Stocks are considered one of the key instruments in the stock market, allowing you to earn extra income. Owning even a small stake in an organization can be profitable and you can start investing with relatively small amounts. Lenta.ru explains what stocks are, what they are and where to buy them, and also explains how to make money on these securities and what you risk by investing in them.
What is a promotion
A share is a security that confirms ownership of a share in an organization that shares released. Such an organization is called an issuing company, it offers securities to investors in order to attract additional capital. The investor, in turn, receives the right to a share of the profit (if the company generates it) and participation in the management of the company.
When a company is liquidated, shareholders are entitled to a portion of the remaining assets, although they are in line for payments stay the most recent. If the company goes bankrupt, shareholders may be left with nothing after repaying their debts.
Today, stocks are not printed on paper, as they were in the past, and exist only in non-documentary form – in the form of entries in accounts with depositories, special organizations that carry out accounting for ownership of securities.
What are the actions
The shares are divided into common shares and preferred shares.
1. Ordinary shares entitle participate in shareholders’ meetings and vote therein, but do not imply benefits in the payment of dividends – profits distributed among the shareholders in proportion to the share in the company they own. In this case, the decision on dividends is taken at general meetings of shareholders.
2. Preferred shares (“prefs”) are generally don’t give voting rights, but provide an advantage in the distribution of dividends. The amount of payments on preferred shares is fixed in the charter of the organization.
The rules for distributing profits among shareholders are specified in the company’s dividend policy. Such a document may, among other things, provide for situations in which the issuer does not pay dividends, for example if receives lesion. In this case, the “preferred shares” are assimilated to ordinary shares and also become shares with voting rights.
How to make money on stocks
When buying stocks, you can follow one of many income-generating strategies. For a novice investor, there are two, and they don’t contradict each other.
1. Holding shares for the sole purpose of receiving dividends. If you are buying shares for a share of the profits, you should carefully study the dividend policy of a particular stock company and estimate payment practices of previous years.
Some companies are notorious for not paying shareholders at all, investing everything in development. It should also be remembered that dividends, even from generally generous issuers, are not guaranteed and depend on the situation of the company or external circumstances.
For example, shareholders “Gazprom” summer 2022 denied to make payments for the first time in 25 years. Anyone who buys stocks with the expectation of a dividend must take the risk that the payout will not agree.
2. Buy stocks for the long term with the expectation that they will grow in value. You can invest in shares of a company that looks promising and sell your shares when their value increases with the development of the company itself. As long as you own the stock, for years or even decades, you may continue to receive dividends if the company pays them. The risks of such a strategy are that in the future the shares may not only rise in price, but also fall in price, and then you will incur losses by selling them.
At the same time, it is theoretically possible to earn on stocks due not only to growth, but also to a decrease in their value. Similar approach suggeststhat you open a so-called short position: you borrow shares from a collateral broker, sell them and wait for the price to fall. You then buy the depreciating shares to return them to the broker, and keep the difference between the bid price and the bid price.
The peculiarity of a short position is that it can only be opened for a short time. It is not recommended for novice investors to adhere to such a strategy: if the shares rise contrary to expectations, then the securities that will have to be returned to the broker will have to be bought at a higher price than they managed to sell earlier. .
Where to buy stocks
You can buy securities on or off the stock exchange, for example on special over-the-counter markets. However, the second option is more risky and not suitable for beginners, especially since the segment oriented for qualified investors (this status can be obtained by an experienced market participant on the basis of a certain number of specific criteria).
Trading on the exchange is more transparent and the advantage is that the site itself assesses issuers before giving them access. The exchange also ranks companies by reviewing their financial documents before listing, i.e. by placing securities.
On Mosbirzhe securities admitted to trading split in the following categories.
1. The first level of listing corresponds to the most stable and most liquid securities. In this case, we are talking about the largest issuers in the Russian market such as Gazprom or Sberbank.
2. The second level of listing – liquidity is lower, but the reliability of securities is considered quite high. The transmitters here are also smaller – for example, KamAZ.
3. The third level of listing is a non-listing, where only basic requirements specified by law are imposed on securities. The issuing company can first be at this level and then, after proving its reliability, move up higher.
How to buy stocks
To trade on the stock exchange, you will legally need an intermediary, a professional player in the securities market – a broker who will transfer your orders and your money. I can exceed bank or specialized brokerage firm.
After the conclusion of the contract, the broker will open two accounts for you, brokerage and depository, the first will contain money, the second will contain the acquired assets. In addition to an ordinary brokerage account, you can open a so-called Individual Investment Account (IIA). It provides some restrictions, but allows receive tax incentives.
Your broker must be licensed Central Bank of Russia. You can check it on to place regulator.
It is also worth paying attention to the rating of the broker and reading customer reviews on the Internet to make sure that the organization has no problems and is not associated with any scandals.
Having concluded an agreement with a broker, you need to install a trading application to work on the exchange and replenish your account. Then you can start trading.
If the investor does not want to make a decision alone, he can turn to a management company instead of a broker, who will conclude transactions in his interest in exchange for a certain remuneration. At the same time, the investor himself continues to bear the risks. There can be several title management formats, one of them is use standard strategies offered to the client to choose from.
How to pay taxes and get tax relief
Income from sale of shares and legal ownership thereof tax tax. Personal income tax rate (IPP) in the general case for residents Russia is 13% and rises to 15% if the income exceeds five million rubles per year.
The tax agent, which is a broker or a management company, must calculate and withhold the taxes. If the shares are sold at a profit, it automatically deducts tax at the end of the tax period.
52 thousand rubles
is the maximum amount of the deduction for the IIS contribution
You can save on taxes when investing with the help of IIS. Holders of such accounts can choose one of two tax credit options – deductible on contributions or deductible on income.
1. A contribution deduction means that you will get back some of the taxes you paid on your official income, such as your salary. The investor is entitled to 13% of the funds that contributed to the IIA. The maximum amount of deduction is 52,000 rubles, for this you will need to deposit 400,000 rubles into the account.
2. Income deduction allows you to not pay tax on income received from IIS. All income from the sale of securities falls within this and dividend tax will have to be paid in any case.
In order not to lose the right to receive a deduction, it is necessary that the IIA has been open for at least three years, whereas, unlike an ordinary brokerage account, it can only be one.
There are other types of incentives for investors – for example, advantage for long-term holding of securities (LDV). It applies to assets acquired no earlier than 2014. To use the LDV you must have held shares for at least three years, you can exempt trading profits from tax, but not dividends.