Investment refers to an economic activity that sacrifices or gives up the value that can be used for consumption now in order to gain greater value in the future. Simply put, investment is also a kind of expenditure, and it is an economic activity that can obtain a total value that exceeds the original value in a certain period of time in the future. What we are going to explain now is personal investment, or family investment. All activities that can add value or gain income in the future by investing a certain amount of principal can be called investment.

There are many kinds of personal investment, such as stock and bond trading, real estate trading and so on.

The relationship between personal finance and investment is that investment is a part of personal finance activities, and personal finance includes various forms and contents including investment.

1, basic investment rules:

First, the principle of coexistence of benefits and risks:

In general, the higher the income, the greater the project risk, and the income is directly proportional to the risk.

In family financial activities, the ultimate goal of any investment is to obtain income, and any investment has different degrees of risk, and income is closely related to risk, which is an important feature of investment activities.

The main indicator to measure the return on investment is "return on investment", and its calculation formula is as follows:

(market value at the end of the period-initial investment+holding period income)/initial investment = return on investment.

Simply explain this formula, that is, from the beginning of an investment to the end of this investment, the percentage of total income in the total investment is the return on investment. If the value is positive, the income is positive, and vice versa.

Investment risk refers to the possibility that the investment will not get the expected return or even have negative growth. There are many factors that lead to the formation of risks, such as:

Market factors: price fluctuations caused by changes in the international political and economic situation and changes in the internal market of the industry;

Policy factors: policy adjustment caused by the adjustment of national economic development priorities;

Financial factors: economic decline caused by inflation and interest rate adjustment;

Human factors: losses caused by the reputation and morality of the unit (individual) in economic activities;

Unpredictable factors: direct losses caused by unknown natural disasters, such as fires, floods and car accidents.

Therefore, risk should be regarded as an important reference condition for investment decision-making in investment and financial management activities.

B, the principle of diversification:

From the principle of coexistence of income and risk, we can know that any investment is bound to be accompanied by corresponding risks, so diversification is actually an effective way to avoid investment risks.

"Don't put all your eggs in one basket" is an old and correct proverb. Invest funds in unrelated or incomplete projects, so that when one project suffers risks and causes losses, other projects suffer losses at the same time, and other income can be used to make up for the losses.

Therefore, it is more scientific to adopt a reasonable investment portfolio to reduce the overall risk of investment. Portfolio can be diversified, such as:

A portfolio of the same category, such as buying multiple stocks or buying multiple foreign currencies;

Different types of investment portfolios, such as allocating funds in stocks, futures, real estate, savings and so on;

Regional investment portfolio, such as investing in different regions and countries.

C, market efficiency principle:

This principle means that mature financial markets (stock, bond and futures markets) are efficient at any time, and their transaction prices can reflect all their true information in time. Therefore, this market is considered as an efficient market.

Introducing the "market efficiency principle" into family financial activities can be manifested in:

1, the fairness of the stock price, and the stock price always truly reflects its company, industry and other economic conditions;

2, buy and hold, too many transactions will lead to an increase in transaction costs, but it does not necessarily bring better returns;

3. Refuse to gossip. In fact, when the news reached you, I'm afraid many people already knew it. Please note here that the premise is "mature financial markets". Because China's economic construction is far from the developed countries, the corresponding system norms may not be very comprehensive, so please carefully screen whether the market is mature!