How to invest

Comprehensive consideration of risk-reward ratio

Long-term investment is still a point of opportunity in the future

Wealth management needs to make an overall plan, from the simple purchase thinking in the past to the planning thinking. You need to clarify your own goal planning, evaluate the available assets and the corresponding risk tolerance level, and make a reasonable asset allocation based on your life goals.

Move towards diversified asset allocation and abandon the habit of single asset to dominate the world. In the US subprime mortgage crisis in 2008, the stock market fell sharply across the board, but the bond market generally received good returns. Therefore, holding diversified assets can mitigate the risks caused by the decline of a single asset. Reasonable asset allocation can be carried out in bonds, equity, cash management, large insurance policies, family trusts, real estate, and even globally.

We must abandon the high-growth era of low-risk and high-return thinking, and moderately lower the rate of return expectations. In 2018, China's GDP growth rate continued to slow down, and the era of double-digit growth rates in the early years has passed. Therefore, in the era of the growth rate correction, some non-standard asset investments can be used to pursue excess returns. This can avoid a lot of illegal financial risks, as well as some extreme fluctuations.

In the investment process, preference must be restrained and the inertial thinking that has been formed for a long time must be restrained. It is said that failure is the mother of success, but in fact in investment activities, inertial thinking is our own big enemy. When the cycle changes, we must abandon the previous procyclical investment ideas, such as increasing leverage and heavy physical assets, improve our own investment system and investment philosophy, and pursue optimal returns through the allocation and balance of large-scale assets.

Persist in long-term investment, look to the future, and pay attention to the beta returns of the market. At present, there will be fewer and fewer opportunities for short-term excess returns, and some longer-term investments must be made. Many traditional technical methods are now unable to eliminate the risk of a single asset or even an investment portfolio. Learn to use time for rewards.

There is no once-and-for-all investment portfolio, and you must learn to maintain a dynamic balance of assets. In the past procyclical, many people did not actively adjust their real estate investment for ten or twenty years, and did not buy or sell. Under the current environment, it is more suitable to adopt a buying and adjusting strategy.

Opportunities and risks coexist

The following areas are worth looking forward to

The first is the new investment opportunities brought about by technological progress and innovation. With the launch of the Science and Technology Innovation Board, the stock market in the secondary market has seen many positive reactions. There will also be many private equity investment opportunities in the primary market, such as 5G, new energy, high-speed rail, high-end equipment and other fields, which will usher in an unprecedented wave, and there will be more room for development in the future.

Secondly, this year's market risks may be released to a certain extent. The stock market is affected by corporate fundamentals, and there may not necessarily be systematic and trending opportunities. However, in some high-rated credit bond products, there is still value worthy of allocation, such as trusts, asset management plans, etc., which can bring about a fixed return of about 6-8%. The convertible bond market has both valuation and growth potential and can be focused on.

Finally, we have to put our eyes on a larger time and space, so that we can see the value depressions of some assets on a global scale. For example, real estate investment in some emerging markets and assets represented by gold may see considerable increases due to the impact of the US economy, and crude oil has shown a very good recovery this year after adjustments last year.

In summary, there are some structures in equity investments represented by new technologies, fixed income investments represented by high-credit bonds and convertible bonds, specific currencies represented by Australian dollars, and real estate investments in emerging markets. Sexual opportunities are worthy of our attention and research.

High-quality wealth management is finance

The organic combination of consulting and service

Wealth management is essentially the financial industry, which is a comprehensive consideration of the pursuit of high-quality assets and the risk-return ratio. The core content of wealth management revolves around investors' financial capital, which requires wealth management to be carried out within the framework of finance and asset management. When carrying out asset allocation, we must have a concept in mind, that is, for stock products, the release of potential risks is inevitable, so we must respect risk, respect supervision, and respect the law. If you want to continue to maintain and increase the value of wealth management in the current financial environment, you need to do three things: reduce the potential return on assets expected; change from a single asset to a portfolio of assets; change from a pure product purchase to a professional financial adviser consult.

Wealth management has typical consulting industry attributes, and institutional professionalism is particularly important. On the one hand, we need to help clients' financial capital to increase steadily. On the other hand, in a long time dimension, wealth management involves all aspects of family life, including education, medical care, retirement, inheritance, charity, identity planning, taxation, etc. This requires clients to seek advice from professionals, and professional wealth management agencies need to provide advice on the efficient management of clients’ wealth, family business and family members.

Wealth management is ultimately a service industry, which must provide customers with a safe, convenient and pleasant customer experience. Some complex financial transactions cannot be completed in one contact and require multiple interactions with customers. For example, Edward Jones, an independent financial advisory company in the United States, emphasizes convenience and face-to-face services.

In the context of continuous technological advancement, combining finance, consulting, and service organically, I believe that both Chinese high-net-worth clients and ordinary middle-class families will usher in a new pattern of higher-quality wealth management.

Wealth management is a Pacific-level business and has broad room for growth in China. Every wealthy family needs a financial office, ranging from buying insurance and managing cash to wealth management, asset allocation, and even family offices. Professional wealth management has real value to financial stability, family and social harmony. Wealth management is not only a noble profession, but also a great career! 

How to Achieve Financial Freedom

 In today’s article, I will combine my own years of work and investment experience and share some practical ways to make money with you.

Guaranteed to be good, it must be worth your patience to finish reading.

1. What is financial freedom?

When it comes to financial freedom, everyone may want to ask: How much does financial freedom cost?

The question that really needs to be asked is actually: Is there a 5 million, 10 million, and then lying at home and doing nothing? This is financial freedom?

Actually it is not like that.

You see, Sam Walton, the founder of Wal-Mart Supermarket, after he became the richest man in the world, he still gets up at 4:30 every day and works hard.

Lying down is not financial freedom.

The correct definition of financial freedom should be: You don’t have to do things that are meaningless to your life for money.

For example, someone will give you 10,000$ a month and ask you to sit in the office and do nothing. Don't do this kind of work.

Because doing this kind of thing is a waste of time and doesn't make much sense in life.

There is basically one path for ordinary people to achieve financial freedom, summed up in 6 words: work first, then invest.

2. Let's talk about work first

It cannot be denied that the first pot of gold earned by most ordinary people is earned through work.

As long as you are not a rich second-generation, work is extremely important to you.

How can you make more money at work?

Let's analyze the nature of work.

We are in a commercial society.

To create value in a business society is to make products and then sell them to customers.

Therefore, the most important thing in a business society is to focus on two ends, one is the product, and the other is the customer.

You want to have unique value in this society and earn more money.

Either you can make a product that no one else can do, or you have the ability to sell the product to customers.

Okay, let’s talk about the first way: creating products

Give two examples.

I am a former colleague, and we joined the company together. When we go to work, we all go out to have fun after work, parties, etc. He just typed codes at home every day.

Later I learned that he had developed an intelligent customer service system by himself.

Because the thing he developed was so awesome, he later resigned and started his own business. Now he is the No. 1 in the smart customer service market.

Now that it has raised three rounds of capital, the proper capital market unicorn is about to go public. This is to grasp the product side.

I also know an English teacher from New Oriental. I have experienced his English courses for postgraduate entrance examinations. Even if I have studied English for 3 to 3 months, I can pass the postgraduate entrance examination.

He summed up each question type to a very practical play.

For example, for a big composition, he asked me to practice the calligraphy first, and practice that kind of very well-behaved young round body. After the font is written, it looks like a clean little girl writes it.

Because he concluded, the marking teacher will give high marks to the little girls who love to clean, even if the content is very general, it does not matter, because the marking teacher will feel that it is not easy for girls. If they fail to pass the exam, they will cry very much. awful. He also grasped the product side.

As large as a customer service system or as small as an English class, you can make products that other people can't make and customers like. This is unique value and will always be competitive in society.

Of course, it is difficult to make products.

It doesn't matter, we have another side to grasp-customer relations.

Everyone needs to know a basic concept: there are barriers to access to information.

For example, in my hometown, a small mountain town on the 180th line, with beautiful scenery and nothing.

There is a young man I know who graduated from junior high school.

He found that although there was nothing in his hometown, there was one thing that was not good-the local honey was of good quality because of the good air.

So he started to add knowledge about honey, and talked about honey, he can talk to you for half an hour.

Then he started to sell honey, set up a stall at the entrance of the tourist area, and tasted it for free for out-of-town tourists, added WeChat, and made honey knowledge popularization for tourists on WeChat.

Because he spoke patiently and the quality of the honey was indeed very good, many tourists from other places became his iron fan and helped him to promote it.

When I chatted with him last year, he said that his annual income is now more than 300,000$.

The cities earn more than 300,000$ a year, and everyone around him earns 30,000 to 50,000$ a year. This is the power of customer relationships.

Since there are barriers to obtaining information, no one can become an expert in all aspects of life.

Therefore, when you choose a product, you need reliable people to make suggestions.

If you are reliable, professional, and have a way to let others know you, then you will have this customer relationship and it will be irreplaceable.

This path is a path that most of us can take.

As long as your usual work is in contact with people, you can do this.

Whenever you come into contact with someone, you treat each other with sincerity and show others professionally.

Gradually, you will become an expert in this field, irreplaceable.

To sum up, either you have mastered the product side or you have mastered the client, even if you don't have a lot of money at this time, in fact, you are already very free.

Because what you are busy every day is something meaningful to you.

Moreover, you have been doing something that is very competitive in society, and it is impossible not to make money.

Even if you don't start a business in the end and have been working in the company, you will become an indispensable person in the company, and your boss will give you a high salary.

Because I'm afraid you will run away.

Before the age of 40, the most important thing is to understand what you want to do in your life.

This is what Confucius meant when he said "Forty is not confused."

3. After talking about work, let's talk about investment

The word "capital" in investment refers to assets.

We usually say that a person is rich, not that he has a lot of cash in his family, but that he has a lot of assets.

There are several assets in front of us, including:

Stocks, houses, bonds, cash, and commodities such as gold and oil, as well as consumer goods such as cars, mobile phones, and bags.

Investing is actually dividing your money into stocks, houses, cars, bags, and so on.

Different assets have different appreciation capabilities.

The well-known American scholar Jeremy Siegel, in his book "The Magic Weapon of the Stock Market", has counted the returns of various assets in the United States for more than 200 years.

In the United States, the long-term return of the stock market is around 10% annually.

The bond yield is around 5%.

Gold is around 3%.

There is no benefit if you directly hold the U.S. dollar.

The situation is similar in China.

The Chinese stock market can also provide an annualized rate of return of 10%.

The bond is around 4-5%.

As for the house, under the background that the homeowner is not speculating, the house in the first- and second-tier cities can probably get at least 5%-8% of the income.

The income of holding cash is also 0.

As for luxury goods and consumer goods, from the moment you buy them, they begin to depreciate. For example, if you buy a car for 200,000 yuan, it will be worth 150,000$ in the second year and 100,000$ in the third year.

So buying a car as soon as you graduate is definitely self-harm.

In our conventional concept, money means cash, right?

However, cash is an extremely bad one among all asset classes.

On the Forbes rankings, the money of the richest people is rarely cash. More than 95% of the money is in the form of investment, and it is mainly assets that can quickly increase in value.

For example, 95% of Warren Buffett’s money is his company’s stock.

However, our salary is generally for you to find cash, right.

What you buy with cash determines when you can be financially free.

If you spend all your cash, such as buying cars, bags, perfumes, clothes, such products that continue to depreciate, then no matter how much money you make, there is no way of financial freedom.

For example, there is a big brother named Edwards in the United States. He won a grand prize of 27 million US dollars in 2001.

Comrades, 20 years ago, 27 million dollars, dollars, and spent ten lifetimes.

But after they bought the luxury house, they bought hundreds of luxury cars and parked a few rows in front of his house.

It made his neighbors say whether they moved to a 4S shop next door.

Later, he bought a private jet, several racehorses, and all kinds of strange hobbies. I won't talk about the specific details, for fear of being keyworded.

In less than 5 years, he had spent all his money and owed more than one million dollars to others.

Finally, over 50 years old, penniless, died alone in the country.

This is the end of someone who gets rich overnight but doesn't know how to invest.

It can be seen that it is useless to have money alone, and you have to know how to invest and know how to allocate assets.

Otherwise, you will spend all your money.

How should we allocate assets?

Peter Lynch, a well-known American fund manager, mentioned a relatively simple configuration strategy in the book "Peter Lynch teaches you financial management".

The first asset young people should allocate most is your first home.

When your money is not enough to buy your first house, you can learn to invest in index funds first, and slowly accumulate assets.

The so-called index fund, you can understand it as: the fund company sells the stocks of the largest and best companies in the stock market to you.

As the fund you buy continues to increase in value, you will save money faster and faster.

When the money is enough, buy the first house.

For the money you make later, you can continue to invest in index funds and continue to increase your assets.

Some students may ask: When does the value increase?

The answer is: there is never an end.

Have you ever seen a rich person who said after he had 5 million or 10 million, I don’t need my money to increase in value, that’s all.

Those who have really mastered investment knowledge will not draw a line to tell themselves: This is financial freedom, and there is no need to go any further.

After mastering the code of wealth, you will only get richer and the snowball will only get bigger and bigger

Of course, there are still some details that need to be mastered for the fixed investment of index funds, and it is definitely impossible to buy directly without thinking.

In general, even if you don't have a lot of money now, after the right investment, you will still live better than before.

You can also let your next generation start his life from a higher starting point, which is another meaning of learning to invest.

What is Financial Freedom

Financial freedom refers to the state where you are not working for money, but the money is completely sufficient. As long as the passive income generated by your assets equals or exceeds your daily expenses. If we enter this state, we can call it retirement or various other names. As long as no major disaster occurs, you can live on. Of course, if you like your job, you can continue to do it, or you can choose what you really like to do instead of doing what you don’t force for life. Happy but helpless things to do.

In terms of financial freedom, assets are things that you can put money in your pockets without working (assets generate passive income), and liabilities are things that take money away from your pockets. Therefore, your private car is no longer an asset in the ordinary sense. A set of properties used for rental profit is an asset, because it is completely owned by you, and the monthly income generated offsets the surplus after the property tax paid by you. And the house you live in is no longer an asset, because you have to pay for the mortgage and the resulting loan interest. Even if the mortgage and loan interest are paid off, you still have to bear the maintenance of the house, property taxes and other items expenditure.

The following are the standard principles for achieving financial freedom:

1) Create assets

2) Reduce debt

3) Manage daily expenses

Financial freedom has nothing to do with whether you are young or how much money you have. If you can make enough money for your daily expenses from ways other than your job, you will have financial freedom. Age may have nothing to do with financial freedom. Suppose you are 25 years old and spend 1,000$ a month, and your assets generate a passive income of 1,001$ a month. You are financially free. You can choose what you want to do without having to Worried about what to eat or where to live next meal. Suppose you are 50 years old and earn one million per month, but your monthly expenses exceed one million, then you still have not achieved financial freedom, and you still have to continue to earn one million per month.

Some people believe that financial freedom only applies to a small number of people. If the vast majority of people try to achieve financial freedom, then the system will inevitably collapse. This theory believes that the passive income that financial freedom depends on comes from the active income of other people. This is basically similar to the reason for the baby boomer retirement problem, in which the social security system is predicted to collapse when the post-war baby boomers, who account for the majority of the population, begin to receive pensions one after another.

Passive income to achieve financial freedom

Passive income

The following does not fully enumerate various sources of passive income that may achieve financial freedom:

1) Rental property

2) Unconditional basic income

3) Dividends or fund dividends

4) Bank fixed deposit and monthly income plan

5) Royalties brought by book writing, photography and video works, music and painting creation, etc., as well as income such as patent fees

6) Advertising revenue from blogs or websites

7) pension

8) Monthly living expenses, child support or child trust fund compensated by the former spouse

9) Rental professional qualifications or academic qualifications [4]

10) Rental property

This is the most common way for people to achieve financial freedom, but it is also the most expensive way. The advantage is that once you have a property available for rent, it can generate passive income for you, and it is usually a high-quality asset that generates long-term cash flow. It is usually preferable to own the full ownership of the property, because you do not have the pressure of a mortgage during the empty lease of the property, and you can still maintain a level of financial freedom. Another factor that needs to be considered is whether one has the ability to deal with the various proxy settlement issues triggered by the rental of the business, such as tenants’ renting, house repairs, rent recovery, malicious damage claims, etc., whether the effort spent is sufficient Passive income needs to be considered before actual implementation.