At that time, wages were not very high and consumption was not very high. At that time, my biggest hobby was buying books. At that time, I began to contact the so-called financial management. The introductory books are Qian Qian the Puppy and Rich Dad.
Because I don't earn much, I can only balance about 500-800 per month. But there was a good consciousness at that time, that is, I knew I had to plan first and then manage my money.
It's almost nine years since graduation, and my income has increased many times. But this good habit has always existed, and now it has accumulated a fortune, which is not small.
If you gave up the habit of saving when you were young because you earned less, you will still be tied behind if you make any choice now.
Sounds a little mysterious, doesn't it?
Just do this:
If you spend 70,000 yuan a year and invest at a stable rate of return of 7%, you will become a billionaire in 70 years.
The compound interest formula is as follows:
P = principal, R = annual interest rate, and T = time year.
Through the book Make Money Well, we can know that the realization of financial freedom is divided into three stages.
I know that many people want to become freelancers, and they should prepare their basic living expenses for at least 6-8 months. Although this concept is cool, the reality is that you can make a lot of money in one month and nothing in the other. Generally speaking, I would advise them not to manage money first, but to make insurance plans first. For example, pay your own medical insurance and properly allocate some commercial insurance supplements.
The first step is to make a plan and then carry it out. Please write down the five wishes you want to realize most in recent years, and write down how much it will cost to fulfill them next to you.
For example, this is my friend Xiao Yuan's wish list:
● Read 30 books every year, and the required amount: 1500 yuan/year.
● Purchase of Apple series suits, the required amount: 30,000 yuan.
● Complete a trip to the South Pole before the age of 35. The required amount: 654.38+ 10,000 yuan.
When I was 30, I went to Hong Kong to study for an MBA. Requested amount: 300,000 yuan.
● Buying a scooter before the age of 30, the required amount: 200,000 yuan.
Step two, what financial preparations have you made to achieve your goal?
Jane 7 puts forward good methods and problems of setting goals, as follows.
● Have you made a budget?
● Is there an executable savings plan? Do you have any plans for promotion and salary increase?
● Have you started investing and saving for a certain wish?
When traveling, did you buy yourself an insurance?
● Any action or preparation is ok. Write it down.
I have a friend and two couples who spend about 30,000-40,000 yuan a month. For the ordinary working class, I am surprised that the expenditure is so large. Because there are no children yet, my parents are not sick for the time being. This expenditure is a bit exaggerated for ordinary people.
I asked them if they had the habit of recording every expense. Said no, only when I returned the credit card did I find that I spent so much money.
I have a clear and detailed account of my daily expenses.
In order to accumulate investment principal, it is necessary to improve the income and expenditure structure and develop good savings habits, especially shopping habits.
In order to continue investing, besides making money, it is important to reduce unnecessary expenses.
At the beginning, I started saving from 10% of my salary every month, and accumulated the original principal. With the improvement of ability, you can try to change this ratio to 30%-50%.
There shouldn't be too many financial concepts at this time.
The products invested are all about 3%-4% annualized rate of return.
At this stage, you will start to leap, and you will be more interested in the concept of money making money. I must be thinking about how to make more money.
Generally, the risk of products with annualized income above 8% is relatively high.
It's okay to make money, but if you lose, you die.
"Make Money Well" has a set of minimalist investment methods, which I think I can share with you.
This part is taken from the book:
We choose index funds with large index, mainly passive investment: on the one hand, in the long run, index funds perform better than many actively managed funds, especially in mature markets like the United States; On the other hand, the cost of investing in index funds is lower, which is beneficial to our income.
These five funds cover five main investment directions from top to bottom.
Fixed income investment
Shares of large domestic companies
:: Shares of small domestic companies
Shares of large foreign companies
Shares of small foreign companies
After we know about these funds, what should we do? We can imagine that we are a fund manager, and minimalist investment is a relatively stable and worry-free portfolio fund product. Daily management only takes two steps. When we need to sell, we will practice the third step.
In the first step, when we started to invest, we made an average allocation to each department, and each fund invested 20%. For example, you plan to invest 654.38 million yuan, and 5 yuan will share 2,000 yuan to buy these five funds.
The second step, holding for one year, we make a dynamic balance. Through transaction adjustment, the proportion of the amount of each fund is adjusted back to 20%.
Third, when funds are needed, the corresponding funds will be recovered as needed, and the remaining assets of various departments will still be 20%.
Maybe you have some questions. Why can a simple combination of five funds achieve good investment results? Back to the principle of asset allocation.
Diversified investment-irrelevant, solving the problem of asset allocation in spatial dimension.
Our investment portfolio has greatly diversified our investment assets. We allocate funds not only to invest in different assets, but also to ensure that your assets are in different market environments, so that "the east is not bright and the west is bright".
In other words, the lower their correlation, the better, or even the opposite trend.
Minimalist portfolio is an effective decentralized allocation of investment assets, and the five major sectors can well realize the so-called "the east is not bright and the west is bright".
I estimate that the income is around 6%- 10%.
"Make Money Well" is a popular reading of financial management, with few specific methods and skills. Tell you more why it is important to have financial awareness.
Looking closely at the recent crashes in the stock market, p2p market and money market, many friends around me choose to pay attention to these high-risk projects alone, or even invest all their money.
This is against the common sense of financial management.
Financial management emphasizes not high income, but a long stream of water and longevity than anyone else.
I wish everyone an early realization of financial freedom.
Book reference:
Jane Seven's Make Money Well.
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