Is it profitable to invest in PAMM accounts?
Investments in PAMM accounts today are gaining increasing popularity. At the same time, active advertising and promotion of this way of earning attracts more and more people to the issue of investing in PAMM. Such investments are especially popular among those who have at their disposal small amounts, insufficient for investing in real estate, starting their own business and so on, but who want to make investments and, as they say, make their money work.
Before making a decision about investing in PAMM, all potentially interested people try to figure out how profitable it is to do it? But to answer such a question is rather difficult, since it is not easy to evaluate the actual “profitability”, because everyone is investing something different in this concept. Therefore, we consider it expedient to understand the profitability of investments as the ratio of the risks of loss of funds and the possible profit.
The risks of investing in PAMM
Let’s start with the moment of unpleasant, but important – with the risks. It is foolish to assume that investments in PAMM do not bear risks, such statements can be a component except advertising leaflets, since there are risks when investing any money and in any direction. Even bank deposits are subject to the risks of inflation or non-payment of funds due to the bankruptcy of a financial institution. If we talk about the risks when buying property or starting a business, they turn out to be extremely high.
Risks from investing in PAMM can be divided into trading and non-trading. The first are the risks that are associated with the peculiarities of the trading strategy of the manager to whom you decide to entrust your money. No trader can trade without losses, so they are inevitable, and they involve the risk of losing a greater or lesser amount. In this regard, it is necessary to pay attention to the choice of more reliable traders and diversify risks by dividing the amount of investments between some of the most reliable or profitable PAMM managers.
Non-trading risks associated with the likelihood of losing money due to the actions of the broker – the company through which you make investments. It is impossible to completely eliminate these risks, but in order to minimize them, you should choose a company that has been operating in the market for many years, has a good reputation and is ready to guarantee its obligations with appropriate documents (primarily, an agreement signed with you).
How much can I earn on investments in a PAMM account?
Besides the risks, the profit that a PAMM account can bring is important. It can vary in different limits and depends on how much more conservative or aggressive you choose. Conservative managers bring in about 3% of profits per month, and this is about 35% per year, which is significant (1.5–2 times the deposit rate). Aggressive accounts can bring even more – from 5 to 10% per month, but do not forget that it is also impossible to do without unprofitable trades, therefore in just one month the trader managing a PAMM account can lose 20-30%, and then 50%.
Thus, you need to match the risks and potential profits for each manager, choose several of the most appropriate of them and invest money in each in the same or different proportions. In this case, you can get the desired effect and make investments in PAMM really profitable, receiving 30-50% of income per year!