Fund fixed investment means investing in a fund at a fixed time and a fixed amount, which is somewhat similar to a bank's "small deposit withdrawal". It also has another nickname called "Investment Averaging Method", which perfectly highlights the core essence of fixed investment: investing in batches, accumulating less to make more, amortizing costs and reducing timing risks.

This investment method is more suitable for entry-level people and people who have no time to manage money. It is also called "lazy people's financial management technique", but it does not mean that it is not suitable for other people. No matter what your main investment method is, Maru Yi's suggestion is that everyone should allocate some fixed investment funds. Those with strong risk tolerance can completely use it as a substitute for time deposits.

The mainstream methods of fixed investment are divided into two investment methods: regular fixed amount and regular unfixed amount. Regular fixed amount is ordinary fixed investment, and regular unfixed amount is what we call "intelligent fixed investment".

After investing in a fund, how do we know its rate of return?

Some people may say, just look at the account. Yes, our holding rate of return is indeed marked on the account, which is also the fixed investment rate of return algorithm we most commonly use.

But how do we know which one is more profitable compared with other funds?

This involves the issue of the annualized rate of return of fixed investment. This is a difficulty in fixed investment. Many people are deterred because it requires mathematical knowledge. In fact, you don’t need to be afraid at all. It is not that difficult. I know In order to highlight their professional abilities, some people deliberately write some professional symbols and formulas that no one can understand. In fact, as long as they dare to explain it clearly, it is very simple. Maruyi will break it down and explain it today to ensure that there is nothing complicated. The formula is very practical.

First, let’s look at the basic algorithm of fixed investment yield:

Fixed investment is actually an equal-amount annuity. Let’s look at the following calculation question. Suppose Xiao Ming decides to start a fixed investment fund. The subscription date is the last trading day of each month, and the fixed investment amount is 1,000 yuan per month. At the end of the fifth month (note: there is no investment this month, so one ***(Only invested in 4 periods)) Terminate fixed investment. What was Xiao Ming’s fixed investment income at that time? The picture below shows the change in net unit value of the fund. The data is compiled by Maruyi, which is a bit exaggerated. The focus is on the calculation process.

The cash flow diagram is like this:

In the first step, we need to calculate what is the total fund share held by Xiao Ming when the fifth period of fixed investment is completed? In the second step, what is the total value of the funds held by Xiao Ming? The third step is, after this fixed investment is completed, what is Xiao Ming’s total cost? Finally, if we ignore the fund application and redemption fees, what should be Xiao Ming’s rate of return on this fixed investment after 4 periods of investment?

The calculation process is as follows:

Yes, this is the calculation method of most fixed investment yields at present. It should be noted that because our funds are actually invested in batches, in the early stage Funds have time value after investment. In other words, the 1,000 yuan we invested in the first phase, even if we don't buy a fund, will still earn interest if we put it in the bank. It has time cost and compound interest effect.

However, the rate of return here does not take into account our time cost of capital, so the annual rate of return cannot be calculated based on this. If you want to consider the time cost of money and calculate the accurate annual rate of return, you need to use the internal rate of return method (IRR) for calculation. The internal rate of return is calculated using the interpolation method. The interpolation method is an estimation method. The specific calculation steps are very troublesome. If we live in the era of EXCEL and do not take the CPA exam, there is no need to do the calculation by hand.

Annualized rate of return calculation method! Key points: Everyone click on EXCEL and enter according to the steps in my picture. Xiao Ming invests 1,000 yuan every month, so he fills in negative 1,000. The total value of the fund at the end of the fifth month is the result of the previous calculation. The numbers in the green box are not input. They are the purpose of our calculation. What we need to input is the formula in the red box, and the rate of return in the green box will be automatically calculated.

The IRR calculation must be both positive and negative, so it is drawn from B1 to B5. You don’t need to worry about the specific calculation, leave it to EXCEL. The annualized rate of return is calculated by subtracting the capital from the 12th power of (cost + internal rate of return) (12 months in a year).

It can be seen from the picture that although Xiao Ming only invested in 4 periods, his annualized return is as high as 793.34%. In other words, if the fund continues to rise at this rate, Xiao Ming will continue to invest regularly. If this continues, the principal will be doubled by nearly 8 times in one year. Of course, this data is just an extreme example I gave, and the reality is not such a good thing.

Having said that, I would like to change the topic and talk about other practical life skills of the internal rate of return method. The 12-month installment rate of some credit cards is claimed to be only 0.66%. Some people think that the annualized interest rate should be 0.66% × 12 = 7.92%, which does not seem to be too high. If you are as smart as you, you will know by using Excel that this is actually a trap.

Suppose we use a credit card to pay 10,000 yuan and plan to repay it in 12 installments. The handling fee is 0.66% per installment. The total *** handling fee is 10000*0.66%*12=792 yuan. Each payment The monthly repayment is 12000/12+846/12=899 yuan. Now we use EXCEL to pull it.

As can be seen from the table on the right in the PPT, the interest rate per period calculated using the internal rate of return method is 1.19%, and the actual annualized interest rate is 15.21%! Far more than the 7.92% we imagined, nearly double the difference! There are pitfalls everywhere in life. Maruyi advises everyone to calm down for three seconds and think rationally when making any decision.

When it comes to intelligent fixed investment, we have to mention our fixed investment smile curve. This curve perfectly explains why fixed investment makes money.

Taking the Shanghai Stock Exchange Index as an example, since the opening of the A-share market, there have been three large smile curves, not to mention countless small smiles.

To put it bluntly, it is impossible for the index to fall into a negative number. As long as you can persist in fixed investment, the cost will be amortized to a certain low level, and then wait for a bull market or a rebound, and you will have to pay for several years, including the principal and interest. Return it to you. Of course, I am only talking about fixed investment indexes in theory. When implemented into funds, there are various risk factors to consider, such as poor fund managers, style drift, rat positions, funds facing liquidation, etc.

As for smart fixed investment, in fact, compared with ordinary fixed investment, the biggest difference is that there is no quota. Intelligent fixed investment emphasizes investing more when prices fall and investing less when prices rise, so as to maximize profits. We can still understand based on a calculation problem.

Assume that points A to E in the above picture are the price trend of a fund. Xiao Ming starts from point A to make a fixed investment and stops profit from point E (point E does not invest). Ordinary fixed investment invests an average of 100 yuan at points A, B, C, and D. Smart fixed investment uses the blue dotted line as the baseline. If it is low, the investment will be doubled, and if it is high, the investment will be halved. Therefore, we will invest at the base points B and D. Each investment is 100 yuan, point C is 200 yuan, and point A is 50 yuan. After maturity, which of the two methods has a higher yield?

The calculation process is as follows:

Calculated in this way, the 200% return rate of intelligent fixed investment far exceeds the 125% return rate of ordinary fixed investment. This is because intelligent fixed investment is based on the ordinary fixed investment. At the top, more emphasis will be placed on buying large amounts at low levels to lower holding costs; while at high levels, try to buy as little as possible to prevent raising costs. I have previously talked about the moving average method strategy of intelligent fixed investment in my official account. Friends who need to know more can read the historical article of my WeChat official account "A very smart fixed investment method, you will like it".

This is actually a question of timing. Although many theories say that fixed investment does not have the trouble of timing and you can buy with your eyes closed, most of these theories are introduced from the West, especially Buffett’s investment theory and the bet on Yabao Index Fund, which have a profound influence in our country.

Buffett has stated in public many times that "by investing in index funds, investors without professional knowledge will actually do better than most professional investors." This is true, but the methods that are applicable in the United States may not be applicable in our country. I also said in the last sharing class that the market in the United States is upward in the long term, while the market in our country is "bullish, short and bearish". "Long-term", if you choose the right time, point and method to enter, you can get higher returns.

If the market is divided into four different situations, namely unilateral rise, unilateral decline, "∨" type market, and "∧" type market, should we make a fixed investment or a one-time investment? How to choose?

Let’s first study the unilateral rising market. I drew a unilateral rising line. Assume that the fund rises from 2 yuan to 10 yuan in 5 months, with a fixed investment of 1,000 yuan per month. According to the formula we talked about earlier , it can be calculated that the cumulative return rate of fixed investment is 128.33%, and the one-time investment is 400%, which is significantly stronger than fixed investment.

Then there is the unilateral down market. Through calculation, we can know that fixed investment is stronger than single investment:

In the "∨" type market (smile type) that first falls and then rises, fixed investment The return is better than a single investment:

In the "∧" type market, fixed investment shows weakness:

Final summary:

Okay, let's talk about it today At this point, in the next issue, I will push the previous fixed investment live broadcast sharing class based on the actual market conditions and actual operating methods.