Pandemics, viruses and lockdowns make us actively search for profitable investment ideas. What is the best way to do it, so as not to make a wrong choice and invest money with maximum benefit? At the preparatory stage, it is best to study the ratings of investment ideas, read the recommendations of financial experts and analysts, learn about the current situation in the stock markets.
We present a rating, which includes only actual and the most profitable ideas for investment. As a result of the review preparation dozens of sources were studied so that investors could get only actual information about where today rating investment companies and opinion leaders of the financial market recommend to invest money.
Selection of variants was made taking into account the level of expected profitability and analysis of practical experience of domestic and foreign financial experts.
Investment idea #1. Securities of local companies and enterprises
Local companies can provide a regular passive income, if you invest into their shares. Certainly, this idea cannot be called innovative, however, there is no need to argue with its high level of profitability.
Investments in large enterprises and corporations
According to statistics, investing in the shares of companies in your country can guarantee an average of 15-25% per annum. If an investor bets on securities of the major players, the annual increase in profit percentage can be about 5% additionally.
Investing in perspective companies
Purchase of shares of new, but objectively prospective companies, which demonstrate rapid development, can be called a high-risk, but quite profitable investment idea. Quite often, faith in a new project can bring an investor up to 500% of the start-up capital. However, this option is not a pattern and requires a careful study of the object of investment. Considering young companies as ideas for investment, it is necessary to weigh the prospects and risks ahead.
Investing in enterprises and business projects, the investor must answer the question: is he ready to risk the capital for the sake of high returns, or would it be preferable to invest in steadily developing organizations with a good, long-standing reputation, but in the end to get less.
For example, last year indicated a number of areas of the economy with good prospects for growth and development. Namely:
- Internet technology;
- health care;
- gas and oil industry;
- computer games (virtual reality);
- mediation and billing (automatic billing system);
- metal mining and processing;
In other words, the shares of companies that operate in these areas can become profitable for their owners.
Analysis of statistical indicators shows that a lower percentage of profit is guaranteed, for example, by companies whose activities are related to such areas as:
- Finance and Retailing.
However, this is mostly true of small private banks and financial companies. As for the large representatives of the industry (public and private large credit and financial institutions), they show a fairly stable level of performance.
As the pandemic situation has shown, a large bank, especially if its financial stability is ensured by the state, is more resistant to any crisis shocks.
The implementation of such investment ideas, i.e. investing in shares of large banking organizations almost always provide the investor with a high level of profit (Sberbank, for example). However, it is worth understanding that this investment will only be profitable over the long term.
The depreciation of the national currency does not have a significant impact on the activities of enterprises in these spheres of business and production and companies demonstrate stability, providing a good income to their investors.
As a rule, this is due to the fact that this category of companies finds support from profits in foreign currency, making them desirable objects for investment. Especially if the investor is lucky enough to buy shares of companies in these industries at bargain prices. In the future, the implementation of such an investment idea will guarantee a good passive income.
Investment idea #2. Securities of foreign companies and enterprises
Following the saying "The grass is always greener on the other side of the fence", many people consider the foreign market as a profitable object for investment. Let's see how profitable the idea of investing in the shares of foreign companies is and what an investor should pay attention to in order to get the maximum return on his investment.
Advantages for the investor who takes a swing at foreign companies:
- breadth of choice
Developed and developing countries in the West and East boast a wide range of companies that are worth considering as an investment tool.
In developed countries the rights of investors are legally protected by the state. This significantly reduces the risk of encountering financial fraudsters and provides favorable conditions and transparency of investment procedures.
In contrast to post-Soviet countries, in the West, most companies have experience of tens of years, which is proof of stability, increasing the loyalty and trust of investors.
At the same time, modern conditions allow speaking about the benefits of investing in relatively young companies which have managed to demonstrate a high rate of development, to prove themselves on the best side by the level of profit, showing a large market capitalization. Namely, large technology companies:
- Google ( and its owner Alphabet);
- Axon Enterprises (law enforcement and self-defense products);
- Apple, etc.
These companies promise investors an average rate of return of 14-21% per annum. The main thing is not to invest in the cheapest stocks and watch the news, follow the demand and trends.
As in our country, some foreign (even large) companies suffered during the crisis, then a number of corporations have significantly increased their capital (eg, Amazon and other smaller Internet stores, as well as companies in the field of delivery, online video conferencing services, etc.), and thus increased the profits of their investors.
By the way, if you are a risky investor, the current situation is conducive to buying shares of large foreign corporations. The price of securities of most companies, which were showing high profits back in 2019, has sagged significantly due to the pandemic. It is possible that such companies need more time to regain their previous positions, to build up the "weight" of their shares. It is possible that in this way, in the long run, an investor could secure a passive return of up to 30% of annual income. In any case, this is a risk and each object of investment should be carefully studied individually in order to extract the maximum allowable income from the invested capital.
Memo to the investor: rules of purchase of shares of foreign companies
Investing in securities of foreign companies requires knowledge of a number of special rules and understanding of special requirements.
In case of direct purchase of shares the investor will have to face bureaucratic difficulties.
Access to foreign profitable shares is possible after the following steps:
- registration of an account as a VIP client in a domestic (foreign) banking organization.
This is an important point, because for the premium clients the doors are open to access foreign securities markets through their partners (foreign subsidiaries).
- liaising with foreign insurance funds
As a rule, such funds are intermediaries and act as brokers. Cooperation with foreign assets in this way allows the investor to obtain special privileges. For example:
- qualitative protection of deposits;
- to pay a lower commission for the intermediary's services (i.e. insurance company);
- to work in absolute anonymity;
- provide documentary evidence of the fact of capital inheritance.
Types of investments with participation of insurance companies:
- an investing one
Such investment supposes single payment of large initial sums for the period from 10 years and more.
The contribution is divided into several parts and is made in regular installments.
It should be noted that such an investment idea as working with insurance funds requires a serious investment, where the initial payment will be higher than when choosing many other investment options.
Investment idea #3. Investments in the field of energy and commodities
Companies and products
The field of petroleum products, minerals, and refined products is a popular and effective investment idea. The value of such products is tied to the U.S. dollar, which suggests possible regular price fluctuations.
Investing in companies that are engaged in mining or processing, as well as in the goods themselves of this group, will suit the investor who owns significant financial assets. This condition is dictated by the value of one contract in this category, which is usually fixed at the level of 50,000 dollars.
Oil quotes are also suitable for investment. This is the best option for a broader category of investors who have different amounts of starting capital.
Investments in precious metals, such as gold, are considered low-risk. Gold, silver, platinum, etc. - are protected assets that are not significantly affected by various crises (economic, political, etc.).
At the same time, these types of investment ideas do not promise high profits. Investments in precious metals are always relevant and long-term investments and are the best option for investors who are not interested in increasing but rather preserving their own capital during any external fluctuations.
Memo to investors: peculiarities of investing in gold
In practice, investing in gold involves several options for the interested investor. For example:
- the purchase of investment/memorabilia coins;
- the purchase of gold bullion in banks,
- a non-cash gold metal balances opening.
Of the proposed options, investment in coins (medium-sized) guarantee the highest level of profit, because their possible future realization will not be taxed.
Investment Idea #4. Investment portfolios and strategies
Risk diversification or financial investments in several objects at the same time is a guarantee of a stable, balanced income for an investor. Such investment ideas allow us to significantly reduce risks. In parallel, the investor gets the opportunity to form the type of investment portfolio that is of interest to him at the moment. For example:
When selecting any type of investment portfolio, the following algorithm of actions is required:
- formation of portfolio structure;
- calculation of risks;
- search of companies that will become a source of profitability in each of the designated sectors.
In practice the second option can be called the most stable investment portfolio (they are mainly created to keep investor's capital as safe as possible). This is the safest platform for money, and capital can be stored like pension savings.
Memo to the investor: about the number of stocks in a portfolio and the specifics of their allocation
In fact, investors may include several hundred securities in their investment portfolio. However, according to domestic and foreign experts in the field of investments, it is advantageous to include in the investment portfolio an average of 10-15 shares, maximum 40 units.
Experienced investors explain it by the fact that it is safer for the capital to buy less reliable assets, reducing the number of unstable shares with high risks.
The basic rules of stock allocation in an investment portfolio
- diversify, i.e. investments should be made in opposite areas/products/instruments/markets;
- at least 65-75% of the shares purchased must be low-risk, i.e., they must belong to promising companies. This will allow the investor to protect their capital by providing a high level of stability;
- the rest, about 15% of the portfolio component, should be mid-price stocks of companies that promise fast growth;
- 5-10% of the stock is better to buy from companies with low value but high prospects. In the most favorable scenario, these are the stocks that can generate significant profits.
Financial market experts recommend allocating about 75-80% of your portfolio to securities and 25-20% to growth stocks.
The higher a company's value, the more reliable its stock is. As for young companies, forecasts on them can work perfectly well and the investor will earn or, on the contrary, incur losses due to a decrease in their value.
Not only the ability to choose investment ideas, but also the proper distribution of the types of stocks in the investment portfolio directly affects the success of an investor's contributions.
It is important to understand that:
- contribution to stocks of protected companies is more promising, therefore in demand and requires about 70% of the portfolio;
- investments into shares of cyclical companies should not exceed 30%, which is connected with a high probability of sharp price fluctuations (price leap both upward and downward) for such assets.
When selecting portfolios of the conservative type, it is better to look closely at shares of domestic companies as less risky in comparison with the foreign option.
The ways of forming an investment portfolio:
- by the investor himself;
- by template of ready-made solutions.
Ready-made solutions for the investor. Warren Buffett's stock investment portfolio 2021.
Portfolio of shares of opinion leader Warren Buffett (American entrepreneur, one of the world's largest investors, the fourth richest man in the world (in 2019 the size of his fortune was estimated at 84.9 billion dollars) consists of shares of public companies. The companies are owned by the management company Berkshire Hathaway Inc. where Warren Buffett himself is CEO, chairman and principal shareholder.
Updates on share movements (buy/sell) in Berkshire Hathaway's portfolio are made quarterly - reports are sent to the U.S. Securities and Exchange Commission. As of today, the most recent publication is dated mid-February 2021.
The financier's portfolio, which is valued at $256 billion, includes 49 large-company stocks.
Buffett's TOP-10 investment portfolio
- shares of Apple Inc (43.61% of the portfolio ), which showed an annual price gain of 103%.
- shares of BANK AMER CORP (11.34% of the portfolio),
- stocks of Coca Cola (8.13%),
- American Express (6. 79%)
- Kraft Heinz Co. (4, 18%)
- Verizon Communications (3, 19%)
- Moodys corp (2, 65%)
- US Bancorp Del (2, 26%)
- Davita Healthcare Partners I (1, 57%)
- Chevron Corp (1, 52%) and other major representatives of financial, industrial and business spheres of the world.
The assets of all of the above companies are constantly increasing in value, increasing the value of the investment portfolio of its investor.
There are a number of secret positions in Baffect's portfolio (the pre-New Year's report positions indicate this fact). The investor has decided to buy up shares of some companies without publicizing it in order not to increase their price. (The legislation of the USA allows keeping secret the information about purchase of shares, if its disclosure may damage business of the investor). These are large stakes in Chevron (oil industry), Verizon Communications and Marsh & McLennan (insurance broker).
Memo to the investor: peculiar properties of the investment strategies
In the world of investing, profits can be made, there are certain strategies you can use. For example:
- work with investment and mutual funds (investments designed for the long term in already formed portfolios)
This means that the investor receives a percentage of profit. At the same time his income is stable, but not much.
- buy options
It is about receiving a fixed profit as a result of forecasting the behavior of an asset.
- Engage in contracts for difference
This is speculation, i.e. the process of buying and selling raw materials, making money on their price difference.
Investment idea #5. deposits in investment projects
Investment projects can be:
- high risk investments
Private companies form platforms with a high level of profitability, but the investor can expect not only profit, but also loss.
- low-risk investments.
Such projects, as a rule, are offered by the state.
Classification of investment projects by:
Also, the type of investment project depends on such indicators as:
- according to the sphere ( economic; production; commercial; social, etc.);
- the size of the start-up contribution;
- payback period;
It is 100% impossible to predict a profitability/profitability of the investment. It is important to analyze, study and observe. After all, a well chosen investment project can provide passive income and give its investor financial freedom.