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Useful suggestions on how to invest and earn

One can invest and save not only in bank deposits. The goal of this handbook is to inform about the wide range of alternative investment opportunities available to any investor. The target audience of this handbook is anyone who has established or plans to establish savings in the thousands (but not in the many millions) and who basically understands or is ready to learn what shares, bonds, investment funds and similar terms mean. The handbook content is regularly updated.

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Table of contents

Preparation

Investments in stock exchange shares

Loans/bonds

Other investments

4 effective ways to invest in bonds

In general, investing in bonds, in our opinion, is a very promising form of investment, but we would advise you to be cautious about this financial instrument, because it has a number of technical nuances, as a result of which it becomes more complicated than investing in company shares. For the sake of simplicity, we have compiled 4 approaches to investing in bonds:

  1. Bond ETFs. Exchange-traded bond funds can be bought as easily as stocks and have high liquidity. The funds immediately offer a diversified portfolio of bonds, both with government and corporate securities. It is important to remember that the price of bond funds can change both up and down. For example, in situations where interest rates are rising rapidly in the market, the value of bond funds decreases (as happened in 2022). Among interesting bond ETFs, we recommend evaluating iShares Global Corporations Bonds UCITS ETF, iShares JP Morgan $ EM Corp Bond UCITS ETF and iShares Core Global Aggregate Bond UCITS ETF
  2. Short-term savings bonds. Buying short-term government bonds can be a very easy and more profitable alternative to bank deposits. Several European states, the Baltic ones among them, sell savings bonds directly to private individuals. We have collected more extensive and practical information about this investment option in the article - How to invest in the short term and with low risk - alternatives to a deposit
  3. Bond investment funds. Closed-end mutual funds may invest in bonds that are not highly liquid or not traded at all. Such bonds offer higher yields, but require additional due diligence in researching the investment. Closed-end investment funds provide investors with investment diversification and access to investments that are difficult for private investors to access on their own. Closed bond funds in the Baltics are managed, for example, by A3E (bonds of developing countries) and by Signet Baltic Bond Fund (bonds of Baltic companies), into which Capitalia merged its own bond fund.
  4. Individual bonds. Investors can also buy bonds issued by individual companies or countries themselves. Here, however, we want to draw attention to the need to create a diversified portfolio with preferably 20 securities. In the Baltic States alone, there are approximately 50 available bonds of various companies, while internationally this offer is even wider. It should be warned right away that in practice, buying bonds that are issued in a different country than your securities account is quite tricky.

To purchase bonds or bond funds, all you need is a securities account in a bank, which most commercial banks offer free of charge. You can buy and sell bonds either through the stock exchange or by making a transfer, which is very similar to making a money transfer through an Internet bank. In practice, however, we immediately recommend finding the broker's telephone contacts, as it is likely to be needed for the formation of the bond purchase transaction.