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"Without savings, you are at risk"

Apartment, gold, currency - or, perhaps, government bonds? In today's fast-paced world every day, taking risks and investing is not easy.

Why long-term investments are the only way to ensure peace of mind in the present and confidence in the future, EastRussia explains Alexander Sokolov, director of sales of welfare products of the Far Eastern Sberbank.

"Without savings, you are at risk"
Photo: Sberbank press service

"If you want to multiply - take the risk"

- According to various estimates, 2-3% of the population are psychologically capable of being entrepreneurs - not formal, but really acting. Is it the same with investors?

- Each of us really has our own attitude to the acceptable level of risk. It is reflected in everyday behavior - in the manner of driving a car, in the role chosen in the team. Someone protects the gate, and someone attacks. But it is precisely in investing that the level of risk, "hardwired" in the subconscious, is decisive. Of course, any risks can be minimized. But then the profit tends to zero.  

- "Who does not take risks - he does not drink champagne", is this about?

- Yes, and, it would seem, everyone understands this. But to understand is one thing, and quite another is to do. In order to invest, no matter whether in your own business or in someone else's, often you don't even need to “move mountains”. For example, every day you go home through your large microdistrict and think: yes, it would be nice to put a flower stall right here, but here - to open a grocery store, because a lot of people walk by, there will be demand. But there is still no stall. Why? Attitude towards risk can also be one of the reasons for this situation.

- Where do those 2-3% of those at risk come from then?

- I may be wrong, but perhaps these are those who participated in the competition with the remaining conditional 98%, and won. Those who prefer not to take risks now may have once taken risks in the past, but not very successfully. And there were those who did not compete at all. According to various estimates, 5-10% of the total number of people with an active position, ready to undertake something and, therefore, take risks.

- How do you cross the threshold between “I’ll put money under my pillow” and “I’ll go and invest somewhere”?

- This is a good question, and a person should ask it, first of all, to himself. They say about small extra funds and savings: "this is for a rainy day", "this is an airbag." On the one hand, life has taught us this - its constant, so to speak, troubles. On the other hand, what is the main "rust" for our money? That's right - inflation. Now the inflation index is hovering around 4-5%. Therefore, in order to receive a return on one's savings, it makes sense to consider investment products alternative to deposits.

At the same time, the modern financial world offers a large number of solutions that satisfy any spectrum of people's needs. For those who are still not ready even for a temporary decrease in their savings, products with capital protection - investment and endowment life insurance - are suitable. For those who prefer maximum flexibility in working with investment products - mutual investment funds (MIFs). You can buy and sell shares at any time, exchange them for free, a low entry threshold - only 1 rubles. All operations can be done in SberBank Online, where 14 funds are available to them - no knowledge or time is needed to collect an investment portfolio, which will include securities from different countries, in different currencies, corporate and government, stocks and bonds.

If you already have savings, you can consider an investment life insurance program. Sberbank Life Insurance offers products with 100% capital protection. At the end of March, we offered our clients the Investment in Life program with automatic coupon payments. 

If savings have not yet been formed, endowment life insurance programs are suitable. Their advantage is that, in addition to the funded function, they provide customers with insurance coverage for the entire period of the contract. In the event of adverse events, the insurance company will make a payment or continue to make savings for the client.


"Bonds - or the hassle of repairs?"

- The first thought about an investment with minimal risk is to buy gold. Do you approve?

- This tool works as an instrument of protection against crisis phenomena in the economy. However, having bought gold, you do not receive more than anything: neither interest nor dividends. Clients sometimes make decisions in favor of investing not directly in gold, but in stocks or bonds of gold mining companies.

- Then an apartment?

- It seems reasonable, but let's figure it out. First, how many stories of successful speculation on this do we know? So that, I emphasize, an ordinary person, and not a businessman who is specially engaged in this, bought housing not for himself or for renting, but simply as an asset, in a year or two the price increased by 20% or more percent, and at this increased price he sold? I think the answer is obvious. Second, the picture changes dramatically when viewed over the long term. The average mortgage rate on ordinary terms is 6-8%. If you pay off the loan for, say, two decades, the amount you pay to the bank will almost double. Will the cost of an apartment double in 20 years? In principle, based on the dynamics over the past five years, this is real. According to the portal "Real Estate Market Indicator", the average return on real estate for 5 years in the Moscow region is 7,5% in annual terms. But…

- But 7,5% minus 6-8% - it turns out that the profit is zero?

- We do not consider, let me remind you, the situation when a person needs housing himself, when he has the right to preferential lending rates or uses an apartment for rent. Today, when real estate prices are breaking historical records in ruble terms, they are forced to lower expectations for the profitability of real estate investments in the medium and long term (3-10 years). You can buy, for example, bonds without the hassle of repairs and communal services. For example, the average yield of bond mutual funds "Sberbank Asset Management" over the past 3 years varies on average from 6 to 8% per annum.

- Anyone can, as well as buy an apartment?

- In recent years, access to the stock markets has become incredibly easier. Commissions have dropped significantly and will continue to decline. Infrastructure is more and more available. Russia is in the top 3 developing countries with the highest average dividend yield per share, and our income tax is one of the lowest in the world. In a word, everything has it. Moreover, almost everything can be done online - buy mutual funds, invest in investment and endowment life insurance programs, open a retirement plan or an individual investment account, even invest in such unusual asset management strategies as Responsible Investments or target date strategies. these are long-term strategies that allow you to accumulate by a certain date, for example, the majority of children.

- Doesn't this require some kind of specialized knowledge?

- We are talking about ready-made solutions for investments and savings. They do not require special knowledge or time-consuming from a person. For example, buying only one unit of a mutual fund for a thousand rubles, you immediately invest in dozens of different securities. How it works: A team of managers and analysts formulate specific investment strategies, for example, investing in reliable dollar bonds. Then they analyze a huge range of such bonds, select the best ones in terms of risk-reward ratios, and choose the moment to buy. Then they constantly monitor the state of affairs of companies and states that issued such bonds, so that in case of problems someone has to sell them on time, or buy bonds of more promising companies. Of course, someone can start trading on their own and at the same time watch training videos on YouTube, while someone feels that they must first be “fed” with the theory: study, read. Fortunately, there are plenty of opportunities for comprehending the "rules of the game" in the stock markets. Another thing is that many of those who talk about crazy earnings on the stock exchange sell certain products. Who can you trust? Financial companies with a history of more than 20 years that ask customers for feedback on the level of service they provide. I would suggest considering online courses from well-known educational platforms and leading economic universities, for example, the Open Education platform from the National Open Education Platform Association, established by leading Russian universities.

- And you can ask the question "Where to invest?" just come to the bank?

- Yes. But to make the final decision in any case to the client. Our task is to provide all the necessary information for making a decision: analytics, infrastructure, product and consulting support. In the stock market, you can both earn and lose, this is its meaning. Market risks are inevitable: tomorrow something may rise in price, and something may become cheaper, and this is difficult, and often impossible, to predict. There is only one way out - to maintain financial discipline. This is, in fact, a series of rules that have proven their effectiveness in practice: use the help of market professionals, diversify investments - do not put all your eggs in one basket; do not commit impulsive actions during market fluctuations, be a long-term investor and maintain regularity of investments; plus we add recommendations on how to behave in cases of turbulence in the stock markets - do not make sudden movements, the profitability is good on the horizon.

- And how exactly can the bank help you decide where to invest?

- For informed investment, you need a clear understanding of several parameters: goals, timing, expected profitability, liquidity and acceptable risks. Based on the parameters, a strategy is built. The term is very important. As a rule, the larger it is, the higher the profitability. On the contrary, the shorter the period, the poorer the set of tools - apple trees, as the well-known analogy says, it takes time to grow, you cannot immediately start harvesting from it. So money, in order for them to work, needs to be invested in assets for 5 or more years. I had a case from one client - for three years he kept funds in stocks, the yield on which was lower than the interest on deposits, and he doubted whether he was doing it right. But then the rising stock returns overlapped the returns on deposits during the time that they lay without a positive result.


"And no shopping"

- What needs to be done in order for people to start thinking: "Should I invest in the future?"

- I would focus on something else. According to statistics, 65% of Russians have no savings at all. So the task is better formulated as follows: to teach people how to save money. Maybe these 65% reason: I have a mortgage, loans, it is easier for me to pay off part of the debt than to save. But this means that a person does not consciously form a reserve capital - the very minimum necessary funds to support life in the event of an unforeseen situation: loss of work, illness, or maybe a wedding.

- The amendment was accepted. How to start saving?

- There are a lot of tools. The simplest is a piggy bank. Truth. It seems primitive, but how does the “Money Box” service work in Sberbank Online, for example? A person sets a goal - to accumulate a certain amount over a given period. And the application, based on this goal, after each payment begins to write off a small amount from its account to the piggy bank. Simple to use. The application gives a person something without which there will be no accumulation - discipline. Investing will come next.

- It is doubtful that it is possible to accumulate such a significant amount.

- I repeat: the time horizon is important. The rest is determined by mathematics. Let's say I am 30 years old, that is, 35 years are left before retirement. The ruble, invested now at 5%, in 35 years will give 1,05 to the 35th power - this is 5,5 rubles. By becoming a pensioner, I will get five and a half times more, you know? And if you add 1% in terms of profitability? We get almost 7,7 rubles. from one ruble. Maybe these are examples from the series "give up a cup of coffee a day and become a millionaire" or "quit smoking - buy a car", and this is a little naive. But it works.

- Okay. We save up. How not to waste your savings?

- Probably a terrible thing to say: there are rules. They are simple, but for many it is difficult to "accustom themselves" to them. In any budget, with a constant income, you can find a reserve of at least 10% - this has been proven for centuries. Where did it come from? First rule: stop going to restaurants. Second, stop emotional shopping. A typical example is subscription renewals for paid services that send you push notifications about discounts. In today's digital society, this is starting to "eat up" a lot of money from people. Third: going to the store, buy exactly what you came for.


"It's time to ask yourself the right questions about the future."

- Let's go back to how to multiply. Gold, deposit, real estate have their drawbacks. Is everyone on the stock market?

- Over the past two years, when interest rates on bank deposits fell, people began to use new opportunities themselves. More brokerage accounts were opened in the past year than in the previous 10 years. Of course, the role of the information campaign on the part of banks is also important in this, and the Central Bank of the Russian Federation is beneficial. But the first step has been taken - clients began to think about simple alternatives to deposits. Plus we add data on the growth of customers who use our products

Sberbank has a large set of tools that allows you to save for any purpose, operating even with small amounts. At the end of the first quarter of 2021, the number of private investors using Sberbank's ready-made investment and savings products increased by 69%. The amount of funds that customers sent to programs for the formation of non-state pensions of the Sberbank Pension Fund increased by 34%, to Sber Asset Management products - by 45%, to the savings programs Sberbank Life Insurance - by 79%.

- What?

- This is also the well-known system of individual investment accounts. By placing funds on them, the client can also receive a personal income tax deduction. These are also individual retirement plans. They allow you to save up for a future pension in the SberNPF, also getting the right to a tax deduction. According to the law, NPFs cannot accrue negative returns, therefore, pension products can be considered break-even. In addition, historically, the return on IPP is higher than inflation and bank deposit rates. Over the past 5 years, the average annual profitability of SberNPF was 7%. In terms of pension savings, we are, of course, still far from world practice. In the world, on average, 29-60% of savings for retirement are formed by people themselves. Moreover, they not only independently, but also actively save up with the employer through the corporate pension program, and only the rest with the state. In Russia, so far the opposite is true.

- The new Russian statehood itself is barely 30 years old. How can ordinary people, accustomed to the fact that the state decides everything for us, train themselves to plan for so many years ahead?

- Yes, we do not know what will happen in a few decades: with the ruble, dollar, gold, even with the planet Earth. But if we talk about an investment strategy, there is a way out. There is such a concept as a "model portfolio", as an example: 40% - currency, 40% - deposit, 10% each - stocks and gold. This is not a universal recommendation, and rebalancing is periodically needed - at least once every six months: to buy the cheaper one by selling the more expensive one. Over the past decades, just such a portfolio has shown the optimal ratio of reliability and profitability indicators.

- So, it is unreasonable to spend everything here and now, to start saving is difficult. How to be?

- To begin with, try to realize that without savings you are at risk. In case of force majeure with income, you will have to sell something. As a rule, something necessary, otherwise they would have gotten rid of it long ago. As a rule, it is urgent, which means losing value. And if there is nothing to sell? In any case, you need to start asking yourself the right questions: what will happen to me in ten or twenty years, what will happen to my future? Unfortunately, this scares many, but in vain. This is not an abstract question, but a question of managing your own money and life.

- How not to be afraid to ask yourself such questions?

- It seems to me that this should be said to children from school. And there can be no better example for children than parents. You need to start with children's piggy banks, with the right messages for the child: buy you 10 gum - or instead, something more expensive and necessary for you? Yes, now new technologies are increasingly coming to our aid, the world is changing rapidly, assets are becoming available for investment that no one spoke about 10 years ago. But without a philosophy of saving, creating a secure future for yourself and your family, setting the right financial goals, any tools, no matter how great and functional, are meaningless. This is so important: come home from work, sit with your family, pour tea and understand that you are calm about the future. That you have everything provided, that for every negative scenario or unexpected event in life there is an answer. When everyone takes responsibility for themselves and their loved ones into their own hands, then, it seems to me, the whole country will live a little differently - richer, more stable and happier, which I wish everyone!

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