Where to invest 100 thousand rubles?

Do you seem to be getting signs it’s high time you invested from literally everywhere from social networks and educational articles to Telegram channels? It  is, indeed, a pretty sensible decision. Investing is a good way to not only save and grow your money, but also to learn financial literacy. The good news is you don’t have to operate millions of deals like the investors you may have heard of to get started. Let’s say you have 100,000 rubles. Is it a lot or little? And where should you invest this sum in 2021?

Today we will look into 11 different options of investing 100,000 rubles and show their pros, cons and pitfalls.

When choosing where to invest, you have to compare three parameters:

• profitability;

• reliability;

• liquidity (how quickly you can sell the assets at a market price).

There is no ideal investment method, nor is there a universal answer to where to invest one hundred thousand rubles to guarantee a high profit. As a rule, the most profitable investment options are the most unreliable (and often have low liquidity), while the most reliable and stable ones have a profitability slightly above the inflation rate. Besides, many high yield investment methods have high entry barriers, like buying commercial real estate.

But there are a few rules that can help reduce risks and improve profitability:

Diversify investments. Don’t “put all your eggs in one basket”, but make a portfolio of assets of different types. You can combine more profitable and risky assets with more reliable ones.

Use professional advice. The market of roboadvisors —  online assistants that help novice investors to compose an optimal portfolio —  has been rapidly developing in recent years.

Observe Experienced Investors. The behavior of successful investors, who often publish expert comments in the media, can give you a signal when to buy or sell certain assets.

Analyse the Object of Investment. There is an abundance of reliable sources of information, but many still neglect this simple rule: study the organization thoroughly before entrusting it with your funds.

Let's start with the most reliable and least profitable instruments, and then move on to increasing profitability and risk. But before we get started, remember: there is no perfect investment, it all depends on your needs and capabilities!

In short: Bank uses the depositor's money for its own purposes (issuing loans, for example), and pays you interest in return.

Pros: It’s the most reliable type of investment.

Cons: The yield is slightly higher than inflation.

Of all types of investments, Deposit is the only type of investment that guarantees the return of funds in case of unforeseen circumstances. In Russia, all deposits of up to 1.4 million rubles are insured by the Deposit Insurance Agency.

The profitability of the deposit almost always fluctuates at the level of 5-7% per annum (inflation in 2021 in Russia is about 6%). Fixed deposits, which cannot be withdrawn or replenished earlier than the term specified in the agreement, have a better rate because it is more convenient for banks.

Making a contribution of 100,000 rubles is a good option for those looking for where to invest in order to create a safety cushion. It also works for those who are ready to freeze money for several years and do not plan to make large purchases.

In short: The state or a private company acts as a borrower, and a bond is an analogue of an IOU.

Pros: Bonds are one of the most reliable types of investments and the profitability is higher than that of deposits.

Cons: There is a risk of bankruptcy of the organization.

Bonds can be either public or private. The first ones are more reliable, since the risk of bankruptcy of an entire state is small (and yet it exists), but their annual yield fluctuates at 6-8%. Bonds of commercial companies tend to have a higher yield of up to 15-20%, but companies also go bankrupt more often. 

The best option is a bond portfolio in which the ratio of government and corporate securities will be determined by the investor's willingness to take risks. The total profit is made up of two parts: the interest paid on the bonds and the net worth of the bonds. Relatively speaking, if the value of bonds has decreased over the year, then the amount of loss on sale will need to be subtracted from the profit received in the form of dividends.

In short: Securities issued by investment funds.

Pros: High profitability, no need to think about diversification.

Cons: If the fund is chosen incorrectly, it may result in underestimated profits or even losses.

Since securities of hundreds of companies are already represented in the investment fund, there is no need to think about additional diversification here. The minus follows from the plus: the profit on the shares of companies, for example, turns out to be highly averaged —  even if the shares of one company in the fund's portfolio showed an increase of + 30%, it is leveled by other companies. ETF assets are of different types: stocks, bonds and gold. Financial experts believe that at least 10% of an ETF portfolio should be kept in gold, and the rest can be split between stocks and bonds. It is important to choose a large fund with a good history and a transparent system of transactions (fortunately, there is enough information about them available). ETFs can also be purchased with the help of Russian banks' roboadvisors, who will then act as intermediaries.

In short: Purchase of metal in physical terms (ingots or coins) or virtually by opening a special metal account.

Pros: Investing in precious metals is reliable as they are growing in price.

Cons: There are no regular payments, meaning it’s not a good option to make quick profits.

You can invest in one of four metals —  gold, silver, platinum and palladium, or buy precious coins. What’s good about such an investment? Gold and other metals are constantly increasing in value long term. It is unlikely that they will be depreciated. Usually, the most serious growth in prices for precious metals occurs during economic crises.

The difficulty is that metals are growing in price in different ways, so fluctuations in the rate are difficult to predict: for example, gold is now growing, while silver is falling in price. The best solution is to purchase all 4 metals for 100 thousand. This option works best for long-term investments.

You also need to keep in mind that you pay 24% as a commission: 20% VAT and 4% commission to the bank when selling precious metal in physical terms (for example, a part of an ingot).

In short: The investor makes a profit by buying shares at a lower price and selling at a higher one.

Pros: You can make high profits, it's suitable for quick earnings throughout the year.

Cons: Risks are rather high.

Stocks can rise by 60% over the year, or fall by the same amount, and even analysts cannot predict the change of rates in the near future. The stock price is influenced by many factors from the state of affairs in the company itself and reputation losses to the general situation on the market. Therefore, the best option is to acquire a diversified portfolio of stocks from different industries, as well as opt for shares of large companies from stable industries, which traditionally include pharmaceuticals, gas and oil. Some recent additions to the list are biotechnology, e-commerce and IT.

Blue-chip stocks are dividend stocks, meaning these companies regularly share profits with shareholders, and you can get another source of income.

Investing in stocks is not your option if you have been saving this 100 thousand for a long time and want to turn it into a "safety cushion". In this case, investing in stocks is not suitable because it’s too  risky, it is better to opt for a deposit or bonds.

In short: An investor buys a stake in a mutual investment fund, receiving dividends from the fund's transactions.

Pros: Reliability, high profitability.

Cons: High entry threshold. You need to pay 13% of the profit.

When investing in a mutual fund you don’t have to constantly monitor stock quotes and market news: a professional fund manager deals with all transactions. The profitability of this or that mutual fund largely depends on the manager's competence. On average, in recent years, the profitability of a mutual fund can reach 20-30% per annum. The cost of a share in different funds is different: for example, in Sberbank it starts from a thousand rubles, and in other places from 50 thousand. Diversification is also possible here: for 100 thousand, you can buy shares in different mutual funds.

By selling a share, you will pay a profit tax of 13% and a commission for withdrawing the amount of 1%. But taking these costs into account, mutual funds allow you to make good money.

In short: Purchasing antiques with the aim of then selling them at a higher price.

Pros: High profitability, a chance to make quick money.

Cons: High risk, need to understand the industry and invest a lot of time.

Of course, you can't buy a lot for 100 thousand —  a serious business here starts with much larger sums. Nevertheless, there are options, namely old rare books, Soviet posters, porcelain figurines, accessories and jewelry. On eBay, for example, household items and jewelry from the late USSR are selling well. By buying antiques, you can earn several times more than you invest. But in order to do so, you need:

• know where to get the right items at a low price;

• have at least minimal expertise in this industry (or someone who can regularly advise);

• know to whom and where to sell;

• be ready to regularly spend a lot of time.

In short: You invest in purchasing one or more cryptocurrencies, observe the growth and wait for the right moment to sell.

Pros: High profitability, new currencies are constantly appearing.

Cons: High risk, unpredictable exchange rate.

Cryptocurrency has rapidly burst into our reality. Those who predicted a “bubble” that would burst quickly were wrong —  in the long term, major cryptocurrencies are showing growth. Another thing is that no one can predict the rate: large leaps are possible both in either direction. Some currencies went to zero, and the developers simply stopped supporting them. Therefore, now, when there is plenty to choose from, consider not just buying bitcoin, but making a cryptocurrency portfolio. What should you include in it? Consider the old most famous crypto coins (Bitcoin, Litecoin), new fast-growing platform cryptocurrencies (Etherium, Lick, EOS), dividend currencies (Ontology, NEO). You get tokens for storing these currencies. And then simply follow the market and hope for the best!

In short: Investing in a start-up using a special platform.

Pros: High profitability.

Cons: High risk, long-term investment.

You can invest in startups and business projects using crowdinvesting platforms such as “Sberkredo”, “AlfaPotok” or Penenza. On the one hand, projects placed on sites have been tested by the platform. On the other hand, this does not at all guarantee that a startup will not go bankrupt and stop paying back the invested funds. There are platforms where investors can issue loans to small and micro businesses in exchange for regular interest payments, like Ozon Invest, where such a loan is paid with 18% of income.

Investing in a business is a promising and potentially profitable option, but if you are looking for somewhere to invest 100 thousand rubles in order to keep it safe, it is clearly not suitable.

In short: Purchasing a small turnkey business for regular profit.

Pros: Possible high profitability, quick profit.

Cons: It takes a lot of time and professionalism, there is a risk of losses.

You don't need millions to buy a ready-made business. You can, for example, buy a small kiosk or a car wash in some Russian city for 100 thousand rubles. Alternatively, you can join forces with someone, which opens up even more options. The main thing in such investments is to carefully study the history of the business: who created it, why they decided to sell it, what’s the profitability, is there a debt load, what are the market prospects etc. The simple question "where to invest 100 thousand rubles" will be followed by much more complex ones. You’ll have to manage and be responsible for the business and develop it. You’ll have to come up with a business plan, think about marketing, and analyze competitors.

You can also buy an online business —  a website, an online store or an application from one of the specialized sites. Sellers indicate what profitability the site has, but this information needs to be double checked.

And to wrap this up we’ll look into a less obvious answer to where you can invest 100,000 rubles.

In short: Invest in education that will allow you to increase your income.

Pros: No risk, high income.                  

Cons: Requires effort and patience

Many businessmen and investors, when asked how they would start investing in 20 years, answer that they would start by investing in themselves —  and this approach is worth listening to! After all, you can think about where to invest 100,000 rubles, choosing a win-win option for a long time, or you can increase your income by 100,000 or more monthly. To do this, it is worth choosing courses in a promising specialty (or advanced training): there are now a lot of offers from sites like “Netology” and Skillbox. In conditions of high competition in the EdTech market, the approach to education itself is now changing dramatically: you receive not only lectures from professionals, but also networking, speaker contacts, practice, the opportunity to undergo an internship with a partner company

Any of the 11 options we covered in the article can help you increase your capital as long as you make sure the opportunities that each type of investment offers correlate with your goals. And, of course, always keep a cool head!