Cheat sheet for investors: stock

Cheat sheet for investors: stock

Stocks are a popular investment tool. Consider the features of working with this tool from the point of view of a novice investor.

Joint-stock companies are effective systems of the modern world economy. Respectively, there are two main groups, interested in the stock market. On the one side, these are the owners of free capital, or investors. Their goal is to invest capital with maximum return or profitability for themselves and their clients.. On the other hand, these are the shareholders, or shareholders. They seek to maximize the value or number of shares owned or entrusted to them.. Both groups share a common interest - increasing equity capital.

The interests of investors and shareholders are met and met in the stock market, which ensures the free movement of capital from one enterprise to another. There are different participants here, each of which performs certain functions:

Эмитент – лицо (for example: state, local administration or joint stock company), on whose behalf securities were issued for the development and financing of its activities.

Инвестор – это лицо или организация, investing capital for the purpose of subsequent profit.

Professional participants in the securities market include:


• Дилеры

• Форекс-дилеры

• Доверительные управляющие

• Инвестиционные консультанты

• Депозитарии

• Регистраторы

Promotions is a security, which produces (emits) company. Consider this popular investment tool from an investor's point of view.

The investor buys shares in order to participate in the capital of the company and receive additional income. There are two types of shares - common and preferred: they differ in a set of rights, which give their owner.

Ordinary shares give the right to vote at a meeting of shareholders, the opportunity to participate in the distribution of profits, but do not guarantee receipt of dividends.

Preferred shares do not give the right to vote at a shareholders meeting, except for some cases, when making decisions:

о реорганизации и ликвидации акционерного общества,

– on changing the type of joint stock company,

– on introducing amendments to the charter of the joint-stock company and (or) Additions, ограничивающих их права, including in terms of dividend payments.

Important characteristics of stocks:

Liquidity - the ability to quickly sell or buy at a price, close to market.

Nominal price - reflects the size of the authorized capital of the company.

Market price - cost, set by quotations on the stock exchange based on the balance of supply and demand.

Profitability - the sum of dividends (payment of part of the company's profits) and / or increase in market value.

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At the start of portfolio formation, an investor needs to draw up an individual investment strategy, to understand which stocks are worth or not worth investing in. Projected losses are not scary. Spontaneous rash decisions and the lack of a clear developed strategy are the right way to get a negative investment result.

It is necessary to set a goal. Safeguard savings against inflation or devaluation, increase capital with a low level of risk or try to get rich quickly? How much loss is the investor willing to incur?? The answers to these questions will help determine the approaches to choosing a strategy., acceptable positions in the portfolio and will not allow you to be distracted by short-term speculative temptations.

An investor should take into account the totality of many parameters.: financial goals, risk tolerance, desired yield, investment time horizon. The investor must be aware, that, if necessary, the ability to sell a share is liquid, that is, with minimal losses and in the shortest possible time, depends on the current market situation, and not from his desire. That is, the desire to sell, does not mean there are buyers. Sometimes they may not be enough, to realize the entire volume. Or, vice versa, too much, when buying shares.

Features of transactions with shares

You can trade shares, by opening an account with a brokerage company. Transactions are made during the trading session. The schedule and trading mode are published on the websites of the exchanges..

Example: settlement and delivery of shares on the Moscow Stock Exchange normally takes place on the second business day (T + 2 mode) - this should be taken into account when calculating. So, when the register is closed for dividends, to receive dividends, shares need to be purchased for 2 working days before the event.

Why does an investor need shares

– This is a potentially more profitable instrument, than bonds or deposits. However, also more risky!

– Low entry threshold: an investor can acquire 1 or several shares, with little capital.

– Unlike bonds, give the opportunity to participate in the management of the company.

Listing of securities

Listing - the inclusion of securities by the trade organizer in the list of those admitted to organized trading for the conclusion of purchase and sale agreements, including the inclusion of securities by the exchange in the quotation list

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Листинг может осуществляется с включением и без включения в котировальные списки — Список ценных бумаг, admitted to trading on the exchange.

The list is divided into three sections:

• Первый уровень

• Второй уровень

• Третий уровень

To go through the listing procedure, ценная бумага и ее эмитент должны соответствовать требованиям, which are established by the Listing Rules of the Exchange.

Obviously, that companies differ from each other in many ways. Their financial results, size, industry and other factors create different risks when investing. Thanks to the standardized requirements of the exchange, the company becomes more transparent for the private investor. Division into levels provides primary information about, how the company meets the high requirements of the exchange and helps to determine the level of risk for investments. This allows a wide range of investors to reasonably approach the choice of securities.

Первый и Второй уровни являются котировальными списками. The third level is the non-quoted part of the list.

The first level - "Major League" - gives admission to trading in securities of well-known issuers. Such heavyweights are traded on it, like Sberbank, Rosneft, Lukoil and other blue chips.

The principles for Level One and Level Two are similar., difference in scale of requirements:

– by capitalization

– free float market price

– the life of the company

– reporting under IFRS for the last 3 calendar years

– on corporate governance

– on information disclosure

The third level requirements are the entrance ticket to the exchange. Securities of this level are not represented in the quotation list. For a Tier 3 listing, the exchange sets minimum requirements for companies:

– compliance of securities with the requirements of the legislation of the Russian Federation and regulations of the Bank of Russia;

– register the emission prospectus of the Central Bank;

– disclose information in accordance with the Securities Law.

Level Three Papers, usually, more volatile and less liquid, as they are more risky. Consequently, the number of transactions made with them during the day is much less in scale, than with securities of the First and Second levels.

Подробно ознакомиться с требованиями для включения в первый, second or third level, presented by the Moscow Exchange.

What are the risks when investing in stocks

– One of the main postulates when working with risky assets, which are shares, - income of previous periods does not guarantee income in the future. That is why the investor, especially beginner, should fundamentally define, what level of risk is acceptable to him personally.

  A little about positions

– Funds, placed on a brokerage account, not subject to insurance, unlike bank accounts and deposits. Interest on deposits is known, a certain amount of the deposit is protected by the state. The interest or coupon on bonds is also determined at the entrance to the deal. It's different with stocks: the more income, the higher the level of risk. Stock markets can be extremely volatile, especially when the market and economic situation changes.

– To minimize risks, it is worth choosing a reliable broker, with proven experience in the professional securities market. It is worth using asset diversification strategies, combining in its portfolio shares of various companies from different sectors of the economy. The common phrase "do not keep all your eggs in one basket" clearly reflects the essence of the principle of a balanced distribution of investor assets.

Features of taxation

And if a loss from transactions with shares is still received? And here the state has provided, how can losses be mitigated. Of course, no one will compensate for the losses. It's worth remembering, starting a transaction with any securities, not only with shares.

However, the Tax Code of the Russian Federation provides for some of the specifics of determining the tax base for those who have failed in the stock market., calculation and payment of income tax on operations with securities and on operations with financial instruments of forward transactions.

So, it is possible to reduce the taxable base on shares. You can also balance losses and / or carry forward losses for the future.. Lesion, received in the current tax period, может переноситься на будущее в течение 10 years, following that tax period, in which it was received. At the same time, the loss, not carried over to the next year, can be carried over in whole or in part to the next year from the next nine years.

And it happens too

And what to do, if the brokerage company, through which the investor was served, went bankrupt or liquidated?

All securities are protected at the legislative level. In this case, the investor can transfer the shares to the depository of another broker or enter them into the register.. It's important to know, that any securities, which the account holder acquires, are recorded in the electronic register and without its participation it is impossible to sell them, translate or "lose".

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