has money on hand, but has nowhere to put ... In 2022, many people fell into this dilemma.
On the one hand, banks have been cutting interest rates. On September 15, many banks lowered their deposit interest rates again. Taking ICBC as an example, the three-year deposit and withdrawal interest rate dropped from 2.75% to 2.6%.
On the other hand, the stock market fluctuated uneasy. Shanghai Composite Index dived from more than 3600 points at the beginning of the year to more than 2800 points at the end of April, and recently hovered at 3000 points. Due to the complex environment at home and abroad, no one dared to enter the market rashly, for fear of being cut off. In this case, how should we manage our finances? Let’s talk about it today. The specific content is as follows:
- , three common financial products, what are their characteristics?
- three common financial products, what are the actual returns?
- How do we ourselves affect the final returns? What are the three common financial products?
. What are their characteristics?
Ordinary people are exposed to more financial products, such as deposits, savings insurance and fund stocks.
When it comes to their characteristics, they naturally cannot be separated from three characteristics: profitability, security, and liquidity. No financial product can take into account high returns, low risks, and high liquidity . This is what is often said, " cannot triangle ".
So, what do the above three financial products focus on? We made a summary:
- Deposit: Revenue is relatively low, currently in a single profit of 1~3%, with strong security. Among them, current deposits are very liquid, suitable for daily expenses and emergency expenses;
- Savings insurance: Medium income , In the long run, the security is very strong, with a compound interest of 3%~4%, but the liquidity is average, and it is suitable for long-term holding to maintain the steady appreciation of household assets;
- Funds and stocks: There is no upper limit on the return, but at the same time the risk is high and the liquidity is good, but there is also uncertainty. For example, you can cash out at any time when you make a profit, but you will be trapped when you lose money, which is suitable for gaining further appreciation of household assets.
So what is their actual returns? Let’s first look at fixed income deposit and savings insurance.
Want higher returns
Should you choose deposit or savings insurance?
Let’s take 100,000 yuan as an example to see the income gap between the two financial management methods:
- Method 1: ICBC will withdraw deposits for 5 years, with interest rate 2.65%, and withdraw the principal and interest after maturity and then deposit it;
- Method 2: Buy a certain amount of life insurance, take a 30-year-old man with one-time salary of 100,000 yuan as an example.
The following figure is the income line chart of the two products:
(Note: Assuming the deposit interest rate remains unchanged by 2.65%)
True conclusion:
- If it is short-term financial management , for example, if it is less than 10 years, bank deposits are more suitable, and the principal and interest are guaranteed within 500,000 yuan, and you can flexibly collect them. If you buy an increase in life, the cash value in the early stage is lower than the premium, and you will suffer losses if you use to cancel the insurance .
- If you can't use this money for 10 to 30 years, , for example, depositing education funds for your children and planning pension for yourself, it is more suitable to choose to increase lifetime life insurance, which will have higher returns in the long run.
It is worth noting that the maximum term for fixed deposits is only 5 years. Although the current interest rate is 2.65%, as the interest rate falls, it may be lower in the future. That is to say, the actual returns of Method 1 may be lower than what we calculate .
In contrast, the increase in lifetime life insurance, its cash value is written into the contract, and we can get steadily.
After talking about fixed income deposits and savings insurance, will the actual returns of non-fixed income funds and stocks be higher? Let's take a look.
Invest in fund . Stocks, what are the returns?
In the short term, A-share market is difficult to measure, ups and downs, and returns are difficult to determine. So how does it look at the long-term performance?
Because stock has higher requirements for investors to select stocks and timing, and has higher risks, here we choose relatively stable indexes to see long-term returns, such as the Shanghai and Shenzhen 300, which consists of 300 securities with large scale and good liquidity in the Shanghai and Shenzhen markets.
From the end of 2004 to the present 17 years, Shanghai and Shenzhen 300 Index has gone from 1,000 points to the current 3,800 points, equivalent to an annualized rate of return of 7.84%. If dividends are considered, the actual rate of return will be higher.
This shows that in the long run, funds and stocks often have higher returns, exceeding deposit and savings insurance .
But what about the actual investment returns of investors and investors? Here we take the investors of active equity funds as an example to take a look at it in detail.
In 2021, three fund companies joined hands with China Securities Journal to release the "Public Equity Fund Investor Profit Insight Report", which counts all 46.82 million customers of its 129 active equity fund products, and processed data of a total of 565 million transaction records in the past 15 years, which is quite representative. It mentioned:
As of the end of the first quarter of 2021, the average annualized return of investors was 8.85%, while the proportion of profitable people was 53.28%. In other words, nearly half of investors did not make money or even lost money .
(Data source: Invesco Great Wall Fund, Wells Fargo Fund, Bank of Communications Schroder Fund, statistical range is from the company's establishment to March 31, 2021)
So, for the same financial products, why can some make money, while others are losing money?
This may be partly attributed to ourselves.
Before managing finance, get to know yourself first
Most people are pursuing high-yield and low-risk financial products. However, they do not know that Sometimes the biggest risk comes from our own .
How will we ourselves affect the final returns? It is mainly reflected in two aspects:
When it comes to cognitive ability, the higher requirements are financial management products such as funds and stocks.
First of all, in the view of the A-share market, some people regard it as a casino, and they will trade frequently, chasing ups and downs; some people regard it as an investment market, insisting on value investment, and holding it for a long time. Different opinions will lead to different investment behaviors and the final results will be different.
Furthermore, it is a reserve of professional knowledge. For example, buying active equity funds, you generally need to understand the fund's investment target, historical returns and drawdowns, fund manager investment style, and also need to understand some valuation knowledge. There are also many knowledge points to know when switching to savings insurance.
For example, the increase in lifetime life insurance requires the cash value, the calculated rate of return IRR, and the additional and subtraction terms; annuity insurance requires understanding the annual amount of money received, the cash value, guaranteed collection, and whether it complies with your financial plan.
If you don’t understand clearly and start quickly, you may lose money.
There is a saying on the Internet that is very appropriate to describe it: We will never be able to make money beyond our cognitive range. Even if we make money by luck one day, we will sooner or later lose based on our strength.
- fell 10%, and the food was no longer good;
- fell 20%, and they couldn't sleep anymore;
- fell 30%, and they were ready to cut their flesh and escape...
After all, this is because the risk preferences are inconsistent. In the investment market, if you cannot bear the risks and cannot withstand short-term fluctuations, may not be suitable for investing in funds .
It is precisely because risk preference is so important that when we purchase funds and open securities accounts, we will have relevant tests. is to help us understand whether we are conservative, stable, or active investors .
For example, conservative investors are more suitable for low-risk products such as deposits and Yu'ebao .
Unfortunately, not everyone will pay attention to risk preference testing.
Summary: knowing yourself is often more important than knowing financial products .
written at the end
In this way, there is no difference between the three financial products, deposits, savings insurance, stocks, and stocks. For individuals, there is only one suitable or not.
If we want to manage our finances, we recommend taking three steps:
- Step 1, know yourself, understand your cognitive ability and risk preferences;
- Step 2, find financial management products that suit you;
- Step 3, hold for a long time, wait for the flowers to bloom.
In addition, there is no conflict between Financial products , 100,000 yuan can be divided into 3 parts, using diversified investment to balance the relationship between returns and risks, and construct an asset portfolio that suits you.
I hope this article can provide you with some ideas on financial management in this special environment.
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