What kind of income do securities bring?

Income from shares

A share is a security that allows you to receive part of the company’s profits, since its buyer automatically becomes a co-owner of the company.

There are two ways to make money on shares: dividends and resale of securities at an increased market price.

Dividends

Dividends are part of the profit that the company pays to shareholders based on the results of the reporting period.

According to the type of shares, dividends are:

ordinary;
privileged.

The amount of dividends is set by the board of directors at the general meeting of shareholders. Preferred dividends can be fixed and do not depend on the profit of the enterprise. They are paid first.

Based on the frequency of payments, dividends are divided into:

annual;
semi-annual;
quarterly.

More often than not, dividends are paid annually.

According to the method of payment, dividends are:

monetary - paid in cash;
property - paid in shares, goods or property rights.

By size, dividends are divided into:

full - paid in full;
partial - paid in parts.

The terms and procedure for payments are determined by the company's charter or meeting of shareholders. The dividend policy of each company is individual.

If an organization has no profit for the last period, it can pay dividends from retained earnings from previous years or from special funds. On the contrary, a company can save profits if it needs money for development.

You will receive dividends even if you have held the shares for only a few days. The main thing is to have time to get into the register of shareholders.

Change in market price

If a company does not make a profit, it cannot pay dividends. Then the only way to make money on its shares is to resell them for more than the price at which they were purchased.

The market price is formed as a result of trading and depends on supply and demand in the market. The better a company performs, the higher the demand for its shares and the more they will be worth. If things go wrong for a company and the stock price begins to fall, it is better to sell them immediately. And if the price rises, buy again and resell at a higher price.

You can earn money both ways. Let's say you bought a share for 1000 rubles. A year later, you received a dividend of 100 rubles and resold the share for 1,200 rubles. In total, your income was 300 rubles.

Bond income

Unlike a shareholder, a bondholder is not a co-owner of the company, but rather a creditor. There are two ways to earn income from bonds:

a fixed interest rate that the company undertakes to pay throughout the life of the bond;
the difference between the market and par prices of a bond, or the purchase and sale prices.

Coupon payments

Dividends are paid on stocks, and coupons are paid on bonds. Only, unlike dividends, coupons are mandatory payments.

They are:

fixed - the same amount is paid regularly, which is set in advance;
variable - the payment amount may change.

Coupons, like dividends, are paid quarterly, half-yearly or annually. The coupon income is accrued every day, but is paid on a certain date.

The coupon amount depends on the size of the company. The larger the enterprise, the lower the coupon payments on its bonds.

Price difference

As with stocks, bonds make money through price changes. On a specific day, the company buys the bond from you at a set par price, or pays the amount in installments if the bond is amortizing. The main thing is to purchase a bond at a price below par. Then the difference between the purchase price and the face value paid - the discount - will be your income.

If a bond has zero coupon, it usually sells for significantly less than face value. And the earnings from price changes are impressive. But most often such bonds are issued by companies close to bankruptcy.

It is not necessary to hold the bond until the end of the term; you can sell it at any time and make money on the difference between the purchase and sale prices. But if the bond is coupon, you will lose further interest payments and you will have to transfer the accumulated coupon income to the new owner.

Bill of lading

A much more interesting scheme appears in bills of lading. These are commodity distribution certificates, each of which is backed by a specific commodity supply of a specific type: sea or aviation.

This order records the quantity of goods delivered, its name, deadlines and the amount of money that must be or has been paid for this delivery. The bill of lading must also indicate the following points:

Nominal type, where the recipient of the goods is clearly stated;
The bill of lading is to bearer, that is, the cargo will be received by the person who presented the bill of lading;
The order type is the most widely used. Such a document can be transferred if it is written on the other side.

The value lies in the fact that this document records the results, that is, the fact that the delivery has been completed, which means that only by filling out this column is the process of financial settlement for this receipt possible.

In road freight movements, this document is replaced by a consignment note - a corresponding fixing certificate. In a broad market understanding, these documents can be resold, thereby the receipt will be redirected to another person, the current owner. On the stock exchange, this principle is largely applied by futures contracts.

Income from mutual funds

For mutual funds, income is generated through the activities of management companies. They consider all types of securities income to obtain the best returns for clients. Each management company has its own methodology.

Shareholders earn from the increase in the value of the share. If the prices of securities in the assets of a mutual fund rise, the value of its shares increases. The investor's income consists of the difference between the purchase price and the price at which he sells the increased share back to the management company. But the value of the share may fall, and then the investor will be at a loss.

Shareholders do not receive dividends or interest.

Income from other securities

Securities reflecting loan relationships

Interest and discount are the main types of income from securities that establish a loan relationship between the seller and the buyer. In addition to bonds, these include bills of exchange, certificates of deposit, and savings certificates. Anyone can buy bills of exchange, savings certificates are purchased by individuals, and deposit certificates are purchased by legal entities. Unlike a certificate, the holder of a note cannot pay it off at any time without cost.

Interest rates on these securities are determined by the Central Bank. You can receive income in the form of a discount if you buy securities at a price below par.

Securities giving the right of ownership

Securities representing ownership rights include options, futures and warrants. The owners of these securities are either obligated, in the case of futures, or have the right, in the case of options and warrants, to purchase the assets within a specified period of time at an agreed price. Warrants are used to purchase securities; options and futures are used to purchase any assets.

As income, the seller receives a premium - a commission from the buyer, and the buyer makes money on the difference in value: he sells the asset at a more expensive price if it has fallen, or buys it at a lower price if it has risen. Option sellers or both parties to futures transactions may post margin, a guarantee that can be used to pay off a position if the other party defaults.

Where is it more profitable to invest?

Securities are more profitable than bank deposits because their income is higher. But it depends on the risk. The riskier the security, the more income it can bring.

There is virtually no risk on government bills. Low-risk include other government securities, medium-risk include corporate bonds. They are suitable for lovers of conservative strategies.

The highest risk is in stocks, options and futures, but these securities bring the greatest income.

The Right service helps you select stocks and bonds taking into account your desired risk-return ratio. Using simple questions, he determines the strategy that suits you, assembles and manages your portfolio.

Bill of exchange

A bill of exchange is the oldest security that has ever existed in nature. The first mentions of it appear during the heyday of Ancient Greece.

In connection with the development of market relations in the Russian economy, Federal Law No. 48 of March 11, 1997 “On bills of exchange and promissory notes” was adopted in 1997. These two laws - Resolution of the Central Election Commission and Council of People's Commissars No. 104/1341 and FZ-48, are the main regulatory documents that carry out the legal circulation of the issue and circulation of bills in Russia.

In accordance with the above laws, a bill of exchange is a special type of security, which represents an unconditional debt (monetary) obligation, in a form strictly established by law. In accordance with it, the drawer (debtor) is obliged to pay the amount of money specified by the bill, at a certain time, in a certain place - to the bearer of the bill (holder of the bill).

A bill of exchange in economic theory is considered an “abstract obligation.” It does not matter on what kind of transaction, credit or commodity it is based. All rights under the bill are transferred to the subsequent holder of the bill as a result of endorsement (transfer of the bill). And its new owner (the holder of the bill) has the right to demand from the drawer all the obligations provided for by the bill.

According to the laws, there are two types of bills of exchange - promissory notes and bills of exchange.

Bills of exchange can only be issued in documentary form, on paper protected from forgery.

Resolution of the Central Election Commission and Council of People's Commissars No. 104/1341 (Chapter 1.) provides for the following mandatory details of a bill of exchange:

the name “bill” included in the text of the document and expressed in the language in which the bill itself was drawn up;
a simple and unconditional offer to pay the amount of money specified by the bill of exchange;
name of the payer of the bill;
indication of the due date for the bill of exchange;
indication and name of the place where the payment should be made;
the name of the person to whom, or by order of whom, payment on the bill must be made;
indication of the place and date of execution (drawing up) of the bill of exchange;
signature and seal of the drawer.

If the due date for a bill of exchange is not specified, the bill must be paid upon sight. On bills of exchange “at sight” and “at such and such a time from sight” the interest rate may be indicated on the bill amount, that is, the interest payable on the bill. Interest will be accrued from the date of drawing up the bill, unless other conditions for their payment are stipulated in the text of the bill.

The drawer is responsible for the acceptance and payment of the bill. Acceptance of a bill of exchange means the consent of a certain person to make payment on the bill in favor of the bearer of the bill.

The acceptance is placed on the front side of the bill, on the left side of it, and can be expressed in the following words - “I will pay”, “accepted” or other synonyms of these words with the obligatory affixing of the date, signature and seal of the acceptor. Acceptance may also be given for a partial amount of the bill.

Payment on a bill of exchange can be guaranteed by a third party using aval. Aval is a guarantee of payment on a bill given by the guarantor (avalist).

Aval is expressed by the words “considered as aval”, or another equivalent inscription and is certified by the signature and seal of the person who gave the aval. It can be applied to the bill of exchange form or to its additional sheet. The avalist assumes full responsibility for making payment on the bill of exchange and, in the event of the failure of the person obligated under the bill of exchange to make the payment, he himself makes the bill payment.

A promissory note must contain the following mandatory details:

the name “bill” in the text of the document on a standard form and expressed in the language in which the bill is drawn up;
a simple and unconditional obligation to pay the amount indicated on the bill of exchange;
indication of the due date for the bill of exchange;
indication of the place (address) at which payment on the bill of exchange must be made;
the name of the person in whose favor such payment should be made;
the date of drawing up the bill and the place of its execution must be indicated;
signatures and seal of the drawer (the person obligated on the bill).

The legislation establishes the following expression for the term of bills:

upon presentation;
in such and such a time from presentation;
in so much time from compilation;
on a certain day.

Both a promissory note and a bill of exchange can be transferred to any person by means of endorsement. An endorsement is an endorsement on the reverse side of the bill of exchange form, or on additional sheets to it. It should be simple and unconditional

, and it also indicates the full name of the person to whom the bill is transferred. Along with the transfer of the bill of exchange, all rights under the bill of exchange are also transferred to the person in whose favor the bill of exchange is transferred.

In practice, the following types of bills may exist:

commercial bills
drawn up (issued for circulation) on the basis of a specific commodity transaction;
financial bills
- such bills are based on a financial transaction, for example, bills issued by banks to raise funds;
fictitious bills
are debt obligations issued for commercial or financial transactions.

The legislation establishes a standard procedure for payment of a bill of exchange:

The bill of exchange must be presented for payment at the location of the payer, unless another location is specified in the bill of exchange;
the person obligated under the bill (drawer, payer) must immediately make payment on it if the bill is presented for payment within the period specified in it;
the day of execution (drawing up) of the bill is not taken into account when calculating the period. If the repayment date of the bill falls on a weekend or holiday, then it is presented for payment on the next business day;
if a bill is presented for payment before the end of its circulation period, then the payer (the person obligated under the bill) has the right not to make payment on it;
also, the debtor on the bill on the day of its repayment can pay only part of the bill amount, and the bearer of the bill is obliged to accept partial payment. In this case, a note indicating partial payment is made on the bill of exchange form.

We can conclude that the following distinguishes a bill from other securities:

a bill of exchange is, first of all, an abstract security, that is, it does not matter at all as a result of what transaction the bill of exchange is executed. In its further circulation, it is in no way connected with the original transaction, commodity or financial, as a result of which its registration took place;
a bill of exchange is always based on a specific amount of money - the denomination of the bill;
the indisputability and unconditionality of making a payment on a bill of exchange, when the obligation to make payment on a bill of exchange does not depend on the conditions of the bill of exchange, as well as on the occurrence of any event;
the bill of exchange performs the function of money, that is, the bill is a means of payment that can be accepted in payment for goods (works, services), this also implies the negotiability function of the bill;

The bill also carries other properties:

the issue (issue) of a bill of exchange does not provide for its state registration with the Bank of Russia, therefore the bill of exchange is not an issue-grade security, but cannot be admitted to circulation on the stock exchange (organized securities market);
a bill of exchange is also a credit instrument that provides a deferred payment for a specific commodity transaction;
a bill of exchange can also be a means of storing value; usually, interest-bearing bills of commercial banks are used for this purpose.