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Crisis is a perfect time for buying stock, because the cost of many companies has dropped several times. Acquiring securities that have reached their price bottom and selling them after the economy begins to grow again, you can earn good money
“If you take our stock market, one should expect the average growth of 50% within one year, though some securities might hit the 100% profitability mark and even more,” predicts Viktor Petrusya, an investments consultant with Astrum Investment Management. This means that if you want to make a million hryvnia by investing money in securities, you have to buy up shares for about UAH 500,000 now. However, it is not that easy to profit on the stock market, particularly for an inexperienced private investor. It is necessary not only to foresee how the economy will operate after the second wave of the crisis but also choose the object of investments correctly and the broker that will work with on the stock market. It does not require that much time to buy shares. The main thing is to choose the right broker: the bigger his/her experience of working on the market and turnover of the buy/sell transactions, the better. As for the financial side, you will have to spend a lot.
Commission for broker services is the main article of expenses. On average, it is 0.1-1% from the amount of the transaction, but not less than UAH 200-250 per each operation. You will also have to spend money for opening a securities account, commission to the depositary for transactions and commission to the bank for transfer of money on the account. In general, in order to make investments profitable, representatives of the stock market advise to invest no less than UAH 10,000 – UAH 20,000 per securities of each issuer. You will have to pay at least UAH 400-500 to the broker for acquisition and sale of securities of one company. Meanwhile, in order to have a diversified portfolio, it is advised to buy shares of at least 46 companies. This is the minimum that stock market players recommend for private investors. “Firstly, it requires a very big amount of money to acquire some significant packages of securities of 20 companies. Secondly, it is very difficult to manage such a portfolio – it is difficult to follow all corporate news of so many enterprises,” notes Oleksandr Dmitriyev, Head of Analytical Department at Bonum Group.
As you can see, the sum of investments and the start up expenses look pretty impressive. Add to that the 15% tax to be levied based on the results of the year from the received profit and it becomes clear that the stock market is not for the poor. Maybe that is why right now, the brokers do not set any limitations for a minimum lot (the number of shares purchased). Despite that there are limitations for a minimum transaction in PFTS (UAH 20,000 for the shares of first level listing and UAH 10,000 for the second level listing), the traders interviewed by Weekly.ua assured that they can buy and sell shares for private individuals without any limitations. The thing is that they purchase many securities for themselves, which is why they do not have any problems with lots.
Promises of brokers to sell shares at any moment is one thing, while practice is quite different. It is practically unrealistic to get rid of non-liquid stock during the crisis, particularly if the lot is small. Many brokers honestly admit that they would be able to sell quickly only the shares of the first echelon (blue chips) and only if the lot contains at least 50-100 shares. By the way, under the broker service agreement, a trader does not guarantee quick and beneficial sale of acquired securities. Traders simply look for the buyer, which could take a long time. The bid for sale can remain on the stock exchange for quite long, particularly if the market is slow and not many transactions are made on it.