Many people tend to think that investment as too complicated and investment requires a lot of financial knowledge. We need a clear understanding of various types of investment before we begin to invest.
However, this is a misunderstanding of investment.
Some people used to think that we need have millions, tens of millions to invest in enterprises or companies. In fact, investment maybe a family financial comb or a few hundred dollars to buy a fund.
In fact, the cost of starting investment is very low, so it is unnecessary to think too complicated. The process of investment is to put the money you have earned in their proper positions, so that each money can play its role.
For example, the pension money used after retirement should not only be put in the bank current account. You shouldn't save insurance money to buy stocks just because you are young.
You need to know that the planning and allocation of each amount of money is a real investment.
How much money do we have?
To sum up, the money we earn every month basically has the following destinations:
1. For daily expenses and living expenses
2. Pay the house loan, rent and credit card
3. Save it and wait for a year or two to buy a big item (such as a car or a house) or do something big (such as getting married and having children)
4. As emergency funds for unemployment, disease, accident, etc
5. Prepare education funds for children
6. Preparing alimony for parents
7. Provision for family pension
If we all invest in the stock market, the risk will be too high and we will be in danger. It is meaningless if we can't outperform inflation if we just focus on current account.
According to the characteristics of each destination, we found that all the money can be basically divided into these four categories: management of idle money, stable financial management, long-term investment and insurance protection.
Where should each money be invested?
After sorting out four sums of money, what should I buy for each money? This is about the three elements of investment: security, profitability and liquidity.
Security refers to how high the investment risk of the product is. For example, the risk of bonds or bank deposits is low, and the risk of stocks is high.
The income is often the most concerned problem for investors, but if you want to obtain higher income, you must bear possible losses. In pursuit of maximum income, it is necessary to bear the low security of assets.
Liquidity is easily overlooked. The reason why many people do not stick to long-term investment is they are forced to withdraw due to various unexpected circumstances. Therefore, when investing, we should also combine the long-term and short-term goals of families.
These three factors are mutually restrictive, and all financial products cannot pay attention to them all. For example, you require the product to be safe, liquid and highly profitable, but there is no such perfect thing.
As we all know, the stock market has the highest yield in the long term, but there are too many factors that prevent us from holding for a long time. Of course, cognition and emotion are two important aspects. Another factor is the property of money.
If a sum of money can be invested for a short time and put into the stock market, it is actually given to randomness and luck. Once the family needs money because of illness or accident, it may also lead to interruption of investment.
The four sums of money are a simple way to help us plug the loopholes, and separate the money at different times for different purposes, which build a long-term stable structure to help us hold them for a long time.
