Read the first book to understand investment and financial management

Chapter 7 Classic Principles and Common Sense You Need to Understand in Investment and Financial Management (2)
In the investment market, people all have the desire to use small money to make big gains, hoping to make more money with very little money.However, there is no free lunch in the world, and the use of leverage is also at the cost of huge risks. This requires investors not only to see benefits, but also to see risks, and use this tool reasonably and correctly to maximize their own use .

GDP: the wind vane of investment and financial management

GDP is the abbreviation of Gross Domestic Product (Gross Domestic Product). It refers to the value of all final products and labor services produced in the economy of a country or region within a certain period of time (a quarter or a year). It can not only reflect the value of a country’s The economic performance of a country can reflect the national strength and wealth of a country, and is often recognized as the best indicator to measure a country's economic status.

GDP was proposed to measure the economic output, or production capacity, of a country or region.For a country or region, there should be an input and output problem.How strong is the production capacity of a country or region, or to put it more simply, how much social wealth has been created? At this time, a unified unit of measurement is needed for comparison between countries and regions.And GDP is this unified unit of measurement.In other words, GDP is a ruler used to measure the social wealth of a country or region.

What exactly does social wealth include?Generally speaking, the products produced by factories, the services provided by banks, the value created by schools... All products created by people through their own labor, whether tangible or intangible, are social wealth.Adding up all these social wealth is the gross domestic product, that is, GDP. To put it simply, the total social wealth = books + discs + loofah... + shoes + clothes + mattresses + fine wine + cigarettes... In order to make these When irrelevant products are added together, the concept of "value" appears in economics, that is, how much is the wax gourd, how much is the loofah, how much is the clothes... In this way, the value of various products can be expressed in a unified currency, and the social aggregate can be calculated. wealth.The percentage of GDP growth that we often see or hear refers to the growth rate of the total wealth of the society on the basis of the previous year.

The total social wealth referred to here does not distinguish between ethnicity and nationality. That is to say, within the territory of a country, regardless of skin color, domestic or foreign enterprises, as long as the value created at this time is included in GDP Inside.For example, the profits of Dell Computer Corporation's branch in China will be included in China's GDP, but not in the US's GDP; the profits of Lenovo's US companies will be included in the US's GDP, not in China's GDP. GDP.

Of course, regarding the concept of GDP, we still have a few modifiers to grasp.One is the concept of time, that is, "produced within a certain period (a quarter or a year)", which shows that GDP is a concept of a period of time, not a concept of a certain point in time; the second is the concept of production, which refers to all products produced Value, excluding revenue from sales that would otherwise be double counted.For example, if 10 TV sets are produced, there will be a value representation of social wealth of 10 TV sets, and you will not only record part of the value representation because you did not sell them; the third is "final products and services", which refers to The goods that are finally consumed and used by people do not include intermediate products, which is also to avoid double counting; the fourth is "value", which means that these final products and services are calculated uniformly through market prices, not a certain The value assumed by the manufacturer itself.

The concept of GDP emerged after the Second World War and was gradually adopted by countries all over the world.China established the GDP accounting system in 1985, and gradually established a new national economic accounting system after 1992, with GDP becoming the core indicator.At present, this indicator has become an important basis for governments at all levels to formulate economic development plans and strategic goals, and has become a well-known economic "barometer" that is concerned by the world.

For personal investment and financial management, changes in GDP are very important.Because the macro economy continues to grow rapidly, that is to say, the rapid growth of GDP is the main driving force for the stock market to rise.Once economic growth slows down and corporate profitability weakens, the stock market will naturally fail to rise.For example, from 2006 to 2007, my country's GDP growth rate continued to remain above 10%, and the stock market was naturally a big bull market; and from 2008 to 2009, my country's GDP growth rate slowed down sharply. The quarterly increase was 2008%, the third quarter increased by 10.6%, the last quarter was only 10.1%, and the first quarter of 9.0 was only 6.8%. Therefore, during this period, the stock market was sluggish and it was a big bear market.

In the process of personal investment and financial management, it is necessary to maintain sufficient attention and sensitivity to changes in the country's GDP.If investors can follow the general trend of the country's economic development and follow the trend, it will increase the chance of profit and reduce the probability of loss.

Learn about investment, wealth management and tax knowledge

Taxation is the form in which the state distributes social products by means of political power or public power.Taxation is a form of distribution to meet social public needs, and taxation is free, compulsory and homogeneous.For investors, if there is an investment behavior, they must pay corresponding taxes.Therefore, learning to invest requires an understanding of China's tax system and related tax knowledge.

Taxes in China are currently classified according to major categories, mainly including turnover tax, income tax, resource tax, property tax, behavior tax and other taxes.

Circulation tax: value-added tax, consumption tax, business tax, customs duty, vehicle purchase tax, etc.

Income tax: corporate income tax, foreign investment enterprise and foreign enterprise income tax, personal income tax, etc.

Resource tax: resource tax, urban land use tax, land value-added tax, etc.

Property tax: real estate tax, urban real estate tax, etc.

Behavior tax: stamp duty, vehicle and vessel tax, urban maintenance and construction tax, etc.

Other taxes: agricultural and forestry special product tax, cultivated land occupation tax, deed tax, etc.

As an individual investor, before investing, you must compare different investment methods and choose the best way to invest.At present, there are two main investment methods that individuals can choose: securities investment and industrial investment.

There is not much taxation knowledge involved in securities investment. For example, stock investment only pays stamp duty now, and other taxes are temporarily exempted.Here is a brief introduction to the tax knowledge of industrial investment.Generally speaking, the industrial investment methods that individuals can choose include: engaging in production and operation as an individual industrial and commercial household, engaging in contracting and leasing business, establishing a sole proprietorship enterprise, establishing a partnership enterprise, and establishing a private enterprise.When comparing these investment methods, if other factors are the same, the tax that the investor should bear, especially the income tax, becomes the key to decide whether to invest.The following is an analysis of the income tax payable by various investment methods.

[-]. The tax burden of individual industrial and commercial households

Five-level progressive tax rates of 5% to 35% apply to the income from production and operation of individual industrial and commercial households and the income from contracted and leased operations of enterprises and institutions by individuals.

例如：某个体工商户年营业收入54万元，营业成本42万元，其他可扣除费用、流转税金2万元，其年应纳税额为（54-42-2）×35％-6750（个人所得税速算扣除数）=28250（元），税后收入为l0-28250=71750（元）。

[-]. The tax burden of sole proprietorship
The tax policy stipulates that starting from January 20, 1, the collection of corporate income tax on sole proprietorship enterprises will cease, and the investment income of sole proprietorship investors will be levied on personal income tax in accordance with the production and operation income of individual industrial and commercial households.The tax burden borne by individual proprietorship investors varies according to the annual taxable income and the applicable tax rate.

例如：年应纳税所得额为6万元，适用税率为35%，应纳个人所得税6×35%-6750（个人所得税速算扣除数）=14250（元），实际税负为14250÷6×1%=2375%。

[-]. The tax burden of private enterprises
At present, the main way to establish a private enterprise is to establish a limited liability company, that is, two or more shareholders jointly contribute capital, each shareholder bears limited liability for the company with the amount of capital contribution subscribed, and the company bears responsibility for its debts with all its assets.As investors, individual shareholders obtain corresponding equity income according to the proportion of their investment in the paid-in capital of the enterprise.As an enterprise legal person, the profits of the enterprise are subject to enterprise income tax.When investors receive dividends from enterprises, they are subject to 20% personal income tax on dividends and bonus income.In this way, the dividend income obtained by investors bears a double tax burden.

Since the rights and interests enjoyed by a single investor only account for a part of the company's total rights and interests, the responsibilities it undertakes also only account for a part of the company's total responsibilities.However, because the income obtained is part of the income, the income tax burden paid by the enterprise is also borne by individual investors in proportion to their capital contribution.

例如：个人投资者占私营企业出资额的50%，企业税前所得为12万元，所得税税率为33%，应纳企业所得税12×33%=396（元），税后所得为12-396=804（元），个人投资者从企业分得股利为804×50%=402（元）。股息、红利所得按20%的税率缴纳个人所得税，这样投资者缴纳的个人所得税为402×20%=8040（元），税后收入为402-8040=32160（元），实际税负为（396×50%+8040）÷（12×50%）×1%=464%。

[-]. Partnership tax burden
A partnership enterprise refers to a profit-making organization established within the territory of China in accordance with the Partnership Enterprise Law, where each partner enters into a partnership agreement, contributes capital, operates in partnership, shares profits and risks, and assumes unlimited joint and several liabilities for the debts of the partnership enterprise.In a partnership enterprise, the profits and losses of the partnership shall be allocated and shared by the partners in accordance with the proportion stipulated in the partnership agreement.After the establishment of the partnership enterprise, the proportion of each investor's income and responsibility has been determined.Like sole proprietorships, from January 20, 1, the state will stop collecting corporate income tax on partnerships, and the investment income of each partner will be levied personal income tax in accordance with the production and operation income of individual industrial and commercial households.However, since a partnership enterprise has two or more partners, each partner only pays personal income tax on the income he obtains.

例如：某合伙企业有5个合伙人，各合伙人的出资比例均为20%。本年度的生产经营所得为30万元，由各合伙人按出资比例均分。这样每个合伙人应纳的个人所得税为30×20%×35%-6750（个人所得税速算扣除数）=14250（元），税后收入为6-14250=45750（元）。合伙企业每个合伙人的实际税负为2375%（14250÷6×1%）。

Among the above investment methods, generally speaking, with the same income, individual industrial and commercial households, sole proprietorships, and partnerships have the same tax burden, and private enterprises have the heaviest tax burden.However, the three forms of enterprises, such as sole proprietorship enterprises, partnership enterprises, and private enterprises, are legal entities, which have advantages in the purchase of invoices and the identification of taxpayers. some tax incentives.

Among the three types of enterprises, private enterprises appear in the form of limited liability companies, which only bear limited liability, and the risks are relatively small; individual proprietorships and partnership enterprises have relatively high risks due to their unlimited liabilities.In particular, sole proprietorships still have related laws and regulations such as value-added tax and general taxpayer identification that are not perfect and difficult to operate, which aggravates the risks of such enterprises.However, partnerships have advantages in raising funds due to the joint establishment of enterprises by multiple parties, and they bear relatively few risks.Compared with limited liability companies, the lower tax burden is conducive to the development of sole proprietorships and partnerships.When formulating investment plans, individual investors should fully consider various factors and choose the optimal investment plan.

Investment and financial management must be carried out under the premise of national policies and regulations, and it is not wise to take huge risks to evade taxes; "tax avoidance masters" who exploit legal loopholes everywhere will eventually be punished by law.Long-sleeved investors will consider how to use relevant tax policies to reduce pressure reasonably, how to legally evade tax supervision, and retain sufficient funds to earn more profits.

Benefit and risk are twin brothers
When it comes to financial investment, it is necessary to mention risks and benefits.The purpose of investment is to obtain income. The income is the money obtained through investment that exceeds the investment principal, which is what we usually call the money earned.In many cases, such as investing in stocks and real estate, the income obtained is uncertain, that is to say, the result of the investment may be to make money, or to make a profit, or to lose money. We call this uncertainty of income It is a risk.

The risk of investment comes from two aspects: on the one hand, the risk is the fluctuation of the price of the investment product itself, such as the rise and fall of the stock price, the rise and fall of the house price, etc. If the stock price you buy is high, once the price falls, you may lose money; On the other hand, the risk comes from the liquidity of the investment product itself. The so-called liquidity, to put it bluntly, means whether it is easy to sell.Liquidity risk means that when you want to sell an investment product, you may not be able to sell it, and you must sell it at a reduced price. Sometimes even if you sell it at a reduced price, it may be difficult to complete the transaction, and as a result, the investment product cannot be realized smoothly.Real estate is an investment product with relatively illiquidity.The risk and return of investment are twin brothers, accompanying each other like a shadow.There are no low-risk, high-yield investment products in the world. If you want to get high returns, you must bear high risks.Conversely speaking, even if you take high risks, such as investing in stocks, you may not be able to obtain high returns and may lose money.Therefore, the phrase "high risk, high return" that people often say is wrong, and should be changed to: "High risk may result in high return, and may also result in loss."

In the investment process, risks must be assessed. Only after an effective assessment of risks can a correct strategy be made, and targeted investments can be made, and risks can even be converted into benefits.

Rockefeller took control of America's oil resources in the 19s.His achievement is not only due to the business philosophy he learned from his father, and the meticulous, trustworthy, and meticulous character he learned from his mother, but more importantly, he benefited from the foresight and adventurous spirit he developed from entrepreneurship .

A large oil field was discovered in Lima in the 19s. At that time, the oil in this oil field contained high carbon content, and people did not find an effective refining method, so the oil price in the oil field was only 80/1 of the normal oil price.And Rockefeller firmly believed that one day he would find a way to refine it, so he insisted on buying the oil field.His decision was opposed by all board members, but under Rockefeller's repeated lobbying, the board made concessions.Sure enough, within two years, Rockefeller found a way to refine it, and the price of oil rose from $6 to $015.The company's profits soared to hundreds of millions of dollars.Members of the company's board of directors had to admit that Rockefeller saw farther than all of them. They said: "It seems that the risk that is identified is the reward!"

China's stock market has experienced a bear market after a bull market in the past 28 years. In this turmoil, investors miss two people very much. One is the world's "stock god" Buffett, and the other is China's private equity No. 1 Zhao Danyang.In 27 years, Buffett made a substantial reduction in PetroChina's 12-16 yuan process, and later PetroChina rose from 16 yuan to 20 yuan, so many people think that Buffett was also wrong, but later, PetroChina's H shares fell to 9 yuan in Hong Kong A little more than [-] yuan, and it is still in a downward trend.Now it seems that Buffett's selling is still very correct. The stock god is not in vain. He may have foreseen the risks, so he made the decision to sell stocks.

At the beginning of 28, there was a major event in China's private equity industry, that is, Zhao Danyang, the No. Our investment standards have enough investment targets with a margin of safety.At the beginning, many people expressed puzzlement and cynicism about this. After knowing the news of Zhao Danyang’s liquidation, Zhao Danyang is a successful man who has come from a bear market. Compared with most people, he must be different from ordinary people. Risk awareness, and risk awareness is the first element of stock trading.Therefore, when investing, you must have the ability to foresee risks. You must know that risks and returns are twin brothers, and you must carefully consider when investing.

Buffett once mentioned the relationship between return and risk in his speech at Columbia University: "I want to point out the important relationship between return and risk. In some cases, there is a positive relationship between return and risk. If someone told me: 'I have a six-round revolver, and I have one cartridge loaded. You can turn the revolver all you want and pull the trigger on yourself once. If you can get away with it, I'll Just $1.' I'll decline the offer—perhaps on the grounds that $6 is too little. He may then suggest raising the prize to $1, but must pull the trigger twice— This is the positive relationship between reward and risk!"

Investment and risk are twins. As long as there is investment, there must be risk.After understanding the truth that income and risk are twin brothers, you must keep a calm mind when making financial investment, conduct investment analysis, and predict risks to avoid huge losses in your investment.

(End of this chapter)