Speaking in previous articles about how passive investing generally wins over active investing - and also mentioning that more than 80% of hedge funds lose to passive investors - I have not yet written in numbers what kind of investor return we are talking about. So in this article we will talk about investment income. Below is a table of profitability of American investors in the period 2004-2013 (i.e., taking into account the global crisis of 2008):
So, we see that passive investment in the American market (S&P500 index) has brought an average of 7.4% per annum over these years. Close to this result came shares of world companies, which gave an average of 6.9%. Bonds almost doubled during this period, yielding 4.6% per annum. And only then, with a noticeably lower result, is the investor's income - only 2.6%. Moreover, the most interesting thing is that according to the rating calculation method, this is not net profitability, but taking into account positions (equity) that were not closed at the time the statistics were collected. For example, it could be a purchased futures, the expiration of which came later than the statistics were collected.
If we take a fully fixed income, then it turns out to be at the level of 0.6% - i.e. such investment income inferior even to inflation! Moreover, according to statistics, not since 2004, but since 1993, the difference will increase even more - the shares of the American market gave an average of 8.2% over this period, and average income the investor was 2.3% (the return on gold was due to a sharp rise in 2001-2011 - however, in fact, gold is a commodity asset, not much different from, for example, wheat. According to Buffett, gold does not produce anything, although it still has its advantages) .
However, passively investing in the US market would yield results like the table below. Those. at detailed consideration it can be seen that the return on investment over a 10-year period over a distance of 80 years could range from -1.2% to 18.30%. Investment income for a 20-year period - respectively from 2.60% to 17.40% instead of the indicated 8.2% in the table above. To stabilize the results (no one wants to be at least a small loss after 10 years, adding to it losses from inflation) and the investment portfolio serves.
But why does the average investor lose about four times the market result (10.5% per annum)? I will try to highlight a number of reasons.
Such an investor (actually a speculator) is confident in his knowledge and believes that he will be able to predict, if not all, then the main ups and downs of the market or selected valuable papers. Maybe he trusts technical analysis, or maybe he actively follows stock news on the Internet or on TV. But the end result in most cases turns against the investor and in the long run consists of a ballast of spent commissions for operations and incorrect decisions taken. Which, as a rule, more than true. According to various studies ( Do Individual Day Traders Make Money? May 2004; The Cross Section of Speculator Skill Evidence from Day Trading, May 2011) no more than 15% of intraday traders make a profit per year - and almost none of those who were lucky could repeat the high profitability next year.
It is human nature to draw conclusions - and try to find a pattern where it is absent. In principle, any random data set can be described by some average curve, which will not reflect the further behavior of the asset. In addition, the investor usually attaches more importance to the data for the latest period. Extrapolating the continuation of growth, he risks quickly being in a drawdown; extrapolating the fall, it may miss a favorable moment for buying assets cheaply.
From psychology it is known that negative events have a stronger influence on a person than positive ones. According to some estimates, to compensate for the negative emotions from the fall of the market, you need twice as many positive ones. In fact, the average investor does not agree to tolerate a drawdown, especially a protracted one. Often this leads to a fear of investing in stocks and excessive conservatism; It helps to overcome this by understanding that the value of a share is ultimately determined not by the behavior of its quotes (random and volatile in a short period), but by the value and condition of the business that the share issuer conducts. The profitability and debt of the company, as well as the return on equity, are the fundamental factors that will lead the patient owner of the stock to the final result.
Although today you can find different methods for determining your tolerance for capital drawdowns, it is quite clear that this term is emotionally dependent and changes with changing market conditions. AT real life conservative investors with growth stock market can buy stocks just as quickly as aggressive stocks, and in a sharp fall, the most aggressive investors become surprisingly reasonable and cautious. Other factors that influence risk tolerance are gender and age—women and the elderly are more wary of their counterparts.
Below is the performance of various assets since the early 70s (dividends and coupons are reinvested, commissions are not taken into account):
The graph clearly shows that all the assets presented provided investment income above inflation, however, depending on the instrument, it fluctuated widely. So, from 1972 until the mid-1980s - the crisis period in the United States - commodity assets provided noticeably better returns, and since 2000 they have lagged behind American and world stocks. You can track the current movement of assets using the following table:
https://novelinvestor.com/asset-class-returns
It clearly shows that various instruments in different years turned out to be either at the top or at the bottom of the table. Real estate performed best on average, with the S&P500 roughly in the midline. During the crisis years - the early 2000s with the fall of dot-coms and 2008 - bonds that were located at the bottom of the table in a growing market (along with cash) felt very good.
Taking the average return on investments across all instruments (including reinvestment of dividends and excluding commission fees), at the time of writing, we are getting about 6.72% per year, which is almost equal to the average return on global stocks from 2004 to 2013. Excluding cash, the average value for eight instruments will already be 7.38%.
With favorable economic situation, using high-yield bonds and low asset correlation can theoretically get another 1-2% higher. Compare this with the recorded result of 0.6% per year… of course, you need to take into account that in some years (for example, 2002 and 2008) the portfolio can sink quite strongly.
What to do in this case? The answer is simple: rebalance. But if a drawdown of about 40% is uncomfortable for you, then this should be taken into account at the stage of portfolio formation: the table shows that HG Bond has not sagged by more than 2% over the years. But in terms of yield, among other instruments, HG Bond was often at the bottom of the table, confirming the rule: less risk - less profitability. So in this case, get ready for a more modest end result.
When choosing funds in the paragraph above, it is important to take into account one circumstance that affects the return on investment - commissions, which for ETFs can vary from 0.05 to 1%. At first glance, the difference is insignificant, but let's look at a long distance of 30 years. With an average return of about 8% per year, an initial amount of $ 10,000 per year and regular replenishment (by $ 5,000 per year, and this number increases annually by 5%, compensating for inflation) with a commission of 0.25% in 30 years, it will be possible to count on $533,000; with commissions of 0.9% - only for 439,000, i.е. nearly $100,000 less (ten times the amount originally deposited).
The costs are noticeable even in shorter periods. The investment return of all types of US stock and bond funds over 10 years (if we take the period 2003-2013) will be determined not by their composition, but by commissions - low-cost funds in all cases will give a return of about 1-2% per annum higher than their counterparts. Those. the results relate both to the size of the company (large, medium and small firms) and their types (growth, value, mixed type). The same is true for bonds - you can consider high-yield, short-term and medium-term bonds, as well as corporate and government bonds.
Separately, it is worth mentioning the leaders of the industry. Often, an investor, both during the initial compilation of a portfolio and in the process of investing, has a desire to invest in funds that have recently shown the maximum yield, which sometimes jumps up to 20-30% per annum and even higher. These can range from passive funds in a very favorable market situation to active mutual funds. However, researchers since Sharpe (1966) and Jensen (1968) have seen very little evidence that past returns can have any bearing on future returns.
For example, Carhart (1997) announced that there was no evidence of persistent high fund returns after adjusting for Fama's and French's common risk factors. In 2010, a 22-year study showed that it is very difficult for an actively managed fund to consistently outperform a passive index fund. As an example, Manager William Miller's Legg Mason Value Trust has outperformed the S&P 500 stock index for fifteen(!) years in a row, until it lost all the advantage accumulated over the index in three short years.
Such managers are sometimes jokingly or sarcastically called "lucky monkeys", alluding to the famous experiment with the monkey Lukeria, who chose the dart throwers. Consequently, when investing, it is not recommended for an investor to focus on the current high profitability of funds (rather, on the contrary, it is more appropriate to avoid investing in them). Below is a chart from D. Bogle's book The Smart Investor's Guide:
Finally, periodic replenishment of the balance is very important, which can be done, for example, along with rebalancing. Studies have shown that an income level of $10,000 with an annual return of 8% and an increase in the amount of replenishment by 5% per year can achieve almost the same result as an investment level of 4% with an annual increase in the amount of replenishment by 10%:
A competent portfolio approach allows you to increase the yield from 0.6% to an average of 10% per year, i.e. about 15 times. On the plus side, we get passive investment, in which the portfolio needs to be touched only once a year to restore the original balance or minor changes in composition. The downside is the likelihood of a strong drawdown in certain periods, and therefore, it is necessary to proceed from the freezing of invested funds, which make sense to withdraw only in a growing market. However, such an opportunity is only available when investing through a foreign broker - in programs investment insurance the freezing was taken care of by the company itself.
An alternative could be fundamental analysis individual issuers (shares) and investing in them - with many years of experience, you can thus receive income slightly higher than the market. Not much, but it takes a lot of time for analysis and subsequent tracking of the issuer. As a result, even consultants who are well versed in such a tool usually create passive portfolios for their clients, which are much easier to manage.
Investing in various assets is one of the most popular types of earnings. However, it requires enough high level financial literacy. For successful investment, it is necessary not only to make the right investment decisions, but also to be able to evaluate the results of investing. This will allow you to make a qualitative analysis and, if necessary, make timely changes to it. This approach to investment activity increase its efficiency, and hence the income of the investor. The main indicator of any investment is the return on investment. What it is and how to calculate it will be discussed in this article.
Return on investment is an indicator that reflects the degree of increase in the investor's invested funds over a certain time period. It can be expressed in currency and as a percentage. In this regard, there are two types of investment income: interest and value.
Interest income is interest accrued on funds invested in deposits, bonds, shares (dividends).
Return on value is the increase in the value of an asset in which an investor has invested their money.
I want to note that some assets combine both types of returns. For example, company shares. can receive dividends and earn on the growth in the value of securities.
There are several formulas that can be used to evaluate the effectiveness of an investment. We will consider the most important among them.
The basic yield formula looks like this:
D \u003d (P / SV) x 100%
The profit received from investments (P) is divided by the total amount of funds invested in the asset (CB) and multiplied by 100 percent. If instead of profit there was a loss, then, accordingly, the indicator will have a negative value. However, this formula has a significant drawback. It does not take into account such a parameter as time. If, suppose, the yield was 28%, then it is difficult to evaluate it without taking into account time. If it is obtained in a year, then this is a very good result, and if it is obtained in several years, then the indicator is very low.
In order to take into account the time factor, you need to use a different formula. It defines the return on investment as a percentage per annum. This formula looks like this:
D \u003d (P / SV) x (365 / KD) x 100%
It differs from the previous formula in that we multiply the resulting yield by a time factor. It is determined by dividing the total number of days in a year (365) by the number of days the asset is held. Calculation of yield as a percentage per annum allows you to compare the effectiveness of investments in assets that have different holding times.
For long-term investments, it will be useful to calculate their average annual return. This is done according to the formula: 
JV is the amount of funds received from the sale of assets;
DV is the cash payments that the investor received during the investment period;
SW - total amount investments;
n is the number of years of holding assets.
In order to choose the most promising among the huge number of investment options on the Internet, investors need universal evaluation criteria. The most obvious one is profitability, a measure of the increase or decrease in the amount of investment over time.
Profitability is measured as a percentage and shows the ratio of profit from to the amount of money invested. It shows not how much specifically the investor has earned, but the effectiveness of investments. When analyzing investment options, investors look at profitability in the first place, often forgetting about possible ones.
I would not write a long article if one formula worked for all cases - there are enough pitfalls when calculating profitability in different cases. In principle, you can not bother and use it for these purposes, but it is still desirable to understand the essence of the issue.
The article talks about common situations related to the return on investment. There will be a lot of 8th grade math, so get ready ;) Happy reading! Content:
The basic formula for return on investment looks like this:
Investment amount is the initial investment amount plus additional investments (“topping up”). Investment profit may consist of the difference between the purchase and sale price of an asset or the net profit of an investment project. It may also include regular payments for (for example, stock dividends).
If the profit is unknown, but you know initial investment amount and current balance(the amounts of buying and selling an asset are also suitable) - use this formula:
Return on investment measured as a percentage and can serve as a reliable benchmark for comparing the two investment projects. The following example looks very illustrative:
Project A - $1,000 profit per year with an initial investment of $5,000. Yield — 1000$/5000$ = 20%
Project B - $1000 profit per year with an initial investment of $2000. Yield — 1000$/2000$ = 50%
Obviously, project B is more profitable, since it gives more high return on investment, although net profit investor is the same - $ 1,000. If you increase the amount of investment in project B to $5,000, with a yield of 50% per year, the investor will already earn $2,500.
That is, the profitability clearly shows in which project, other things being equal, the investor will earn more. Therefore, an investor with a limited investment portfolio tries to pick up assets with a higher yield.
In practice, there are often situations when investments work many periods in a row- simple interest (profit is withdrawn after each period) or compound interest (profit) begin to work.
A task that is more relevant for active web investors is that they can shuffle their investment portfolio even more than once a week.
For starters, what is inputs and conclusions? This is any change to the initial investment capital that is not related to profit or loss. The simplest example is the monthly replenishment of the investment account from the salary.
Each time you deposit or withdraw funds, the denominator of our yield formula changes - the amount of investments. To calculate the exact return on investments, you need to know the weighted average size of investments, calculate the return on investment, taking into account inputs / outputs, and thus calculate the return. Let's start with profit, the formula will be:
All transactions on investment accounts are usually recorded in a special section like "Payment History" or "Transfer History".
How to find out weighted average investment? You need to break the entire investment period into parts, divided by input and output operations. And use the formula:
The Word does not really want to obey and the formula turned out to be clumsy in appearance. Let me explain it on my fingers - we consider the “working” amount of investments in each of the periods between input and output operations and multiply it by the length of the period (in days / weeks / months) that this amount has worked. After that, add everything up and divide by the total length of the period that interests you.
Let's now see how it works with an example:
The investor has invested $1000 in an investment vehicle. After 4 months, the investor decided to add another $300. After another 6 months, the investor needed money, he withdrew $200. At the end of the year, the investment account reached $1,500. What is the profitability of the investment instrument?
Step 1 - calculate the received investment profit:
Profit = ($1500 + $200) - ($1000 + $300) = $400
Step 2 - calculate the weighted average size of investments:
Investment amount = (4*1000$ + 6*(1000$+300$) + 2*(1000$+300$-200$))/12 = (4000$+7800$+2200$)/12 = 1166.67$
Step 3 - calculate the profitability:
Yield = (400$/1166.67$) * 100% = 0.3429 * 100% = 34.29%
And not 50% if we ignored deposits and withdrawals - ($1500 -$1000)/$1000 * 100% = 50%.
Since the yield of many investment instruments is constantly changing, it is convenient to use some average indicator. allows you to bring fluctuations in profitability to one small number, which is convenient to use for further analysis and comparison with other investment options.
There are two ways to calculate the average return. The first one - by formula compound interest , where we have the amount of the initial investment, the profit received during this time, and we also know the number of investment periods:
The initial investment amount is $5,000. The yield for 12 months was 30% (immediately in the mind we transfer $ 5000 * 30% = $ 1500). What is the average monthly profitability of the project?
Substitute in the formula:
Average Return = (((6500/5000)^1/12) - 1) * 100% = ((1.3^1/12) - 1) * 100% = (1.0221 - 1) * 100% = 0.0221 * 100% = 2.21%
The second method is closer to reality - there are returns for several identical periods, you need to calculate the average. Formula:
The project in the first quarter brought a 10% yield, in the second 20%, in the third -5%, in the fourth 15%. Find out the average profit per quarter.
We substitute:
Average return = (((10%+1)*(20%+1)*(-5%+1)*(15%+1))^(1/4) - 1) * 100% = ((1.1 *1.2*0.95*1.15)^(1/4) - 1) * 100% = (1.0958 - 1) * 100% = 0.0958 * 100% = 9.58%
One of the special cases of calculating the average return is the definition percent per annum, which we encounter at every step in the form of advertisements for bank deposits. Knowing the return on investment for a certain period, we can calculate the annual return using the following formula:
The investor invested $20,000 and earned $2,700 profit in 5 months (round up to 150 days). How much is this in percentage per annum? We substitute:
Yield = ($2700/$20000 * 365/150) * 100% = (0.135 * 2.4333) * 100% = 0.3285 * 100% = 32.85% per annum
The higher the yield, the better, it seems to be obvious. This rule would work well for risk-free assets, but those just don't exist. There is always the possibility of losing part or all of the investment - such is their nature.
Higher returns are much more often achieved through additional increase in risks than due to the higher quality of the instrument itself. This is confirmed by real data - when I conducted Alpari companies, I found a strong relationship between the risk indicator SKO(standard deviation) and return per year:
The x-axis is the return for the year, the y-axis is the standard deviation. The trend line shows that the higher the annual return, the higher the risks of the PAMM account in the form of a TSE indicator.
Yield chart is an indispensable tool for analyzing investment options. It allows you to look not only at the overall result of investments, but also evaluate what is happening in the interval between the events “investing money” and “withdrawing profits”.
There are several types of yield charts. Most often found cumulative yield chart- it shows how much the initial deposit would grow in %, based on returns over several time periods or by results of individual transactions.
This is what the cumulative yield curve looks like:
solandr
It can be used to understand several important things - for example, whether profits grow evenly (the smoother the chart, the better), how big drawdowns (that is, unfixed losses in the investment process) an investor can expect, etc.
I wrote in great detail about the analysis of yield charts in an article about.
Also often used yield charts by week or month:
Chart of the net return of the Stability Dual Turbo PAMM account investor by months
The columns speak for themselves - March was successful, but for the last three months there was no profit at all. If you look only at this chart and do not take into account the older Stability accounts, then you can conclude that the trading system failed and stopped making a profit. A smart strategy in this case would be to withdraw money and wait until the situation returns to normal.
In general, yield charts and PAMM accounts are a separate interesting story.
Let's start with the most obvious - PAMM account profitability charts for all brokers do not correspond to the real profitability of the investor! What we see is the profitability of the PAMM account, that is, the entire amount of investments, including manager's money, and management fee.
When we see numbers like this:
600% in a year and a half, the hand immediately reaches for the "Invest" button, right! However, if we take into account the 29% commission of the manager, then the real return will be as follows:
2 times less! I do not argue, 300% in a year and a half also look great, but it is far from 600%.
Well, if you delve into the essence, then the profitability of a PAMM account is calculated as follows:
As a result, we get a very confused formula, which is necessary for high accuracy of calculations. What should you do if you need to calculate the net return of a PAMM account investor? I suggest using the following algorithm:
All you need is to multiply the official PAMM account profitability figures by one minus the manager's commission. And not the final result, but the data from the PAMM-account chart (they can be downloaded in Alpari in a convenient form) and calculated using the profitability formula for several periods.
For clarity, look at the same yield graph, calculated in three ways:
The difference with and without the manager's commission is almost 2 times! According to the simplified algorithm, we got a result of 92%, according to the exact one - 89%. The difference is not significant, but for thousands of percent it will become quite noticeable:
The green circles show the moments when the manager's remuneration is paid, the red circles show the reduction of your shares in the PAMM account. What is a share? It's yours share in PAMM account, your piece of the total profit pie.
For understanding, such a comparison is suitable - shares are a certain number of shares in a PAMM account. For these shares, you receive dividends - a percentage of the company's profits. The number of shares decreases - dividends decrease, respectively, and the return on investment.
Why are shares decreasing? The fact is that initially you get a profit on the entire amount of your investment - as you should. The time comes for the payment of the manager's commission - and it is taken from your amount, your "piece of the pie." The piece became smaller with all the consequences.
What I showed you is not bad, it's how it is. This is how PAMM accounts work, and whether to invest or not, the choice is always yours.
Friends, I understand that the article is quite complicated, so if you have any questions - ask them in the comments, I will try to answer. And do not forget to share the article on social networks, this is the best gratitude to the author:
And finally, a wish: invest in really profitable projects!
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Elena Pazina
Updated: 2019.07.08
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One indicator of a country's economic health is the well-being of the middle class. It is its representatives who provide the lion's share of income from the sale of cars, real estate, and retail. Over the past thirty years, the middle class has been actively forming in our country as well. World practice shows that additional sources of income, including investment income, are very popular among its representatives. Citizens become rentiers, open bank deposits, invest in securities. The editors have collected information about the methods passive income, structure, features.
Investment Characteristics
Among domestic economists, as it turned out, there is no agreement on a clear definition of the concept of "investment". Most often, the word "investment" is used when it comes to a long-term investment of money in order to make a profit in a few years or have an annual income for a long time.
Accordingly, investment income is profit received with the help of funds withdrawn from their current turnover, invested in any direction in order to obtain additional income.
Source examples passive income quotes Gleb Zadoya:
There are three types of investments that can make a profit:
Investment classification
The return on investment is called total investment income.
Its structure consists of two components:
When planning investments, one must remember that not only profits are possible, but also losses. This applies not only to a decrease in the amount of dividends, the absence of interest payments, but also to a decrease in the value of invested funds.
For example, 1000 shares were bought for 100 rubles. The invested capital amounted to 100,000 rubles. In two years, the value of the securities fell to 90,000 rubles. This means that the investor, despite the payment of dividends, suffered losses.
Gleb Zadoya briefly compared the types of investment in his video:
The income from investing money must exceed the rate of inflation, only in this case the investment is profitable.
There are three main classifications of types of investment income. The first is based on the types of investments made, the second - on the duration of the investment, the third - on the regularity of payments.
Classification by type of attachments:
1. Real investments bring profit in the form of:
2. Financial investments allow you to earn on:
3. Intangible investments pay off thanks to:
When investing in development innovative industries profit can be in the form intangible assets such as access to free use of technology and so on.
Profit from investing money can be obtained:
According to the multiplicity and type of payments, investment income consists of:
Knowing the various ways to make a profit from investing money, the investor selects the option that is most suitable for himself.
Someone prefers to develop production in order to get a stable working business that brings dividends in 5-10 years. And someone - to speculate in the market Forex, receiving monthly payments.
When choosing an option for investing money, it is worth considering not only the available volume free funds, but also the personal characteristics of the future investor.
The maximum profit from investing money is associated with a huge risk of loss. The more reliable the investment, the lower the profit.
So interest rate on ruble bank deposits 7-9% per annum, but the amount up to 1,400,000 is protected by state insurance. Payments in mutual funds reach up to 30%, but there is a risk of losing investments.
Property tax
Investment income is taxed at the standard rate for personal income tax - 13%, but there are small nuances.
Taxation scheme for investments in real estate:
Tax on investment in securities
Tax deduction
For investments in securities:
For owners of individual investment accounts, there is an opportunity to receive a 13 percent tax deduction:
Benefits for investors
For investors investing in the development of production, the creation of new technologies, state and regional preferential programs are provided.
Here is an example tax incentives for investors in the Novosibirsk region:
The declaration is submitted annually by April 30 to the regional inspection at the place of registration. The video will help you deal with common issues of budget payments:
Refine tax rates, features of filling, it is necessary from the inspectors. The fact is that in the inspections of different cities and regions of the Russian Federation, the points of view on paying taxes differ, much is regulated by internal instructions.
Regardless of the amount of money invested, you can always choose a tool that guarantees a stable investment income. The main thing is to study the issue and pay taxes on time.
Analysts of CB "Renaissance Credit" compared the profitability of the main investment instruments, which are most often used by Russians, for the period from 2011 to 2015. As a result, the absolute leader was dollar bank deposits. Their cumulative return for five years, expressed in rubles, amounted to 209%. This indicator is due to the large-scale depreciation of the ruble that occurred in 2014-2015. According to the authors of the study, the success of using dollar deposits depends, first of all, on the ability of an investor to predict the dynamics exchange rate and his willingness to invest in the long term.
Ruble bank deposits would have made it possible to earn about 4 times less over the past five years - about 49.5%. However, compared to dollar deposits this instrument has a more stable profitability. The authors of the study believe that it is also the most accessible and safest asset, since it does not require large investments and is insured by the state for 1.4 million rubles. There is also a tool that combines the best characteristics of both types of deposits - a multi-currency basket of deposits, experts say. Based on the results of five years, this investment strategy would make it possible to earn at least 129%.
Relatively high returns gold, despite the fact that after the end of the global financial crisis of 2008-2009, prices for this metal are gradually declining. In 2012-2013, investments in gold would only bring losses, but already in 2014, the precious metal confirmed its status as a defensive asset on the Russian financial market. As a result, its profitability for 5 years was 86%. Analysts warn that the success of investing in gold, as in the case of foreign currency deposits, depends on the ability to predict the future dynamics of the markets and the willingness to invest for a long time.
Real estate in five years would bring the investor 73%. With the exception of 2015, when investments in this asset were unprofitable, real estate showed a relatively stable increase in profitability. Experts believe that the main disadvantages of this investment strategy are high requirements for initial capital and low return on investment in the apartment.
mutual funds turned out to be the least stable instrument in terms of profitability. In 2014, this asset was unprofitable, but already in 2015 it turned into a plus, allowing investors to earn 23.8%. Nevertheless, according to the results of five years, mutual funds would have brought the lowest income compared to other instruments - about 14%. Experts note that the study considered the simplest strategy for investing in mutual funds, involving investments in funds that have shown the highest return in the past. By choosing a more complex strategy, the investor could earn more, but this requires special skills and knowledge, as well as an understanding of the situation in the stock market.
Sergey Suverov, head of the analytical department of Russian Standard Management Company, believes that this year one should not hope for high returns on bank deposits. “The ruble strengthening trend and low deposit rates are unlikely to make good money on dollar deposits, and ruble deposits will not be able to show a decent return due to high inflation,” the analyst says.
According to Suverov, a real alternative bank deposits in 2016 may become individual investment accounts(IIS), OFZ and mutual funds of shares. “IIS is a long-term instrument, which, moreover, can be used to receive a tax deduction. Money from this account can be invested in stock market instruments and debt securities - for example, in the same OFZ. By the way, you should pay attention to government bonds, because in the long term the Central Bank will reduce the key rate. Equity mutual funds are interesting because the securities market will grow as oil prices recover,” commented Suverov.
Alfa Capital Analyst Andrey Shenk believes that the main competitors of deposits in the next few years are debt instruments, which will grow in price as inflation slows down and the Central Bank rate decreases. “The yields of many OFZ issues are already at the level of 9.2-9.3%. Taking into account that now there is a tendency for inflation to slow down and the market expects a reduction in the key rate of the Central Bank, these issues will still be revalued. Demand for government bonds will grow. Corporate bonds of the first echelon are also very interesting. The yield of some securities from this segment of the debt market is already higher than the rates on deposits, ”said the financier.
