How to make money in the stock market
Get Rich / / December 20, 2019
Philip Astrakhantsev
In this article I will tell you about the most simple and sensible way to create retirement capital. This strategy is widely used in the West, and first of all thanks to savings of Europeans and Americans can afford to live well in old age and travel.
In Russia, the count on the pension system is worth even less than in the West. This year once again froze the funded part of pension contributions, in the plans - another reform. The average pension is about 13 thousand, and there are no prerequisites for the fact that he is fundamentally changed, because the population we are not getting younger in the future.
Therefore, take care of your well-being you need to own. Start applying the approach, which will be discussed today, you make the first step on the road to wealth. Ignoring the need for creation of pension capital, you will hardly be able to lead a decent life in the golden years.
There is no secret in this strategy is not. This is not a "super-duper-way to get rich quickly" - such offers better to stay away, you only lose money. Also, you do not have to spend a lot of time and effort learning the subtleties and nuances of the stock market. It is suitable for people engaged in their business, who works and not be distracted by too much fuss.
The basic idea is the principle of compound interest. If this sounds not clear, do not worry for you. Everything is very simple.
Compound interest allows you to collect profits from the profit you received earlier. Let's take a closer look at how it works.
Imagine that you are 30 years old and you have a 100 thousand rubles. You invest them in Russian MICEX index shares. It includes the shares of 50 largest Russian companies. By investing in an index, you invest directly in a basket of stocks and reduce your risk if a certain company will be something bad.
Over the past 16 years, the average return of the MICEX index was 18% per year. To demonstrate the principle of compound interest, we will assume that our investment brings evenly at 18% per year. What do you think, how much money you will have in 58 years - the average age of retirement?
You will have 10 million rubles.
Calculation is simple. If you start to invest 100 thousand by the end of the first year you will have 118 000 (we do not take into account the capacity of the Commission). You earned 18 thousand.
The second year you start is not with 100,000. Those 18,000 that you got in the first year, and will bring you profit. Therefore, when the yield of 18% you will earn 18,000 from its initial 100 000 plus 3 240 rubles of profit the first year.
To calculate how much money you will have after 28 years (we are considering investing example from 30 to 58 years), you do not simply multiply 18 000 28. This would give only 504,000. Where did come from the other 9.4 million? That's the secret. Money begins to make money from the profits. Starts compound interest.
The income you received in the first year (in this case, 18,000), develops, in turn, make a profit in the second year, the third and so on. And so it happens with every piece of the profit that you earn. Therefore, 18 thousand, you have received in the second year, too, give you 3240 rubles in the third.
But that's not all. These 3 240 rubles beginning to pay each year for 583 rubles. Look at the diagram to understand the principle. You will find that you will have 164 303 rubles by the end of the third year.
And the money continued to grow. Look at the chart below. There shows how much you will have by the end of each year. For 58 years in a total amount of 10 million rubles. And if you wait a couple more years, then growth will be explosive. By the age of 60 you will have almost 15 million.
Now you understand why it is important to know the secret of compound interest. Your profit begins to work on a par with the initial investment and ultimately create your condition.
In conclusion, let us see what can give you 15 million for pensions. If the yield will remain at 18%, you will receive 2.7 million profit in the year, that is 225 000 per month. I think it's a good increase in the state pension. Even if earned in the stock market of 15 million, you transfer to a bank and will receive interest in the month (look at the current rate of 9% per annum), you will have income about 110 thousand rubles.
Today I have deliberately not talking about inflation and other nuances to show the principle of compound interest in its purest form. Those readers who have thought about it, note that this result we have achieved after a single total investment of 100 thousand rubles.
You successful investments!