3 most risky investment instruments from the Alex Reinhardt Academy

Business News | 7 Dec, 2021 |

Governments want to limit citizens’ access to risky investment instruments. For example, the Central Bank of Russia will make it impossible for unqualified investors to buy certain instruments as early as 2021. The government hopes to protect its citizens from losing money on the stock exchange. However, reliable instruments give a much smaller return than risky ones. It’s not for nothing that Alex Reinhardt likes to say: “Whoever wants to make the maximum profit should not be afraid to take risks.”

However, by protecting us, the government is depriving us of profitable opportunities to make money. So, is it possible to get around these restrictions? Well, yes, you can! Anyone can earn a lot more if they learn to protect themselves. That means to correctly assess the risks and choose only those instruments that can make a profit. To achieve this, you need to take online business training at the Alex Reinhardt Academy. Knowledge of the different types of investments that you will receive from the training will help you to maximize your returns at the lowest possible cost. Moreover, armed with this knowledge, investors will profit from futures, options, or the most common stocks bought for a tidy sum.

Futures

A futures, or futures contract, is one of the derivatives or secondary instruments of the stock market. It may seem that only an academy teacher, no less, can trade in futures. However, this isn’t true. That’s because a futures is not a sophisticated exchange-traded instrument. In simple terms, a futures contract is a contract in which the buyer undertakes to buy a commodity at a certain price, and the seller undertakes to sell this commodity at a pre-agreed price. The goods in this transaction may be currencies, securities, indices, commodities, etc. Alex Reinhardt himself only buys futures using assets he can predict the price dynamics for and which he understands.

Futures contracts are short-term assets agreed for a fixed term, and then the trade will expire. The buyer does not have to receive the specified goods in the contract at the expiration of the futures deal. Sometimes the seller and the buyer can simply make mutual settlements for the goods at the market price. However, the Alex Reinhardt Academy experts warn that the investor must pay the broker security for the futures contract. In other words, 2-10% of the transaction amount. If the commodity price goes up, you must increase the amount. The futures contract is sold if that does not get done.

Trading in futures contracts requires a lot of care and discipline on the part of the investor. It is vital to ensure that the amount in the brokerage account is sufficient to cover the collateral and sell the futures when the commodity’s price is at the maximum. Or you can sell the futures when the price of the commodity is falling. That minimizes your losses. The price of futures can change rapidly, and its dynamics are difficult to predict. Therefore, Alex Reinhardt always keeps a very close eye on the price movements of the commodities for which he has concluded a futures contract.

Options

The experts at the Alex Reinhardt Academy point out that the options investment is similar to the futures in many ways. Like futures, an option is a derivative on a stock exchange. Options are a contract that gives you the right to buy or sell a commodity at a predetermined price. However, the buyer of the options does not have an obligation to conduct the transaction, as with futures. The commitment to execute the transaction arises only for the seller of the option.

It might seem that by buying options, the investor does not risk anything, but specialists from the Alex Reinhardt Academy are aware that there are always risks for an investor. For instance, the buyer of the options will have to pay quite a high commission to the seller. That is why for the buyer of the option to make a profit, the cost of goods must increase or decrease significantly.

So, let’s look at a specific example where the seller’s premium for buying the commodity is $3. If the commodity price rises less than $3, the buyer of the option will still be at a loss. If the cost of the commodity falls, their loss will be even bigger. That’s why Alex Reinhardt only buys options if he is 100% sure that the commodity price will change significantly.

Shares

A share is a security that gives the owner ownership of part of the company. The owner of a share can expect to receive a percentage of the company’s profits, paid as a dividend. Alex Reinhardt never buys shares in a company solely based on dividend payments if he expects a high return.

Stock investments can be very safe and low-yielding or very risky and potentially high-yielding. Company dividends generally yield less than 10% per annum. You can expect a higher yield if a business is actively developing and its share price is rising. Nevertheless, as the Alex Reinhardt Academy’s experts point out, such companies tend to channel money into growth rather than dividend payments. If a shareholder’s hopes of rapid growth don’t materialise, then the investor won’t get any profits. The worst situation is when the share price falls after the purchase. In that case, the investor will have to wait several years to sell the shares at a more or less favourable price, and they will not receive any dividends in the process.

The famous investor Warren Buffett made his fortune largely by buying shares of companies very cheaply and waiting for them to rise. However, if you don’t know how to analyse a company’s financials and take stocks randomly, you will lose your money. Alex Reinhardt always analyses in detail the financial situation of the company whose share he is about to buy. To learn how to analyse securities, as he does, you need to be educated in economics and take a course in the academy.

The riskiest strategy is to buy or sell stock on credit. This strategy can lead to an investor ending up with huge debts instead of income. So it makes sense to think about trading on the stock market on credit only after finishing online business training,  and the Alex Reinhardt Academy offers the best.

All rights to the text of this article is courtesy of the Alex Reinhardt Academy – https://reinhardt-academy.com/

Show Buttons
Hide Buttons