Internet earnings, in most cases, are associated with work on any specific projects (sites) with the subsequent withdrawal of earned money to payment systems. But there is a slightly different way to make money – investing in securities .
The stock market is one of the tools to effectively invest money. Many people are wary of this place, because they consider it too risky, and overlook the fact that any significant income is fraught with risk. You could even say that the greater the profit potential, the greater the risk. Investing money in bonds is considered less risky in the stock market, investing in stocks is more risky. However, in the Forex market, the risk of losing money even more. So what are the opportunities for investing in securities?
The most reliable and less risky are government bonds, for example, US Treasury bonds. The government uses such securities to raise capital for government spending. Such papers are considered more reliable, however, and the profit potential on them is rather small in contrast to less reliable corporate bonds. When investing in the latter, the economic condition of the country in which the company is located, the state of its business and the risk of default, that is, the failure of the company to pay its debts, should be carefully evaluated.
There are several ways to protect yourself from a default because companies issue different types of bonds. Mortgage bonds are secured by some property, for example, real estate, which in case of default must recover at least part of the investor’s losses. Convertible bonds can be easily exchanged for ordinary shares, which will also allow you to return the money spent, unless the company declares bankruptcy and leaves the stock exchange market . But the third type of bonds, debentures, represent only the honest promise of the company to pay off debts.
However, the reputation of many companies is such that honest words are enough. Depending on the security of the bonds and on the state of the company, the risk and yield on the bonds will vary. More prosperous companies can easily raise capital, so they don’t have to pay high interest rates. Less prosperous, declining or simply new enterprises pay a higher percentage for raising funds, but there is no great confidence in these companies.
As already mentioned, investing in securities also implies the possibility of investing money in stocks. In this case, the investor gives his money to the company, in return receives shares, a promise or an obligation to receive dividends (ordinary shares do not always pay dividends, unlike privileged ones). Having invested money in shares, a person becomes an investor and shareholder, that is, a co-owner of the company’s business. When overcoming a certain level of equity participation, a person is allowed into the election of the board of directors, thus participating in the management of the company.
In addition to dividend income, stockholders make a profit (or loss) from rising stock prices. It is because of the potential loss of cash due to changes in the market value of the shares, people are so afraid to invest in securities. And that is why such an aura of myths and fears has developed around the stock market. The reality is much simpler. A more prudent and far-sighted investor who invests in promising companies makes a profit. More gambling and emotional incurring losses. Thus, depending on the person and his approach, the stock market can become a business investor, or turn into a casino.
You can start investing in securities personally or transfer the money to the so-called trust management , in which other people who position themselves as specialists will manage your funds. Depending on the degree of their professionalism and reputation, they will receive one or another percentage for management. As in the situation with bonds, investing in young investment companies can be more profitable and riskier measures, unlike older, well-established companies. Personal management is also possible, although it requires a lot of work and time.
Nevertheless, the richest people on the planet have made their money themselves, investing in shares of various companies profitably and effectively.