.
As an option, if you do not want to invest in a business, you can consider bonds. As a last resort, you can open a bank deposit, but it will be of very little use, since the interest will only cover inflation.
If the risk allows, you can try investing in structured products of brokers (trust management). Their risk, as a rule, is limited to 10-15% of the investment amount, and you can earn more than with bonds.
- Where to invest 300,000 - 500,000 rubles?
This is also a relatively small amount by investment standards. This amount can already be divided into 2-3 parts and invested, for example, in business , bonds , gold or trust management e.
If there is an option within this amount to purchase real estate at the construction stage, then you can invest in it.
— Where to invest a million rubles?
Having 1,000,000 rubles in hand, you can already try investing in almost any of the instruments described in this article.
For 1 million rubles. It is already quite possible to purchase a rough apartment and an apartment at the excavation stage.
Or alternatively:
- You can invest part of the money (100-250 thousand rubles) in shares of promising companies, give them to trust management, PAMM accounts/portfolios, or invest them in mutual funds.
- But 400,000 - 500,000 rubles can be invested in reliable instruments: various bonds (it is also advisable to divide the amount into 3-5 parts), gold, art objects...
- I would still invest a small amount of 30,000 - 50,000 in cryptocurrency, in case it seriously rises in price in the next couple of years.
- With the remaining amount you can try to open a business (including on the Internet).
5. Where is it better not to invest money so as not to go broke - important tips on how to avoid fraud
At the end of the article, we’ll talk about something equally important: how not to lose your money and how not to fall for scammers.
The world is full of people who invent various schemes to steal money through fraud. Especially nowadays, fraud flourishes abundantly on the Internet (and not only!).
Therefore, before investing money anywhere, it is worth checking 10 times to see if you will end up with nothing.
Both on the Internet and in real life, people often come across “super profitable” projects that promise to make them millionaires in the very near future. The organizers of such projects offer huge interest rates, fast payments, very favorable conditions, etc. - all if only people would invest their money. 
💡Take note!
Super favorable conditions- this is the very first sign that they most likely want to deceive you! Scammers love to profit from other people's greed!Money doesn’t come out of nowhere; if someone receives money, then someone will definitely part with it!
The most common type of fraud is financial pyramids (remember Mavrodi and his MMM). Visually, some plausible story can be created, as if the project is really functioning (providing some services), but in reality, the organizers of this project are only making money on the investments of gullible people.
Sometimes the “history” of a project is so well created and worked out that it is very difficult for an ordinary person to detect fraud.
Hype(which we talked about earlier) are essentially also built on the basis of a financial pyramid and they can also be classified as a fraudulent scheme (although it is also possible to make money from them, but experience is required). You can also add here various casinos and other methods that promise “easy” money.
Another controversial investment instrument is sports betting. It is possible to make money on them in the long term, but only bet organizers and 5-10% of participants (those in the know) do this, and the rest just constantly lose money.
I will also highlight another type of widespread fraud on the Internet - the sale of various courses, programs... which, according to promises, can bring you incredible income in a matter of hours (days). If you buy them, you’ll be throwing your money away (tested in my own skin 😀).
Thus, you need to invest in what you are good at! Otherwise, those who are good at something you don’t understand will profit from you! This is my sad experience.😞
If you are not yet particularly versed in a particular investment object, then invest time and money (it’s not even necessary) first of all into your knowledge ! This will be your most profitable investment!
6. Conclusion
Well, you have learned about all the most popular and profitable areas for investing money.
Of course, it is impossible to fit all the options and all the nuances of investments into one article, but I tried to make the article as useful and interesting as possible for you!
I hope my experience was at least a little valuable for some of you and you have already decided where to invest your money! 😀
Let me emphasize once again that, in my experience, the most profitable investments are investments your own business And knowledge !
❓❓❓
What do you think is the best place to invest your money? Feel free to share your opinion in the comments!
Thank you for reading the article to the end! I wish you successful and profitable investments! 👍💵👍
P.S. If you liked the article, I will be very grateful if you share it on social networks! Also, please rate it on a 5-point scale. 👇 Thanks in advance!
Smart investing is the key to a highly secure future. By placing free money in promising investment projects, you have the opportunity to significantly increase your wealth. What instruments are potentially profitable and what kind of profitability they can bring to a novice investor, we will analyze in detail in today’s article.
You can invest your free money in these projects:
Sources of investment
The question of where to get free funds is asked by those people who are already thinking about their future. As you know, there is no such thing as too much money. Therefore, if you do not purposefully take measures to accumulate capital, then there will be nothing to invest. So where can you get free money to invest?
Let's consider 3 reliable options:
- Save 10-20% of your salary . This option always works. It is important to determine how much money can be withdrawn without consequences. If you find it difficult to save money and the temptation to spend it is great, you can start. True, there are not many options and they are not so profitable compared to investments of 100,000 or more. But you can view investing a little money as a temporary milestone that will take you to a big goal.
- Borrow money from relatives . Not the best idea, but it has its place. Moreover, parents can donate initial capital to a good cause free of charge.
- Additional income . As sources of additional earnings, you can consider overtime work at your main place of work or short-term options with low pay. Of course, you will have to work more. But it's worth making the effort to earn passive income in the future.
TOP 17 ways to invest free money
So you have some capital and you want to make it work. Below is a list of 17 working ways where you can invest your free money. All you have to do is adapt them to suit yourself and depending on the ratio of income and degree of risk.
1. Bank deposit
It makes sense to invest free money in a bank when you need to save up an emergency reserve just in case. In addition to time deposits, interest on contributions is quite cheap. Therefore, you should not count on good dividends even from a large amount. Anyone who decides to place savings in a bank account amounting to more than 1,400,000 rubles needs to divide it and put in different jars . To in case of default the state reimbursed the investment in full.
2. Securities
Shares are one of the most attractive, but also the riskiest options. As practice shows, it is better to entrust the management of securities to experienced professionals, although they cannot guarantee income. The peculiarity of this method is that there is no upper ceiling for profit or loss. In each case everything is individual. Of course, you can predict the main trend based on past experience, but this does not always work.
Read our review about how to avoid mistakes that 90% of novice investors make, and.
3. Real estate
It’s a fairly popular method to spend free money. After all, investing means getting the opportunity to quickly earn income and cover mortgage payments with it. However, it must be taken into account that if the apartment is not rented out for some reason, money must be paid from your own pocket. In the case when housing is purchased with your own capital, you will receive a stable profit with minimal risks. It is most profitable to rent out an apartment for offices and other commercial premises.
4. Binary options
With their help, every investor has the opportunity to make money on shares of popular companies, banks and corporations. The way options work is structured like this: either you get the maximum profit, or in case of failure, you completely lose it. The risks are high, but so are the rewards can reach 70%.
Making money on options depends on whether or not you guess whether the price of a stock will rise or fall at a certain time. You can buy them at different times, ranging from 1 minute to months.
Option investing is done through a broker and requires knowledge of the basics fundamental and technical analysis.
5. Microfinance organizations
7. Business
One of the most controversial investment options. On the one hand, with the right choice of niche, it can bring the greatest profit to its owner. On the other hand, you cannot hope for long-term income without constant contributions to the development of the project. An alternative solution is a franchise, but here you will face strict restrictions from the franchisor.
Read separate publication, and you will find out what other pitfalls await you in.
8. Precious metals
13. Own website
Creating a website is one of the most popular ways to invest savings and for this there are a number of reasons:
- small initial investment;
- efficiency of creation;
- you can start earning money right away;
- passive income in the future.
With all the advantages, it is worth considering that competition in this area is huge.
And before starting a project, you need to understand all the possible methods of monetization and promotion. Ideally, the investor should deal with these issues independently, then the income will be maximum.
14. Social networks
The topic of making money from public accounts on social networks does not lose its relevance. There are active discussions on the Internet about whether it is still possible to make money from your group or whether the train has already left. It is difficult to answer this question unambiguously. In any case, those who started a couple of years ago have clear advantage. In general, everything depends on the investor’s organizational abilities and experience in promoting projects.
In any case, doing social networks yourself, you won’t need a lot of money. If the circumstances are successful, you will receive a good income from selling advertising; if the experience is unsuccessful, nothing will prevent you from selling the unprofitable group.
15. Education
At the beginning of your career, it is very important to invest in gaining knowledge. New skills provide an opportunity to establish yourself as a competent specialist and earn more money for a comfortable life in the future.
16. Structured products
A stable way to invest your savings, which gained popularity at the height of the crisis and is still in use today. The idea is to divide your capital and invest the bulk of your investment (80%) in bonds and the remainder (20%) in futures and options. This combination allows the investor, if successful, to receive up to 40% profitability, and if unsuccessful, to remain with his funds.
Pay attention to the comparison table below (click on the image to enlarge it):
Based on it, we can conclude that structured products have the highest returns with relatively small investments.
Profits may be higher if we are talking about, but it is important to carefully monitor news and analytics.
17. PAMM accounts
Investing in PAMM accounts is a transfer of free money to a trader for temporary disposal with the aim of increasing it as a result of trading activities on Forex. The peculiarity of such investments is that deposits are protected from possible fraud on the part of the account holder. If you lose, losses are distributed among all account participants, including the manager, which is an additional motivation for successful trading.
Conclusion
As you can see, there are many worthy options where you can invest your free money. The threshold for entry into the listed alternatives is affordable, so you can try all the tools and determine the one that suits you with virtually no monetary losses. We, in turn, wish you not to be afraid to try new things, because this is the only way to gain experience and develop investment intuition.
The state's responsibilities for the final resolution of the conflict are established. The state is obliged to intervene at the request of the victim in all cases where he cannot obtain justice in any other way.
13. Any state body is a legal entity
He can be prosecuted and prosecuted.
The state has no right to have such a structure in which responsibility for its obligations as a whole cannot be attributed to its specific bodies
The article is directed against the well-known irresponsibility of government institutions. In addition, it implicitly assumes the existence of a body in charge of the actual constitution or structure of the state and carrying out the forcible redistribution of responsibilities between other state bodies.
14. The state does not have the right to conduct activities that do not involve the use of violence
Thus, the state is prohibited from any activity other than establishing order within the country and protecting it from external enemies. This article separates the state from the economy. It cannot print money, build roads and bridges, take care of culture, pay pensions, or help the poor. It is the renunciation of economic functions that makes the state capable of being an impartial arbiter in internal conflicts, that is, fulfilling its main tasks provided for in the previous articles of the section.
15. The state does not have the right to discriminate, establish benefits, rewards or punishments depending on gender, nationality, religion, place of residence, work, types of activity, income and other characteristics of legal entities and individuals
Thus, everyone in Russia is left with only one way to earn money - to serve another. Economic science claims that such rules of life contribute to the good functioning of the economy and the growth of the people's well-being. They also put an end to receiving money for connections and intrigues and contribute to the deep improvement of society. An official cannot be more kind at the expense of others and give out benefits, no matter how nice this or that business or the person carrying it out may seem to him.
The article establishes a regime of state neutrality. It does not divide activities into more or less useful; only the consumer gives them this assessment. It follows from the article that the state does not have the right to redistribute money from rich to poor. This position needs clarification.
Let's start with the fact that the most numerous recipients of government payments - old-age and disability pensioners - are not poor. Throughout their working careers, they paid money to the state, implying reciprocal obligations of the state to adequately provide for them in old age or in other cases of long-term disability. Thus, old age and disability pensioners are actually the holders of unregistered debt obligations from the state. This debt must be taken into account during the transition to a new state to the same extent as the country's external debts are taken into account. Retirees must receive a commitment in the form of monthly payments with constant purchasing power. These financial documents will be their private property, which they can do with as they please.
In addition to old age and disability, there are many other cases when a person is not able to take care of himself and earn his daily bread. However, as the practice of many countries shows, it is better when assistance is provided with their own money, rather than with state money, and, therefore, responsibly. Voluntary care in all such cases must be taken upon by the citizens themselves and their organizations.
Read the text and complete tasks 21-24.
It is believed that the state is better able than the market to coordinate the production of public goods - a small class of goods and services whose consumption is difficult to limit only to those who pay for them...
There are four main reasons why central planning will almost certainly do more harm than good.
First, it simply replaces the market with politics. Let us remember that the state is not an economic regulator. The central planners (and the legislators who control them) are not really selfless saints. Naturally, subsidies and investments allocated by planning authorities are influenced by political motives...
Second, there is every reason to believe that investors who risk their money will make better decisions than central planners who manage taxpayers' money. An investor, if he wants to make a profit, must invest money in a project that increases the value of the resources expended, and if he makes a mistake and the investment project turns out to be a failure, then he himself suffers from the consequences of this. In contrast, the relationship between the adoption of effective projects and the personal well-being of those who
engaged in central planning, very, very weak...
Third, central planners feed on inaccurate information. Since they are a source of investment funds, managers of both private and public enterprises will provide them with distorted information in order to receive government benefits. They will try to convince the planning authorities that their enterprise produces (or can produce) a type of goods or service that is extremely valuable to the entire population, and that if their enterprise were given some funds, they would do something extraordinary for the welfare of society...
Fourth, there is no way to obtain information sufficient to develop a reasonable government plan. We live in a world of dynamic change. Technological advances, new products, political unrest, changes in demand, and fluctuations in weather patterns constantly change the relative scarcity of resources and goods. No central authority is able to keep up with these changes and, therefore, is unable to give reasonable instructions to company managers at the local level.
Markets record and bring together information fragmented into millions of pieces, forming prices that become signals for enterprises and resource owners to carry out their actions in accordance with changed conditions. No central planning agency is able to obtain, and without distortion, this important but scattered information.
The incredible diversity of people's needs and desires, knowledge of the unique characteristics of time and location - all this lies beyond the control of any planning authority. These bodies operate with only a small portion of the necessary information, which largely becomes inaccurate by the time it is received.
(R. Stroup, J. Gwartney)
Explanation.
The correct answer must indicate the following reasons:
1) the market is replaced by politics;
2) central planning authorities have no interest in success and are not responsible for planning failures;
3) central planning bodies receive distorted information from persons interested in making certain decisions;
4) information becomes outdated so quickly that developing a reasonable plan or issuing any instructions adequate to the situation is impossible.
The reasons may be indicated in other, similar formulations.
Give three examples of public goods and explain why the government is more successful than the market in organizing their production (using social science knowledge, give two explanations).
Explanation.
1) examples of public goods:
Free education, healthcare services;
Law enforcement and security services;
(Other examples may be given.)
2) explanations, for example:
The state has large funds for their production, and the need to make a profit from their sale is not a circumstance limiting its activities;
The organization of production and provision of public goods is associated with the implementation of the socio-economic policy of the state and is regulated by the state based on political considerations that are of little relevance to the market.
Other explanations may be given
How are freedom and responsibility of economic entities related in market conditions? What economic and legal institutions provide the opportunity for free choice of economic entities? (Name any two institutions and briefly explain the role of each.)
Explanation.
The correct answer must contain the following elements:
1) answer to the first question:
Subjects make free economic choices, risking their own and borrowed capital, invested labor, and lost opportunities;
(The answer to the first question may be formulated differently.)
2) institutions and corresponding explanations, for example:
Financial institutions (invest funds in various projects, lend to economic entities, ensuring their economic activities);
The judicial system (provides legal resolution of economic conflicts between economic entities).
Other institutions may be indicated and other explanations may be given.
Explanation.
The correct answer should include the following elements:
1) Functions:
Information (“markets record and bring together information fragmented into millions of pieces”);
Pricing;
Coordinating / regulatory (provide “signals for enterprises and resource owners to carry out their actions in accordance with changed conditions”).
Functions can be given in other, similar in meaning formulations
2) an explanation of the concept is given, for example:
The market is a set of relations that develop between the consumer and the producer of economic goods regarding the purchase and sale of goods and services.
This statement made me think about the problem of investment efficiency. Its meaning, in my opinion, is as follows: investors who are able to independently choose the level of acceptable risk when investing money will act more efficiently than planning authorities, which are limited in their choice. A private owner will always be interested in the result, which is why he will be able to manage property in the most rational way.
Let us turn to such social science concepts as investment, property and economic system. Investment is an investment of capital in any enterprise or business with the aim of generating income. Both individual individuals and legal entities, that is, organizations and firms, can invest. Property is a certain form of appropriation of material goods and the relationships that arise in connection with this.
There are various classifications of property. Often different types of property are distinguished: corporate, individual, private, state, cooperative, and collective. Economic systems include the following: traditional, market, planned, mixed. One of the main conditions for the existence of a market system is the presence of private property. A market economy is characterized by free pricing and economic independence of the producer. In a planned economy, in turn, all the main issues are decided by the state. All enterprises in the country are state-owned; the state sets production volumes, assortment, and prices.
Let's turn to history. During the Soviet era, production was completely controlled by the state. The state plan was established for each “five-year plan”. It was impossible to accurately calculate the amount of goods that would satisfy the needs of all citizens, which often led to shortages.
In modern Russia there is a market economy and the market is able to regulate itself independently, with minimal government intervention. Such a market allows for a wide variety of goods and their high quality due to the existence of competition. Funds are distributed as efficiently as possible to meet the needs of the majority.
Thus, we can observe that investors who risk their own money will act much more efficiently in comparison with planners who are not always able to correctly answer the main questions of the economy: What to produce? How to produce? For whom to produce?
Updated: 2018-02-25
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