Investing is allocation of money in specific assets and opportunities. When you invest, you become the investor.

Investor's goal is to return the invested capital after a while and get additional profit. Or create an influx of passive payments to cover regular expenses.

Do not rush to think that this information is useful only to "tough guys" in suits from financial TV channels. The investments may and should be an important part of the life of each of us. Take an article half an hour, and you will be convinced of this.

Investing is more profitable than saving

If you are wondering about personal finance and trying to create savings, you are already on the right way. After all, financially successful people live like this:

• Seek to spend less than they earn;
• Get rid of debts and loans;
• Save some of the funds.

All of this is important to start with. But saving is not an end in itself. You can't achieve much by saving, and here's why:

According to Trading Economics, the economic development of 75% of countries in the world is accompanied by inflation. Money is gradually depreciated under its influence.

You have saved up a million tenge and put it under the mattress. Dreaming how you will make a repair one day. Or buy new appliances or furniture for home. Don't be surprised when, a year later, you find that the million is already insufficient.

“Everything has risen in price: both furniture and building materials! It was necessary to immediately decide to buy!” you think.

And you are absolutely right! We assure you it won't get any better. In the case of inflation, time is against you. The longer money is idle, the less goods and services you can buy with them in the future. Plus, it's not just inflation. Other economic forces can devalue money even more.

But don't worry. There is a fourth ingredient in the recipe of the financially successful people: they invest.

Let your money work for you

There are several ways in which income from an investment can end up in your pocket. The most obvious are:

·         Increase in the value of assets: bought shares at $ 25 per share, sold at $ 60. Earned $ 35 per share.

·         Regular payments: as a deposit rate of return.

We'll consider the shares a little later, but for now, let's look at the bank deposits.

According to the National Bank, Kazakhstanis keep more than 9.6 trillion tenge on deposits. Another 10 trillion is kept with the banks by the companies. It is fair to say that the people is exactly familiar with this instrument.

The deposit is the simplest investment product. It even takes into account such an important investment condition as “compound interest”. When you receive interest for the first month only on your investments. And then the return received from the bank is added to the total amount, and the new remuneration will already be higher. So the longer the funds work, the more income they bring automatically.

Do you have a deposit? Congratulations, you are investor!

But the deposit is not the only and not the most profitable instrument. It is ridiculous to call rates on foreign currency deposits as profitability. Agree, you won't earn much at 2% per year. And rate of return on tenge deposits does not always cover the same inflation, plus there is a risk of depreciation of the national currency. We have already faced devaluations more than once in recent years.

Therefore, starting with a deposit and even keeping some of the funds on it in the future is normal. But there is a much more attractive direction for investment, and it is worth gradually coming to it.

Where to invest

To cover the full breadth of our topic, let's call to mind a real investment. They include:

• Purchase of land plots;
• Acquisition of real estate, residential and commercial, for rent or resale;
• Investments in precious metals or stones;
• Hunt for collectibles and antiques;
• Business creation and development, purchase of ready-made franchises;
• Acquisition or registration of copyrights, patents, licenses.

All these are possibilities with their pros and cons. Much on this list requires special knowledge, skills, and business acumen. It can also take a lot of energy and time. Plus, no one cancelled the risks: the collector can be “cheated” or robbed, the business may “not work”.

Another, in many ways more profitable, type of investment is financial investment. This is when you buy securities of large companies on the world's stock exchanges.

Main types of securities, and how they work:

·         Shares (stocks): you buy a share of a company's business. The business grows and develops, you earn on the growth of the value of the purchased securities. And more than 4,100 companies in the American market periodically share their net profit with shareholders, they pay dividends simply for owning the shares.

·         Bonds: you "lend" money to the company. For this, the company regularly pays you interest and is obliged to return your investments after a predetermined period. Bonds can also rise in value and can also be sold at a profit.

How much can you earn from this?

Long-term, the American stock market brings about 10% per annum in dollars. Agree, it's already more pleasant than 2% on deposit. If you invested $ 1000, a year later you earn $ 100 instead of $ 20 in the bank.

In some years, the broad market grows by 20-30%. That is, you can earn even $ 200 or $ 300 per thousand instead of $ 20 on the deposit.

The "broad market" means the S&P 500. To put it simply, these are the 500 largest companies from different sectors and industries of the economy. Most of them are from the USA. Apple, Microsoft, Facebook, Disney and others are included.

But no one makes you to immediately invest in all 500 companies. You can choose just a few. Separate shares can grow by tens or even hundreds of percent within a year.

Example: In 2020, Tesla, the electric car producer, became the largest, carmaker on the planet by market value. Elon Musk's brainchild has overtaken the Japanese Toyota, a company with an 83-year history. At the same time, Tesla shares have quadrupled from the beginning of the year to July, from $ 420 to $ 1,795!

The yield on bonds is usually more modest than on shares. But it is often fixed, known in advance, and available with less risk.

Can Kazakhstanis really invest like that?

Sure! Freedom Finance provides access to world exchanges and full support.

In doing so, it is important to break down another mental barrier that can make investments in the stock market “inaccessible”. We are often asked about the minimum amount to start. People think they need a lot of start-up capital.

Relax, everyone can invest!

You don't need a lot of money for this. After all, you can start by buying literally one share. On the American market, one security costs about $ 45 on average. There are shares on the Kazakhstan Stock Exchange at 2000-5000 tenge apiece. One share of Halyk Bank costs 116 tenge.

There are also instruments that allow you to buy tens or hundreds of shares at once for amounts less than $ 400.

It will be even better if you start with a small amount, you will see how it all works, you will understand. You will always have time to invest more. Plus, there is even such a profitable strategy: invest a little on a regular basis.

This is how the question "Where can I get the money?" is resolved

Any kind of earnings in which you can save a little money every month is enough for investment.

The main thing is that this money should be really free, not vital and it should be yours. Any investment loans remain out of the question at all!

What to do now?

Did you like the idea of investing and increasing free funds? Have you appreciated the benefits of investing in the securities market? Want to try it out or get more information?

Excellent! Leave a request in the form below, experts will contact you and advise on all issues. We will give you as much time as you need. For each customer, Freedom Finance assigns a personal investment advisor who will always help you to choose the right strategy and instruments.

Follow the blog posts. We will be looking into the issue of risks and how to control them soon. And will also talk about different approaches to investments with different expectations for profitability.