A lot of thinking of people who manage money is different from ordinary people, to learn to manage money, the transformation of thinking is very important, I believe that you readers in the learning process should have a deep understanding. The first thing to understand is a formula: expenses = income - profit. So you can set a "profit" goal every month. Combined with the actual situation can be completed, such as monthly "profit" to achieve 1000 yuan or annual profits of not less than 15,000 yuan.
So that the monthly salary is first deducted from profits, only then we can use the money at our disposal, so that they will avoid a lot of blind spending.
Many wealth managers with a strong sense of wealth planning do not spend their money blindly after receiving their monthly salary, but rather deposit part of their salary in the bank or buy regular wealth management according to their goals. This way, after some time, you can get additional earnings, and then these profits can be at your disposal. Of course, there are also smarter money managers who will continue to invest the profits, so that the money can be used as new capital to earn money. This process, that is, the accumulation of savings and letting the savings generate a return, for us to invest in other financial storage "first bucket of gold”.
Three factors affect compound interest: the starting investment, the rate of return, and the investment period. Of these three, the investment period is the most important. Suppose you start to take 1,000 yuan a month to invest from the age of 20, calculated at a rate of return of 9% per year, 30 years of continuous savings to the age of 60, the return is 1.78 million. But if you start investing only at the age of 30, invest 2,000 yuan per month, and invest for 20 years, the return is surprisingly only 1.34 million. Just delaying your investment for 1 0 years makes your income plummet by 440,000. So investing early allows you to fix less money per month, with a lower rate of return (and lower risk), and achieve amazing results all the same. As the wise saying goes: Time makes your investments worth more.
A direct application of risk tolerance is the percentage of investments in equity assets.
The older you are, the lower the percentage of equity assets should be in your household investments. A 30-year-old, on the other hand, can have 30 years to smooth out the high volatility of equity assets. As long as overall equity asset returns are moving upward, then no matter how dramatic the ups and downs are during that period, 20 or 30 years is enough time to smooth out the risk, which is minimal in the long run. By the same token, the older you are the less time you have left to manage your money, and when investment time is shortened, then to achieve the same results you need to choose investment products with higher yields. And choosing a high-yield investment product means higher investment risk. It seems that there are only two ways to make more profits, one is to have more principal and the other is to extend the investment time.