The illiterate will be left behind in a rapidly changing world.
2017 year. In news releases on federal channels, they talk about cryptocurrencies, bitcoin is the money of the future, the price for them is growing rapidly. Bloggers are conducting an interesting experiment in the capital’s metro. They offer passengers to buy a custom-made iron coin like a five-ruble one, but with the letter B embossed on it. Supposedly, it is bitcoin.
– Really worth eight thousand (!) Dollars! But I give it for a thousand – the money is very necessary, – the seller of coins with the letters B called (especially for the experiment), the price of which is actually a penny on a market day. However, there were Muscovites and guests of the capital, ready to purchase this dummy for the designated gigantic amount. Some retirees were ready to run to the bank to withdraw their savings in order to buy the cherished “bitcoins”. Apparently, judging: on TV, after all, they will not talk in vain, the money of the future, therefore, must be taken! This story clearly demonstrates how gullible we are all. And illiterate …
“Unfortunately, most people do not understand how money works and the economy functions,” says Alexander Dubak, financial expert, investment advisor to a number of large companies and a businessman-practitioner. – We are not taught from the very childhood to handle money correctly. That is why various incidents arise: scammers threw, threw a bank, ended up in a hole in debt, and so on. But “the thinking of a rich person” (a term circulated today, but it reflects the essence) is not an innate skill. You can buy it and get out of poverty, which sometimes seems like a vicious circle.
We offer the readers of “MN” a series of lessons that will help them understand basic financial terms and concepts, get very necessary information about how the applied, personal economy of a person works, and learn how to effectively manage their money. Write, ask questions, we are always ready to help you. At the same time, it does not matter at all how old you are. At least a hundred!
Stock. A popular investment tool that allows you to participate in making a profit from the company’s activities. A share is, in fact, a document confirming your right to own a part of the business. The income of the company and the value of shares grow – your capital also grows. But if earnings and share prices have fallen, you also suffer losses. That is, you assume the financial risks of the company. If you are an inexperienced investor, it is more profitable to buy shares of a well-known bank or large company (for example, oil or gas). Shares of leading companies create the country’s economy, which means that the risks of losing investments are minimal. The role of brokers (that is, intermediaries between you as a buyer of shares and a company) are now large banks. It is very convenient. No need to look for a specialist – just buy shares of a company you are interested in directly at the bank or through an application on your mobile phone and become the owner of the shares.
Bonds… The main difference from stocks: bonds are a loan, the company is obliged to return the money you invested with a small percentage. Bonds, unlike stocks, cannot skyrocket in value. But they guarantee the return of the invested amounts.
Investment funds… Associations, as a rule, are professionals who receive money from the population and independently invest it in the economy. Can the fund disappear along with the money? Maybe. And he has no obligation to return your investment.
Deposit… This is a bank deposit of a fixed amount of money. After a specified time (the deposit assumes a specific period), you take your money with a percentage (small). If you pick it up earlier, you will lose the premium. Today, a deposit is one of the most unprofitable strategies, since the rise in prices is approximately equal to bank interest. And in Europe, banks have begun to introduce a “negative bank rate” at all. For the fact that citizens give them money for storage, they themselves are obliged to pay a percentage of this amount. Because a lot of money has been printed.
cryptocurrency… Internet money, virtual. The concept is relatively new, it appeared around 2008. However, they quickly become part of our reality. During the pandemic, the price of cryptocurrency increased and here’s why: America began to print a huge amount of money in support of the population, as a result, the cost of the dollar fell. Cryptocurrency, I believe, is the future. And in the next issue of our column we will pay special attention to this topic.
How not to fall into the MMM trap… The creator of this scheme, Sergei Mavrodi, discovered the possibility of the pyramid as a loophole for fraudsters. Now he has many followers. MMM shares were, in fact, phony letters, but at the same time people were promised transcendental prospects. It always happens this way: scammers, luring with beautiful advertising, guarantee you a lifetime income with minimal investment. But where will this lifetime income come from for you and other contributors? This question – and it should be the main one! – for some reason the citizens did not ask themselves. But MMM did not produce anything and kept afloat exclusively at the expense of new investors. Then this bubble burst. Hence the conclusion: do not trust promises. Before investing money, you need to thoroughly figure out to whom you are giving your hard-earned money and for what purposes.
How to get rid of the fear of investing… It is necessary to understand that the same stocks are the basis of the economy. And you can take part in its development. It is necessary to integrate into this system, otherwise you will be left behind. Therefore, I once again urge you to learn financial literacy. Science has proven that the brain is a flexible structure and is able to quickly memorize, analyze and structure the necessary information. And there is no doubt that information about the economic rules of a rapidly changing world is vital for us.
Photo: ADOBE STOCK,
from the archive of A. Dubak.