Read the first book to understand investment and financial management

Chapter 2 Investment Changes Destiny, Financial Management Accumulates Wealth (1)
Difficult life for 'scrooge'

Once upon a time there was a miser who, after many years of hard work, finally took over a prosperous family business from his elderly brother.Due to the large number of hired workers, the rations consumed every day made the miser heartbroken, so it didn't take long before he insisted on closing all the shops, dismissed all the hired workers, sold all his property, and replaced it with a lump of food that he didn't need to eat or need. A great nugget of drinking, buried in a hidden place.This piece of gold is the heart of the miser, and it makes him think about it day and night, and worry about it.Almost every other day, he would quietly dig out the gold in the dead of night, examine it, and play with it.A few years passed like this.Later, someone noticed his whereabouts, guessed the secret inside, and dug away the gold while he was not prepared.When the miser went again, he found that the place was empty, so he pulled his hair and burst into tears.A passer-by saw the miser who was in pain, and after asking the reason, he smiled and said to him: "My friend, don't be discouraged. In fact, you don't own the original piece of gold. It's better to take a stone and use it as gold." Bury it in the ground, and this will also make up for your loss, because as far as I know, when you have gold, you have never used it."

This story tells us: If all property is not used, it is equal to nothing.From an investment point of view, if your money cannot create value for you, it is equivalent to a buried "stone".

Generally speaking, there are only two ways to increase wealth: either work hard to make money and deposit it in the bank to increase book deposits; or invest and let money make money.We found that in this era of rapid economic development, it is difficult to achieve the goal of worry-free life and economic freedom by simply relying on the first way of earning money to save money.

Maybe you will say: "Investment and financial management are easier said than done, both troublesome and risky. In fact, what if you don't know how to invest? Our parents have come here before. Can't I imitate the experience of the older generation?" ?” Some people even say: “It’s good that I have enough money. At worst, when I get old, I can go back to my hometown to farm, and I can still live happily!”

However, is this the reality?
Although everyone has the freedom to choose their lifestyle, the changes in the general environment force you to open your eyes and face the fact: it is absolutely true - the era of safe and secure wealth has passed!Today, you may encounter various unpredictable situations such as inflation, financial crisis, unemployment, bankruptcy, etc. at any time!Whenever you have nothing, it's not a surprise to be on the streets.

From the perspective of the overall environment, in recent years, the global economic situation has been worrying.Since 27 years, the world economy has been in turmoil. The subprime mortgage crisis has not only brought heavy losses to large financial institutions in Europe and the United States, but also brought a crisis of confidence in the entire credit and securities markets.The shocking rise in oil prices, the sudden increase in the pressure of inflation, and the depreciation of the US dollar have caused a sharp decline in the wealth of countries and companies that hold US dollars. After the autumn of 28, the financial crisis hit the economy, and the global trade has not escaped the negative growth until the third quarter of 29. It is estimated that the annual trade volume will drop by 119%.At present, the world economy is beginning to come out of recession and recover slowly under the influence of short-term factors such as policy stimulus, but the economic recovery path and recovery prospects are still faced with loose policy adjustments, inflation expectations, rising commodity prices, trade protectionism, rising unemployment, Uncertain factors such as deepening expectations of dollar depreciation.The slowdown of the world economy will inevitably have an impact on the Chinese economy. For example, the decline in external demand caused by trade protectionism will be the main driving force for the Chinese economy in the future. It will not only affect China's export trade, but also bring greater pressure on employment.

In our country, it is an indisputable fact that employment pressure has increased.As early as a few years ago, when colleges and universities expanded their enrollment, people realized that one day soon, college graduates would face a difficult employment environment.Sure enough, in 27 years, the employment gap rate of college students was the lowest in ten years.This means that under the background of the increasing number of graduates year by year, the effective demand of enterprises for college students has not increased, and the employment pressure will continue to increase.In 27 years, more than 100 million fresh graduates were unable to find employment in the current period.Think about it, before these more than 100 million people were employed, not to mention how many social resources were ruthlessly consumed, even the hard-earned money of parents added up to a huge amount.

In addition, the more serious fact is that the 25-year "Main Data of the National 1% Population Sample Survey" shows that the elderly population over the age of 60 in my country has increased from 1.2 million to 1.49 million, accounting for 11.03% of the total population and almost accounting for the global elderly population. one-fifth of.With the increasing speed of my country's economic development, population aging has brought profound impacts on China's economic, social, political, cultural and other aspects of development. The pressure is also increasing, and the problem of providing for the elderly has become a burden on society.Generally speaking, the statutory retirement age in my country is 60 years old for men and 55 years old for women. According to the average life expectancy, these retirees have at least 20 years of retirement life.Although social endowment insurance is generally the first choice for urban and rural elderly people in terms of old-age security, the strength of society is limited after all. The rapid increase in the pressure of aging has made the government's burden more and more heavy, and the problems of "support" and "medical care" have also been resolved. It is becoming more and more urgent, and most elderly people are becoming less and less willing to choose to rely on their children for the elderly.How can we get rid of the situation of relying solely on social insurance to pay for the old age?All this requires you to prepare a full purse in advance.

The best approach, financial experts have found, is when your money is constantly working for you, whether you are working or resting.Only in this way, when the crisis comes, you can deal with it calmly.

Over time, the currency will depreciate, and the original idle money will be greatly reduced.People who only know how to save money will never become rich. Not only that, but they will also find it difficult to cope with the pressure of life and become poor.To get rid of the predicament of life, we must keep pace with the times, update concepts, break through thinking, learn to invest and manage money, and let money flow.

Prices are soaring, you have to run ahead of the CPI
In the process of financial management and investment, it is very important to consider the price factor.

Xiao Wang, Xiao Li, and Xiao Zhao each bought a house for 40 yuan, and then sold it one after another.

When Xiao Wang sold his house, there was a depreciation rate of 25% at that time-the average reduction of goods and services was 25%, so Xiao Wang sold it for 30.8 yuan, which was 23% lower than the purchase price.

When Xiao Li sold the house, the price rose by 25%. As a result, the house was sold for 49.2 yuan, which was 23% higher than the purchase price.

When Xiao Zhao sold the house, the price did not change. He sold it for 32 yuan, 20% lower than the purchase price.

In this process, who of the three did the best?

Most people may think that Xiao Li did the best and Xiao Wang did the worst.Why?Because most people only see that Xiao Li sells at the highest price, while Xiao Wang sells at the lowest price.But in fact, Xiao Wang performed the best, because taking into account the inflation factor, the purchasing power of the money he got increased by 20%, and he was the only one who didn't need to pay any money to buy such a house again.

This example tells us that in different periods, due to the difference in prices, we must take price factors into account when investing and managing money, and consider the purchasing power at that time, and we cannot stay at the price level of 3 or 5 years ago. .

Price is a very important weathervane for our investment.We need to see clearly the price trend, find the right investment direction, and seize the best opportunity for financial management.Just like buying stocks with appreciation potential when speculating in stocks, you are required to have flexible thinking and judge the direction of investment and financial management from the orientation of the market.For example, if you save regularly for 5 years, after the maturity, the interest rate income plus the value-preserved interest, and then remove the inflation part, there will be very little left. This means that you are not running ahead of the price, or you have not considered the impact of the price on investment and financial management at all. Impact.

There are many tools to resist price rises and maintain their own wealth preservation and appreciation, such as real estate, stocks, funds, RMB wealth management products, gold... But for many people, how to choose a wealth management product that suits them is quite a headache. things.In the face of rising prices all the way, what choice should we make?

"You may not be able to outrun Liu Xiang, but you must outperform the CPI (Consumer Price Index)." This is one of the most popular words on the Internet in recent years.For a while, it seemed that the prices of all commodities were rising, ranging from real estate to pork and eggs. Although our nominal wage income remained unchanged, our actual purchasing power was declining.Keeping up with the pace of rising prices and making reasonable financial investments has become an urgent problem for many people.

Rising prices have created a greater demand for financial investment among people, and they all hope to find a way to preserve and increase the value of their funds.In fact, there are many methods, each with its own characteristics. We should carefully choose a financial management method that suits us according to our income and financial management attitude. We must not invest blindly, otherwise we will only be dumb and eat coptis.

In an era of soaring prices, if you don't take good care of your money, once severe inflation occurs, and your savings shrink, you will "sit and eat".Only by having the courage to invest in financial management and broaden income channels can we run ahead of the CPI and beat inflation.

Investing in financial management, let money "grow" money
Inspired by the sensational "Pins for Houses" story a few years ago, in order to raise money for charity, three Australian college students launched a bold plan called "One Egg One World" in November 3. They intend to use In the way of bartering, an egg was finally exchanged for 28 Australian dollars (equivalent to 11 million yuan).

Soon, three college students including Wright reached the first deal—this egg was exchanged for an original soundtrack of the movie "The Story of Pine Cone Head", and then the original soundtrack was exchanged for a string of words game, and the crossword game was replaced by a travel book, which was replaced by an old digital camera, which was replaced by an alarm clock...

After several twists and turns, they exchanged the alarm clock for a 1988 old car.They then sold the car for about $1.After several rounds of exchanges, 9 months later, the original egg has been replaced with a late famous cricket star Don?Bradman's autographed cricket.Then, they sold the cricket ball to a netizen for 22 Australian dollars, and then used the money they got to buy a 14-day tour package for two people in Kenya.

In this way, after 15 months of non-stop exchanges, the penniless egg at the beginning has now been exchanged for a 22-day tour package for two people in Kenya worth 14 Australian dollars, and it is expected that in the next exchange process, it will be exchanged at a geometric rate. Multiples continue to "appreciate".

In the process of exchanging goods, every intermediate good plays the role of money.When money flows, more wealth can be created than before. This is a good interpretation of the concept of financial management.

(End of this chapter)