Understanding Finance from scratch

Chapter 29 How to Make Money Make Money, Deposit in the Bank or Invest——Learn some knowledge about investment and financial management every day (5)
First, invest in real estate in a good location.There is a famous saying in the real estate industry that is almost unchanged from ancient times: the first is the location, the second is the location, and the third is the location.As a combination of real estate and real estate, the construction cost of the house part is relatively fixed within a certain period of time, so it generally does not cause large fluctuations in real estate prices; while the price of land, which is a non-renewable resource, is constantly rising. The increase in real estate prices is also mostly due to the increase in land prices.In a city, good locations are very limited, so they have more potential for appreciation.Therefore, investing in real estate in a good location, although the purchase price may be relatively high, but because it has a stronger appreciation potential than other places, it will certainly be able to obtain considerable returns.

Second, invest in off-plan housing.Off-plan housing generally refers to real estate that has not yet been completed and accepted. In Hong Kong, off-plan housing is also called "off-plan".Because the developer sells off-plan housing, it can be used as a means of financing to withdraw cash in advance, which is conducive to the flow of funds and reduces risks, so a relatively favorable discount is often given when setting the price.The general discount range is 10%, and some reach 20% or even higher.At the same time, investing in off-plan housing may be the first to buy a house with better orientation and floors.However, the investment risk of off-plan housing is relatively high, and investors need to have a correct judgment on the strength of the developer and the prospect of the real estate.

Third, invest in the "tail room".Refers to the final stage of real estate sales, and the remaining few floors, orientations, and house types are not very ideal.Generally, by the end of the project, the capital invested by the developer has been recovered. In order not to affect the next step of development, the developer usually disposes of these end-of-life houses at a lower than usual price, so as to recover funds as soon as possible and revitalize the assets more effectively.Investing in Weifang is a bit like investing in junk stocks in the securities market. Investors buy them at a lower price than usual, and then sell them at the usual price at the right time to earn the difference.Weifang is more suitable for investors with strong bargaining power.

Fourth, invest in second-hand housing.Since the Ministry of Construction proposed to allow the listing and trading of purchased public housing, various localities have introduced corresponding policies to encourage the listing and trading of second-hand housing.This also brings opportunities to invest in second-hand housing.Buying second-hand houses in some urban areas with better locations, convenient transportation, and mature environments can be rented out to earn rent, and then sold on standby, which can be described as the best of both worlds.Although the transaction of second-hand housing is not very active, its investment prospects are still very optimistic.

Fifth, invest in facade houses.At present, in some newly-built communities, there are supporting facade houses.Generally, the area of ​​these facade houses is not large, ranging from 30 to 50 square meters, which is more suitable for self-employment.Since there is a relatively fixed customer base for operating in the community, the risk of investing in such a facade house is relatively small, and both self-management and leasing will generate better returns.

Sixth, invest in real estate to be demolished.During the reconstruction of the old city, there will be many properties to be demolished.In demolition, the owners of these properties generally receive very favorable compensation.Therefore, it is also a good investment method to earn income by purchasing properties to be demolished in advance to obtain demolition compensation.But investing in this type of real estate requires an understanding of urban construction development and urban planning.

Insurance and wealth management with small bets

A long time ago, one day a man was walking by a big river, and he saw ten boats loading goods. Everyone loaded their own goods onto their own boats, and every boat was full.Just about to set sail and set off, suddenly the wind picked up and the river made waves.Some people are worried that the voyage will be dangerous and propose to set off one day later, but most people are afraid that the voyage will be delayed and business will be affected.When the two sides were hesitating, the wise man walked up to him and came up with an idea. He suggested to set sail immediately, but he asked everyone to divide their cargo into ten parts and put them on ten ships respectively, and then set off.A few days later, nine ships returned, and one ship was overturned by the wind and waves, and each lost only one-tenth of his cargo.Everyone thinks that the wise man's method is brilliant.Later, this wise man seized this business opportunity and opened a business. Every ship sailing from this wharf would pay him a certain fee, and the ship he promised to pay the fee should pay for the loss caused by any accident during the voyage. He guarantees compensation.This is the early prototype of insurance.The story takes place in Italy in the 14th century.The ship shipping insurance contract issued by the merchants of Genoa, Italy on October 1347, 10 is the oldest insurance policy ever found.

In modern society, insurance is not only a basic means of protection, but also a flexible financial management tool.So, how much do you know about insurance and financial management?

The most cruel thing is that a person's life is full of unknowns, and you never know when bad luck will befall you.Ordinary diseases will temporarily affect the quality of life of the family, and major diseases will bankrupt people. The deterioration of the environment and food contamination have led to an increase in the incidence of major diseases year by year.Based on these considerations, the foundation of financial management is not only to save a certain amount of funds, but also to make relatively certain plans for an uncertain future. Insurance is also one of the important foundations of financial management.

There is a joke about how the captain of a wrecked ship persuaded several passengers of different nationalities to jump into the sea holding life buoys: he told the British that it was a sport; he told the French that it was romantic; To the Germans it is an order; to the Americans it is guaranteed: you are insured.

In the United States, insurance is an indispensable part of people's life, whether it is a head of state, a celebrity, or a commoner. Like food and housing, it is a necessary part of survival.Life, medicine, houses, cars, cruise ships, furniture, etc. are all insured, and they are like wooden fences, forming a ring and surrounding you.In our country, ordinary people's acceptance of insurance has not been high, but with the development of the macro economy and the accumulation of personal wealth, the importance of insurance consumption in family life is becoming increasingly apparent.

When people in China talk about financial management, they think of either investing or making money.In fact, the scope of financial management is very wide. Financial management is a lifetime financial management, that is, a person's lifetime cash flow and risk management, not just solving the urgent money problem.Financial management also covers risk management.Because more future flows are uncertain, including personal risk, property risk and market risk, which will affect cash inflow (income interruption risk) or cash outflow (expense escalation risk).If you have some spare money in hand, you don’t want to deposit it in a bank because the deposit interest rate is too low, and you dare not invest in stocks, futures and real estate because the investment risks are too high. At this time, you can consider investing in wealth management insurance products, which can not only obtain stable income Save worry and effort.

We say that insurance financial management has its unique advantages, which are mainly reflected in:
(1) Use small things to make big gains.That's the case with reimbursement insurance.There is a probability of getting sick or being accidentally injured.As for individuals, there are two situations: yes and no. Once there is, the loss is a large amount of money.Sacrifice small amounts of money at ordinary times and accumulate large sums when needed.As for how much this small amount of money is, it is necessary to comprehensively consider the relationship between the level of medical expenses and the level of income.

(2) Money that you don’t have time to manage.If you have no intention of spending at all, but just want to leave the money to your children and grandchildren, you can buy dividend insurance, or have dividend insurance that returns.If you don't move in the short term, and there is a possibility of moving in the future, it is recommended to take universal insurance.In the short-term, one or two years is guaranteed, in the medium-term seven or eight years it can maintain its value, and in the long-term it is profitable.

Both insurance and bank savings can provide for future risks, but there are big differences between them:
(1) Using bank deposits to deal with future risks is a self-help behavior that does not transfer risks.Insurance investment can transfer risks to insurance companies, which is actually an act of mutual assistance and cooperation.

(2) Free deposit and withdrawal of bank deposits.Insurance has the meaning of mandatory savings, which can help policyholders quickly accumulate a sum of money, but they can only get it when the insurance period expires or an insured accident occurs.

(3) The deposit amount includes principal and interest, which is definite.The money that can be obtained in insurance is uncertain, it depends on whether an insured accident occurs, and the amount may be much higher than the paid insurance premium, but in some insurance types, such as regular pension insurance, the money obtained is certain .

(4) The money in the bank is still your own, and it is only temporarily given to the bank for use.The money that the policyholder spends on buying insurance belongs to the insurance company, and the insurance company performs its obligations according to the provisions of the insurance contract.

Some people may be more worried about the withdrawal of insurance funds. In fact, there are several types of fund withdrawals for insurance wealth management:

First, it can be withdrawn flexibly. For example, within the validity period of the contract, the policyholder can request to receive part of the cash value of the investment account, but the insurance amount under the contract will also be reduced proportionally, which will affect the degree of protection.If all withdrawals are made, the depletion of the reserve account will be deducted (because you have enjoyed the death protection for a period of time), so only the cash value of the policy will be returned, which will cause a large loss.In reality, in order to meet the financial needs of policyholders, many insurance companies' universal life insurance products emphasize the strategy of "less protection and more investment" in account management.For example: You pay 10 yuan in premiums, of which only 2000 yuan is used as a liability reserve, and the remaining 9.8 yuan is used for financial management, and can be withdrawn flexibly.

The second is that it cannot be withdrawn at any time. Until the expiration of the insurance period, the death benefit and the cash value of the investment account can be returned at one time.

So how to choose insurance financial products?There are many types of insurance and wealth management products, but not every product is suitable for you.Generally speaking, insurance wealth management products are mainly divided into three categories: one is traditional dividend insurance, the other is universal insurance, and the third is investment-linked insurance (referred to as investment-linked insurance).These three types of insurance have their own characteristics, and consumers should choose the type that suits them.

Participating insurance refers to a life insurance in which the insurance company distributes the distributable surplus of this type of insurance in the previous accounting year to customers in the form of cash dividends or value-added bonuses in a certain proportion.The amount of dividends for participating insurance depends on the overall operating level of the insurance company, and the dividends come from the distributable surplus generated by the death margin, interest margin and expense margin of this type of insurance.The allure of participating insurance is that as long as the insurance company makes a profit, its profit level is higher than the prevailing interest rate level.

Investment-linked insurance not only provides life protection for customers, but also has a strong investment function.Except a small part of the premium paid by the purchaser is used to purchase insurance protection, the rest goes into the investment account.The funds in the investment account are invested by the investment experts of the insurance company, and all the investment income will be apportioned into the investment account and owned by the customer, while the customer bears the corresponding investment risks.The income of investment-linked insurance mainly comes from the income of investment accounts.The income of participating insurance is shared by the insurance company and the customer, so the investment risk is also shared by both parties; while the income of investment-linked insurance is fully enjoyed by the customer, and all investment risks are borne by the customer alone.

Universal insurance is an investment-type life insurance between dividend insurance and investment-linked insurance. Its main feature is that it has both investment income and protection.Universal insurance has two accounts for investment and protection. Part of the premium paid by the policyholder goes into the protection account and part into the investment account. As for the allocation of the protection account and investment account, it depends entirely on the policyholder.The annual rate of return of universal insurance refers to the annual rate of return of the funds in the investment account, not the rate of return of all premiums paid.Universal insurance generally has a guaranteed minimum return, so its investment risk is relatively low, and the actual rate of return is generally higher than the guaranteed minimum interest rate. The actual rate of return depends on the investment capabilities of each company.

At present, various insurance companies and banks offer a wide range of products. In addition to the above three main differences, each bank and insurance company has different fund income, cash withdrawal related regulations and fees. You can choose according to your needs. .

(1) Do what you can when purchasing.How much disposable monetary assets do you have, how much financial insurance to buy, asset evaluation is the first step in insurance financial management.Asset evaluation is mainly to carry out statistical analysis on one's own liquid monetary assets and various financial products owned, according to the principles of rational asset allocation and prudent financial management.Industry insiders believe that bank savings products should account for about 50% of personal monetary assets, high-risk products such as stocks account for about 10%, and investment insurance and wealth management products account for about 40%.Consumers can roughly determine the purchase amount of investment insurance based on this ratio.

(2) Choose the ideal company.Insurance wealth management products are different from general wealth management products. They have the characteristics of long contract time and strong constraints. Generally, it takes 3 to 5 years before cashing out the insurance amount and dividend income in one go or in installments. This feature determines that investors are buying It is essential to fully understand the capital strength and financial position of the insurance company.Just imagine, if an insurance company's financial situation is not good, when the insurance contract expires, the company has gone bankrupt, how can the rights and interests of investors be guaranteed?At the same time, investors should pay attention to the capital operation ability of the insurance company. If the capital operation ability is not strong, the investment income is limited, and the income of insurance wealth management products is correspondingly limited.

(3) Choose the right product.The main differences between bank financing and insurance financing are as follows:
First, bank wealth management products do not have a protection function, while insurance wealth management products have the protection function of death insurance.The payment of variable life insurance is fixed. Among the death benefits of the policy, part is the fixed minimum death benefit agreed in the policy and borne by the reserve account, and the other part is the investment income of the investment account.Depending on the situation of the fund income each year, the cash value of the policy will change accordingly, so the death benefit payment, that is, the degree of protection is constantly adjusted and changed.

The payment of universal life insurance is relatively flexible. After paying the initial premium, you can choose to pay any amount of premium at any time, as long as the cash value of the policy is sufficient to pay the relevant expenses of the policy, and sometimes you can even not pay the premium.In addition, you can also set the amount of death insurance according to your own needs, that is, you can allocate the proportion of premiums in the reserve account and investment account by yourself.Therefore, death insurance benefits are usually divided into two methods: the death insurance benefit is fixed, which is equal to the policy insured amount; the death insurance benefit can change continuously due to the payment situation, which is equal to the policy insured amount + policy cash value.

The death benefit payment of variable universal life insurance is basically the same as that of universal life insurance.However, it should be noted that the investment portfolio of the universal life insurance investment account is determined by the insurance company, which must promise a minimum return to the policyholder; while the investment portfolio of the variable universal life insurance is determined by the policyholder himself, and he must bear all investment risks. If it fails, and he fails to pay for the reserve account in time, the cash value of the policy will be reduced to zero, the policy will become invalid, and the protection function will be completely lost.

Second, the capital income situation is different.Bank wealth management products mainly adopt simple interest, that is, deposits with a certain period and a certain amount will have a relatively fixed income space.Regardless of whether it is fixed income or floating interest, within the financial management period, bank financial products all adopt simple interest.

Insurance wealth management products are different, most of them adopt compound interest calculation.That is, during the insurance period, the cash value in the investment account will be compounded annually.

Among insurance wealth management products, variable life insurance may not pay dividends, or it may pay dividends (currently, most of the domestic ones are dividend-paying types). Universal life insurance will also promise a bottom line of capital income, usually 4% or 5% of annual income; while variable universal life insurance will not promise, and the capital gains and losses are entirely borne by the policyholder.When you choose variable universal life insurance, you should pay attention to that the "capital income statement" presented by some agents is only the previous profitability of the insurance company, and does not represent the "certain" income in the future.

Third, the degree of flexibility in withdrawals varies.Bank wealth management products have a fixed term. If depositors need to withdraw flexibly due to urgent needs, there will be interest losses.

In recent years, insurance companies have introduced many types of insurance that have both protection and investment functions.These types of insurance not only play a role in protecting property and personal safety, but also increase the value of insurance funds.At present, domestic wealth management and investment-type insurance products mainly include: dividend insurance, universal life insurance and investment-linked insurance.The risks of these three wealth management and investment insurance types increase sequentially, but the potential for investment income also increases sequentially.

When you decide to buy wealth management insurance, in addition to the characteristics of the product itself, you should also consider factors such as the strength and reputation of the insurance company. You should consult a professional actuary before making a prudent choice.

Adjust your insurance plan regularly.Over time, households may face new risks, insurance needs, and income levels may change.In view of this, you can consider regularly adjusting your insurance plan and insurance products every few years so that you can enjoy sufficient protection.

(End of this chapter)