It seems to many that investing is the lot of financiers with 3 higher economic entities. But in fact, anyone can find an investment option that does not require any in-depth knowledge in the field of finance. It’s about trust. Here, the investor trusts his money to another person who is engaged in increasing capital.
This is the most popular type of trust money management. Mutual Fund – unit investment fund. That is, it is a kind of “common fund”, in which anyone can have a share. It is only necessary to acquire units, which will prove the right to a certain part of the mutual fund.
The point is that the value of a share is constantly changing, since the money of the entire mutual fund is invested in different assets. The management company is engaged in this. Moreover, in Russia there are many reliable and reputable companies among the management companies: Sberbank, Gazprom, UralSib, Alpha, etc.
Simply put, a large company is registering a new mutual fund and contributing its personal money to it. Other people, investors (they are shareholders) can deposit money into this mutual fund by purchasing shares. In fact, investors transfer funds to trust.
Let’s say the UK divided all the fund’s total capital into parts and invested them in various assets — shares and bonds of any companies. If the calculation was correct, and the assets began to grow in value over time, then the capital of the entire mutual fund increased. This means that the value of the share has also grown.
If necessary, any shareholder can sell their shares if the price has risen markedly. So investors and make a profit. Although it is worth remembering about the risks. On the one hand, funds are managed by professionals, and mutual funds are regulated by the state. On the other hand, risks cannot be ruled out. No one is safe from the fact that the UK will conduct unproductive management, and the shares will become cheaper.
Everything seems very suspicious – why should some kind of management company work to increase the fund so that ordinary investors make profits while sitting at home. But this is done for a reason. Firstly, the mutual fund consists to a large extent of the money of the Criminal Code. Roughly speaking, managers are also interested in productive work.
Secondly, the Criminal Code retains a certain percentage in its favor after the sale of shares by the shareholder. And it doesn’t matter if the share has risen in price or not. Thirdly, there are different commissions in the form of discounts and allowances, which also bring financial benefits to the Management Company. We can say that all parties to the deal have a benefit here.
Therefore, one can consider investing in mutual funds as a way of passive income generation. It is only important to correctly assess all risks and apply diversification whenever possible.
This is another type of trust capital management. Transactions take place in the Forex currency market. There are also special platforms where brokers provide access to intermediaries. You just need to find a suitable site, register, open a personal trading account and replenish it.
Then you can already search for PAMM accounts. The point is that this account is managed by a professional trader. He has personal capital on it, and under the offer agreement he accepts investments. That is, anyone can invest their money in his PAMM account and have profit / loss from this. Everything works almost the same as with mutual funds.
Suppose a certain manager opens a PAMM account, replenishes it and starts accepting investments. The investor wants to invest and transfers to the account, for example, $ 1,000.
Next, the manager trades in the Forex market with the goal of making a profit. Investors cannot influence the actions of the manager. They have only the opportunity to withdraw their money from the account.
If a trader conducted productive work, then the total capital grows. Hence, investors are also in the black. And vice versa. Of course, the manager takes money for his work as a percentage of the profit of each investor.
Actual profit from investing in PAMM accounts may be greater than from investing in mutual funds. But the risks here are much higher. And the point is not so much the complexity of the foreign exchange market, but the fact that there is little trust in managers. If mutual funds are managed by professional companies with the appropriate license, then with PAMM accounts everything is more complicated.
In fact, there is complete transparency, that is, investors see all the actions and their outcome. But still trusting an unknown person your money is dangerous. Moreover, there is no guarantee that it will be possible to return the money if the broker himself disappears, who brought the manager and investors together.
Instead of output
For the sake of big profits, it can and should take a chance by investing in PAMM accounts. It is only necessary to carefully select them. Firstly, you need to look for accounts only with trusted brokers. They value reputation and filter unreliable managers.
Secondly, you need to study the PAMM account itself: age, statistics, the size of the personal capital of the manager, etc.
If there is no desire to take risks, then it is better to invest in mutual funds. The risks are noticeably lower. And profitability is sometimes not inferior to PAMM accounts.