Will Yu'ebao eat up the principal?

Many people like to put money in Yu'e Bao because it can generate income and is more convenient to use money.

However, some people may worry that if their money is placed in Yu'e Bao, it will be eaten and they will not even be able to get back the principal. Do they need to worry like this?

First of all, what needs to be clarified is that when we put the money in Yu'e Bao, we actually bought a currency fund with the money and used it for investment instead of actually putting it in Yu'e Bao.

Currently, there are about 20 monetary funds in Yu'ebao, and Yu'ebao is equivalent to the sales channel for these funds.

Therefore, the money we transfer to Yu'ebao actually flows into the pockets of these fund issuing companies.

The money raised by fund companies from investors through the issuance of funds is subject to supervision by regulatory authorities and is unlikely to be squandered casually.

And even if the fund company collapses, the money cannot be used.

Secondly, it is to see if you will lose money by putting money in Yu’e Bao.

Any investment that does not promise to protect capital will have the possibility of losing money, and putting money in Yu'e Bao is no exception, because currency funds are investment products that do not promise to protect capital.

However, although monetary funds do not promise to protect capital, the possibility of losing money is very low. Under normal circumstances, it can be said that there is basically no loss, so the probability of losing principal is very low.

All in all, if you put money in Yu'e Bao, although there is no guarantee that the principal will not be damaged, the possibility of losing the principal is still relatively low.

So, why do some people say not to put too much money in Yu’E Bao?

Why not put too much money in Yu’E Bao?

No matter whether you put more or less money in Yu'ebao, security is not the main consideration. Some people put 200 million in Yu'ebao and they don't worry about security issues.

The main considerations may be the following two aspects.

One is that it’s not a good deal.

Although putting money in Yu'e Bao can generate income, the income is not high and is not even as good as some bank deposits.

From the perspective of investment and financial management, if you put too much money in Yu'e Bao, it will obviously not be able to fully utilize the funds to create more profits, which is not cost-effective.

In fact, Yu'e Bao is more suitable as a current or short-term financial management method because it has better liquidity, can be withdrawn at any time, and is relatively safe. You don't have to worry about inconvenient withdrawals due to losses when you need to withdraw money.

But if it is used as a medium- and long-term financial management, its returns appear to be a bit low.

Another is that although it is convenient to put money in Yu'E Bao, it also has some limitations.

For example, although we can usually pay directly with money in Yu'e Bao, the daily maximum cannot exceed 10,000 yuan.

If you want to transfer money out of Yu'e Bao, the maximum amount that can be quickly transferred to the account on the same day cannot exceed 10,000 yuan.

Therefore, if you put too much money in Yu'e Bao, you will not be able to withdraw the money quickly in an emergency.

In fact, you can’t put as much as you want in Yu’e Bao, because it has a maximum limit for individuals.