Where to invest money during the crisis and make money on the stock market?

Where to invest money during the crisis and make money on the stock market?

During a crisis, many securities fall in value and this provides excellent opportunities for profitable investments. By buying shares at this "sale", you can secure yourself a good profit. The following is a step-by-step guide on how to do this.

1. Strategy development

Before you start buying securities on the stock market, you need to draw up a strategy for yourself. What do you want to get through your actions.

To keep things simple, I'll highlight the possible options:

1. Speculation. Buy cheaper - sell more expensive.
2. Cash flow. Create an asset that will generate money on a regular basis.

If you choose the first option, then you need to clearly understand when and at what price you want to sell the previously purchased shares. For example, during the crisis, we bought stocks that fell in price and sold a year later, when the price increased by 50%.

For those who choose to generate cash flow as a strategy, you should buy companies that pay dividends to their shareholders. One of the main criteria for you will be the size of these dividends. Accordingly, the cheaper the purchase price of the paper, the higher the percentage of your dividends on the invested funds will be.

Important! A speculation strategy has more risks than cash flow formation. When speculating, it is important for you to buy at a lower price and sell at a higher price. But the share price may never rise after the purchase, but, on the contrary, go down. In this case, you either have to wait for the stock to rise in price, or fix losses.

When forming a cash flow, in principle, it does not matter to you how much a share is worth at the moment, the main thing is that the company pays dividends.

2. Choosing a broker and opening a brokerage account

The stock market is traded through a broker. When choosing a broker, you should pay attention to the following criteria:

• Commission for deposit and withdrawal of funds
• Account maintenance cost
• Commission per trade
• Depository fee
• Minimum investment amount
• Mobile application and ease of investment
• Possibility to buy shares of foreign companies

You can find all these data on the website of the brokerage firm or ask them by phone. At the same time, assess the level of their communication with clients.

3. What to buy during a crisis?

Many have heard stories about how someone bought cheap shares of Apple or Google a long time ago and now has become a millionaire.

So that's it. These are not fairy tales. If you bought Apple shares at the beginning of 2004 for $ 100 (then the price was $ 1.5 per share), then in 2020 these shares could be sold at a price of $ 300 apiece and earn $ 20,000. Growth 200 times.

During a crisis, many securities can be borrowed at a good discount. Perhaps not at the same price as the origins, but cheaper by 50%, or even more. Whoever is lucky.

But before calculating future profits, it is important to consider the risks. Some stocks may not recover from the crisis. Or the company may declare itself bankrupt. In this case, you will lose money.

Therefore, it is worth choosing the companies to buy carefully.

4. How to choose reliable stocks to buy in a crisis?

It is best to choose well-known companies from those areas where you at least understand something. Priority for selection should be given to shares from the first tier. The so-called blue chips. They are by definition more reliable. They have proven themselves well in the market, have strong management and growth prospects.

But not all blue chips are created equal. It is also worth choosing the best from them. To do this, you need to study the following indicators of the company in which you want to invest:

• Low bankruptcy rating. Below Ba1.
• Company debts. Less is better.
• The company's revenue. We are looking at the growth of indicators over the past 3-5 years.
• P / E ratio (market cap / annualized earnings). Shows how many years the company will pay for itself if it directs all profits to dividends. The lower this figure, the better.

All these indicators can be viewed and compared on the website - https://tezis.io

Remember diversification. Don't put all your eggs in one basket. Distribute your budget among companies from different industries. And you shouldn't keep more than 10% of your funds in one paper. This will reduce the risks of losing your money and increase the likelihood of earning a higher income.

5. How to determine the entry point for buying a stock?

It is clear from logic that you need to buy securities cheaper and there will be happiness. But how do you know when the cheapest price will be?

An ordinary person does not.

But there is a way out. If you decide to invest N-amount of money. Divide this amount into 10 equal parts and start buying the shares you like in small parts. This approach shows more effective statistics for long-term investments.

The main thing is not to succumb to the emotions of panic and greed if the market does not go where you would like. At the same time, it is important to make decisions on your own, and not to listen to expert advice. After all, you are risking your money, not theirs.

To simplify the process. You can place pending buy orders at the price you need. And when the price reaches the level you set, the deal will be automatically executed. This will save you time and nerves while viewing the chart and monitoring the desired price.

6. Evaluation of the result

To give an objective assessment of your actions, you need to keep records of investments. For this, it is convenient to use a google table. It's free and convenient.

With the formula = GOOGLEFINANCE (“MCX: STOCK TICKET”), you can track stock prices in real time right in the spreadsheet.

You can also enter all your actions with shares in this table. We bought or sold something, updated the data. This way, you will always have up-to-date information on your investments in front of your eyes.

7. Summary

If you think you need millions to start investing in the stock market. Then you are wrong. You can start investing even with 10 thousand rubles. The main thing is to do it systematically and wisely. Then any crisis for you will be a new opportunity for additional income.

Important! I am not encouraging anyone to buy stocks and I do not guarantee that you will make money from it. The stock market carries risks and you must be clear about your actions. Invest only the money that you will not need for the next few years.