Investment guru Charlie Munger said: "If I knew where I would die, I would never go there in my life." As an ordinary person, especially an investment beginner, it is important to understand the practice on the investment road. The experience and mistakes summarized by readers can help us learn to invest correctly, reduce losses, and improve long-term returns.

"21 Precepts of Investment" is just such a small book that warns us to avoid investment traps. The whole book only has about 90,000 words and lists 21 negative investment lists. The author Ben Stein is a famous American economist and comedian. He has won the Emmy Award, the highest award in the American television industry. Due to translation, the Chinese version may affect the reading experience of this book. But as Warren Buffett said, "Ben Stein applies Charlie Munger's warnings to the investment field with his unique humor and insight. Please remember!"

I am very impressed with this. Treasure. I have been involved in the investment field since the beginning of the epidemic in 2020. At this moment, I especially want to share with you the correct investment rules that investment beginners have learned and applied from this book.

Compound interest is known as the eighth wonder of the world. Sorting out your own and your family's financial plans in advance and investing early are the prerequisites for realizing the compound interest effect on wealth. Based on a simple calculation of time deposits, the same 10,000 yuan is saved until the age of 60. Calculated at 10% annual compound interest, starting from graduating from college at the age of 23 and starting to save at the age of 30, the final amounts are 340,000 and 174,000 respectively. The gap is very large. . If the calculation interval of compound interest is shortened, the income gap is even more shocking. Therefore, invest as early as possible. Don’t “have no plan for your investment or even all financial management”, or even “sharpen your guns” when you are about to retire.

Financial planning can start with simple bookkeeping, then sort out your own income items, expenditure items and asset categories, and then conduct integrated analysis through balance sheets and financial diagnostic ratio calculations to find the one that suits you asset allocation method. The assets here include bank deposits, currency funds, bond funds, stock funds, hedge funds, artworks, futures contracts, etc. Different assets have different returns and risks. The specific types of investment and how to determine the investment proportion of each category need to be determined based on financial planning and return-risk preferences.

After having a certain financial plan, it is necessary to understand various types of assets. After analyzing my family's assets, I found that the proportion of savings and currency fund assets was too high and the stability was good, but the passive income was very low, so I wanted to learn about stocks and funds and make a certain proportion of allocations. Information channels are very wide, including financial news on TV, financial columns of big V, investment communities, and even offline fund sharing meetings. But in the first two months, my contact channels were very limited. I only followed a fund influencer based on a friend’s recommendation. Then, without knowing anything about it, I broke into fund investment and operated the same ratio simultaneously. Fund types recommended by V. Fortunately, the initial investment was relatively small and the losses were controlled. Here, I committed the “opinion leaders can predict the future” item in Ben Stein’s negative list.

In fact, no one in the world can predict future prices or market trends. As an ordinary investor, all you have to do is follow proven experience and always maintain independent judgment.

Different types of assets have different levels of returns and risks. Choosing investment objects carefully is the most important thing when investing.

The risks of short-selling speculation and commodity investment (such as art, Bitcoin) are very high, and neither of them can be controlled by investment beginners. Perhaps you have heard of hedge funds, whose expected returns are greater than 15%, much higher than ordinary funds. However, if you have read the book "The Truth about Hedge Fund Profits", you will know that the performance of hedge funds is not better than that of simple funds. Index funds. Overseas hedge funds charge an annual management fee of 2%, plus a 20% performance commission on excess returns, while the total cost of index fund transactions is controlled at around 2%. Fortunately, there are relatively few A-share hedge funds. However, universal insurance in insurance is a similar product and requires caution.

As an ordinary person, especially an investment beginner, I chose to allocate 20% of index fund products. An index fund is a basket of stocks that metabolizes the stocks according to the rules of index compilation. For example, the CSI 500 Index is composed of the 500 small and medium-sized stocks with the highest total market capitalization. Even if a single stock experiences abnormalities due to company development, the overall income of the index will not be greatly affected. Facts have proved that the long-term returns of index funds are better than those of hedge funds. They obtain the overall average return of the market. As of July this year, the index funds I bought in early March were basically sold at a 30% gain.

In fact, when we focus on increasing passive income, we often forget the core asset - ourselves. You are a stable human asset. By improving one's professional skills, strengthening one's body, improving one's personal charisma to generate stable cash flow, and then converting human assets into the accumulation of financial assets, this is an actionable path for ordinary people to achieve financial security and freedom. As Ben Stein said, "You yourself are a huge interest-bearing asset - your brain, your charm, your grace, your strong back, which can protect you and make you able to pay for all kinds of things." bill.

"

Entering the practical stage of investment, the common mistakes we make include frequent trading, quick liquidation of positions when the market is at a low, and the use of investment leverage. This is something that as ordinary people, we must avoid" Pitfall.

At the beginning of 2020, the average holding time of some of the funds I first bought was only 3 months. The funds I invested in regularly only lasted for half a year. As the market rose and fell, my mood changed. The direct consequence of frequent buying and selling is that transaction costs take away profits.

Looking at stocks, stamp taxes and commissions are charged by brokers when trading. If you sell in a short time, you will also have to pay individual stock dividend tax. Combined with the comprehensive transaction fees and frequent trading, the cumulative cost is very high. According to statistics, A-share retail investors contribute 80% of the total trading volume, and the annual stamp tax reaches hundreds of billions.

When the market is down, many retail investors clear their positions. The recency effect makes people believe that the market will continue to be down. However, historical data shows that when the market is down, many stocks often enter the low valuation area. It's a good time to buy. Take the US stock market meltdown in March 2020 as an example. At that time, a large number of high-quality stocks were seriously undervalued. By July, the returns of China Internet and China Internet were already around 40%. /p>

Thanks to institutions’ hype about the hot market, most people only enter the market when the market is hot. The most typical thing is that when Chinese aunts rush into A-shares, they often chase the rise. In fact, no one can predict the rise or fall of the market. Therefore, plan your investment wisely and keep some cash. Only in this way can you "buy cheaply" when the market is truly undervalued. High returns.

If you are not familiar with futures contracts that use margin trading, you must be very clear about borrowing money to invest. But this is an act of adding leverage to your investment. This behavior itself is very risky.

First of all, there is a risk that the investment income of the borrowed money will not be enough to cover the investment cost. For example, the cost of cashing out on a credit card is 14%, but the annualized income of the investment fund is 14%. Only 8%. Obviously, the operation of borrowing money to invest is a failure.

Secondly, there is a risk of mismatch between the borrowing period and the investment period, but the market rise and fall are unpredictable. During the repayment period, if the investment is at a loss, you have to pay back the money.

Finally, borrowing money to invest brings huge psychological pressure, which increases the risk of investors making mistakes.

Investment is a very complex project. A successful investor needs enough patience and iron will to cope with the unpredictable changes of the market. The epidemic continues, companies suffer losses and bankruptcies, and the number of unemployed people increases. Times are becoming increasingly difficult. By mastering the 21 investment commandments and self-reflection at all times, we can better protect our assets, reduce losses, and make more money.