The familiar method does not mean the best method. Your money is slowly losing its value: inflation – the depreciation of money – is to blame. We can trace this process through the general increase in prices. For example, last year you bought chicken, vegetables, washing powder and candy for 800 rubles. This year the same basket costs 840 rubles. Your 800 rubles have become less valuable: you can buy fewer goods with this amount.

If money is lying idle, it depreciates every year by 4-6% for moderate inflation, and from 10% to 100% for high inflation.

Not really. Deposits in most cases only protect against inflation. The average deposit rate at the end of January 2020 fell to 5.76% per annum – and that’s a record for the last ten years. Annual inflation in 2019 was at 4%. It turns out that in reality your savings on deposit have only increased by 2%.

If you put money into a time deposit, which usually has higher interest rates, you won’t be able to withdraw the money until the end of the investment period without losing interest. And you can sell liquid stocks and bonds at any convenient moment.

There are always risks. But following this logic, you cannot buy anything of value and make a financial plan either – everything will be devalued or taken away.

After a default is declared, the national currency drops. In 2008 Iceland was on the verge of default. The Icelandic krona fell by 30% against the euro, and inflation rose to 12.6%. A sharp decline in the exchange rate leads to the collapse of banks, which affects the savings of citizens. If the situation turns out to be quite critical, the government may ban cash withdrawals. So the default affects the whole economy of the country, not only the stock market.

To protect your investments, diversify your portfolio. Invest in securities from different countries and industries. Shares of American companies from the S&P 500 list (an index that shows the dynamics of the US market) – for example, Apple, Google, Walt Disney, Facebook – can be bought on the St. Petersburg Exchange.

Don’t compare, because… A car is not an investment: it won’t bring you money in the future, and you won’t be able to sell it for more in a few years either. A car loses 10 to 50% of its value in 3 years of use. Maybe you will save your time, but you will spend money on maintenance and gasoline.

If you rent an apartment – it can be called an investment. But the threshold of entry here is much higher: real estate costs millions. At the same time, you will receive the same income per year as on a deposit. A one-bedroom in Moscow for 5-6 million roubles will pay for itself in 15 years, and the yield will be 4-6% per annum.

This is not true. A good start for the first investment is 30-50 thousand roubles. The return on investment will be tangible, and mistakes will not seem fatal.

On the Moscow Exchange, shares in some companies can be bought literally for pennies. For example, a share of Territorial Generating Company No. 1 (TGKA) costs Br0.016. A share of the FXIT ETF fund, which invests in the U.S. IT sector, will cost you 6,267 rubles – and you will immediately distribute your money on 90 securities.

69% of Russians agree with you and don’t even make savings. But if you spend every paycheck completely, you will not be able to afford greater pleasures and a higher standard of living. A round-the-world trip, an MBA at Oxford, a decent pension – all this will remain just dreams.

In 2019, Sberbank paid its shareholders 361 billion rubles in dividends: that’s 16 rubles per share. Given the company’s goal of increasing payments to 50% of net profit, the size of dividends should not decrease.

Let’s assume that in 2020, Sberbank’s dividend yield (the ratio of dividends paid to the value of securities) will be at the same level as in 2019 – 6.8%. For 50,000 we buy 200 shares at 250 rubles. In the end, 50,000 rubles will bring us 3,400 in dividends. You can buy the shares until the record date, when the shareholders entitled to payment are determined.

Rather undervalued. The average dividend yield of Russian stocks in 2019 is about 7%. This is higher than the US market: the dividend yield of companies from the S&P 500 list in January 2020 was 1.81%. So an investor who wants dividend income will be interested in the Russian stock market.

This is partly why the Russian stock market grew faster than other emerging markets in 2019. The MosBirch index rose 28.5% and the RTS rose 44.9%, indicating a favorable market condition and a high chance for an investor to make money.

If you don’t believe in the Russian market, you can trade on foreign exchanges. Or buy an ETF, whose assets include securities of foreign issuers. For example, the FXUS fund invests in shares of American companies.

So, what’s really true:
If you keep your money at home, it will depreciate in value.
In most cases, the interest rate only covers inflation.
If you properly diversify your portfolio – you can not be afraid of default or crisis.
Buying expensive things cannot be an investment. An investment is an investment of money with the purpose of making a profit.
30-50 thousand rubles is a good starting capital for the first investment.
If you do not make savings and do not invest, it is unlikely to achieve big financial goals.
If you do not believe in the Russian market, you can invest in the economies of other countries.