What are the common ways of personal finance? How to manage personal finance
Sihai: it's not hard to be a good investor. If you follow these principles, you will get better returns than most investors. It's very important to learn how to manage money. The editor will teach you a few ways to manage money.
1. Save money
If you save $3500 a year for 20 years in a row, the annual return on investment will be 10%, and the total amount will exceed $200000. Amazing? Good returns work, of course, but saving is just as important. In fact, you've saved 70000 dollars.
Revelation: to make money, you have to have money. This means saving money once a month.
2. Start early
Suppose your goal is to save $200000, but you start saving 10 years earlier. You're not saving $3500 a year for 20 years, you're saving $1200 a year for 30 years. What was the result? The money you actually put in is only $36000.
Revelation: the earlier you start, the more return you get and the easier it is to achieve your investment goals.
3. Purchase of shares
In the long run, stocks outperform bonds, while bonds outperform cash investments such as money market funds, treasury bills, and savings.
Inspiration: if you want a good long-term return that offsets inflation, invest your money in stocks.
4. Other options
Stocks are more volatile than bonds and cash investments. According to Ibbotson, the lowest stock market since 1925 was from August 1926 to June 1932, when the stock price plummeted 83.4% (even including dividends); while the lowest point of medium-term bonds was from June 1979 to February 1980, with a decline of 8.9%.
Inspiration: if you are worried about market volatility or may need money badly, you should choose short-term bonds and cash investment.
5. Consistent
Some investors want to take advantage of both the bull market and the market storm. But the fact is that forecasting market movements is extremely difficult and expensive.
Inspiration: in the portfolio, make sure your stock investment proportion, and then stick to the same.
6. Spreading nets around
If you hold only a few stocks, you may get huge profits or suffer huge losses.
When you add more stocks to your portfolio, you narrow your profit margin, so the potential earnings are less dazzling, but at the same time, your potential losses are less serious.
In this way, investment diversification seems to be mixed. But it's actually a necessary insurance.
Inspiration: be careful to diversify your investment.
7. Reduce investment cost
When you make an investment, you can never guarantee that you are the winner. But how to bear the larger investment cost will definitely reduce your investment income.
Inspiration: to ensure that you can get more profits, consider choosing low-cost mutual funds, minimizing account management fees, and reducing broker commissions and other transaction costs.
8. Self control
A perfect investment strategy can be destroyed by several hasty decisions.
Inspiration: keep calm and write down your investment strategy. Then, don't change your decision until you discuss it with your family or friends.