hard core analysis: is compound interest becoming a millionaire "poisonous chicken soup"?

As a qualified leek, I have seen all kinds of secret books on the market, and the core idea is nothing more than the following three kinds of proverbs:Long-term investment, compound interest thinking, eggs should not be put in one basket.

Among them, the thinking of "compound interest" is an indispensable philosophy of life for everyone: at the 2018 Chinese Poetry Conference, the takeout boy took ten years to precipitate and beat Peking University to win the first place, which was knowledge "compound interest". Li Ka-shing insisted that he got up before six o'clock in 50 or 60 and was still Hale and hearty at the age of 91, which was a healthy "compound interest". In 1953, the Nobel Prize left only 3 million US dollars. After changing the allocation method, it is the wealth "compound interest" to achieve a steady stream of fund returns every year.

When we embrace countless secret books of leeks, why have we never been able to travel around the world?

01 "the eighth Wonder of the World"

First of all, if you don't understand compound interest, let's have a game guess:

a. I'll give you 1 million yuan today.

b. I'll give you a penny today, and I'll give you twice as much money every day for the next 30 days in a row.

For friends who choose B, please take a look at the following results:

Day 1: 0.01 yuan

Day 2: 0.02 yuan

Day 3: 0.04 yuan

……

Day 30: 5368709.12 yuan

Total for 30 days: 10.73741823 million yuan

In 30 days, it accumulates 10 million from one penny. Do you understand? This is the power of compound interest: add up the principal and interest of the previous period as the principal, and then calculate the interest of the next period, and the effect of time will allow the money to accumulate quickly until you become a millionaire.

A few years ago, few people thought about this problem, until the concept of "compound interest" appeared in various major financial products and insurance products. Compound interest is called by Einstein as "the most powerful discovery of mankind" and by some people as "the eighth wonder of the world". It seems that anyone who knows can become a millionaire, and those who do not know can only be cut into leeks.

But is there such a good thing in the world?

In fact, according to the mathematical calculus, compound interest is indeed feasible, and the income is equivalent to the r power of the exponential function e, and with the addition of time, the income suddenly doubles exponentially, that is, the so-called "exponential explosion".

But look at reality.If a wealth management product with an investment interest rate of 6% 12 years ago is to reach 1 million today, how much more principal would be needed? 497000 yuan.

Most wage earners don't have 497000 of their savings at all.(principal)The yield of 6% is also quite difficult(interest rate)Plus 2% or 4% per year(inflation)Today's 1 million is far less valuable than it was 12 years ago. In addition, following the rules is far less than investing in stocks, making a lot of money, once and for all, investors like to look in "speculation".(risk).

Indeed, mathematical calculation confirms the correctness of compound interest, and long-term persistence is indeed a healthy philosophy, but the reality of investment and financial management is much more complex than numbers, which involves human nature, business management, economic conditions, and even political gaming.

Marx told us that the philosophy of ignoring practice is only metaphysics, and the investment thinking of ignoring reality is only "poisonous chicken soup". So we suggest that Niu you follow the following ideasClearly recognize financial products and their own situation, the use of "compound interest" thinking, take the initiative to attack financial freedom.

02 healthy compound interest begins with knowing yourself and your enemy

If you are the following types of people:

An office worker who receives a fixed salary every month. There is not much left after the salary minus the daily expenses, and it is too risky to invest in stocks alone.

A person who needs to spend money in the future. If the children want to study abroad in 10 years' time, they will have a large amount of capital demand, and they need to plan the investment in advance to lighten the financial burden.

A person who has just entered the field of investment and financial management and has spare money but no time to study. The pace of life is fast, the work pressure is great, do not have the energy to pay attention to the stock market and chase the rise and fall.

Then, as a healthy compound interest model, the fund will be a more suitable way for you to invest. Of course, if you like fresh excitement, are not afraid of scarring in several battles, and have a clear sense of criticism of following behavior, the stock market is your Roman arena. However, due to the great risk of the stock market, it is not suitable to accumulate wealth and can only "get rich overnight".

What is a fund?When a professional (fund manager) collects everyone's money, he helps us invest in the securities market. It's like hiring a CEO to run our investment empire, he takes his commission, we take our income, and they help us manage our investments.

At this point, you may have endless questions: is my money reliable? Is the fund manager reliable? How much commission does he take? How much income do I have? How risky is this? What kind of stocks or other securities do they buy? How do I buy it? How much does it cost to buy it?

The purpose of our "play fund" series is to solve your above problems, which is divided into ten issues, taking you into the fund world of investment and financial management from all aspects. Fasten your seat belt before the start of the game and understand the operation mechanism of the fund.

03 game description of open-end fund

First of all, when we put the coin into the game box of the open-end fund, the money starts itsOperation processFund companies begin to manage our money, which is generally entrusted with the bank, that is to say, the management and custody of fund assets are separate. In this way, no matter if the fund company or the bank fails, we cannot use our money. It can be said that our coin investment is safe.

When the purchase is completed and the coins are turned into the management of the fund company, the fund company will put the coins into different channels: stocks, bonds, currencies, etc., each with branches of different products untilThe funds are dispersed enough.The next step is to usher in the tense and exciting link: to adjust the position according to the market situation to realize the profit and loss.

At the moment, please rest assured that we canRedeem at any timeShare of the fund and recover the cash coins. In this way, whether you want to continue the game or not also depends on the players themselves, redemption is very convenient and fast.

And the whole operation process is "transparent": after applying for purchaseYou can see the increase or decrease of net worth every day.And the process of fee calculation, because the fund requires net value to be published every day and information to be disclosed on a regular basis, so it can clearly reflect its investment value at a glance. This is in contrast to closed-end funds: usuallyClosed-end fundThe closure period is more than 5 years, usually 10-15 years. So closed-end funds are more like piggy banks, and it will take many years to see whether they are profitable or negative.

In addition, open-end funds receive a policy buff bonus. According to the current tax law of our country, the income from investing in open-end funds can enjoy tax exemption. First, the shares of individual trading funds are temporarily exempted from stamp duty; second, the income from the price difference of individual trading fund shares and fund dividends are temporarily exempted from individual income tax.

04 when our compound interest skills are fully open

Compound interest thinking seems to be beautiful, but the core idea is actually very simple: find the right investment products and wait for the value of time.

Our generation of investors, inspired by "Rich Dad and Poor Dad", have read the lesson of "self-cultivation of leeks" and looked up at the wisdom of "smart investors". Who has not fantasized about becoming the next Buffett one day? When we recognize the reality and overcome the speculative mentality of chasing ups and downs, compound interest skills can be fully developed.

There is a question at hand: open-end funds are open, transparent and decentralized enough, but how to choose a game console that suits you? After all, unimpeded liquidity makes fund companies also face the pressure of redemption at any time, the complexity of the game requires fund managers to have a higher level of investment management.

Overall, in China's market, if we only look at stock-related funds, the scale has exceeded 3000, and the level of fund companies and managers is also mixed. For the majority of players, it is not easy to pick out excellent funds among countless kinds of funds.

Therefore, Niuniu will begin the next article to help you sort out the types of funds and your own needs, and really open up the world of wealth accumulation with the basis that pick suits you.

Disclaimer
Risk and disclaimer: this document is not and should not be regarded as the basis for soliciting, soliciting, inviting, recommending the sale of any investment products or investment decisions, nor should it be interpreted as professional advice. Those who read this document or before making any investment decision should fully understand the risks and the characteristics and consequences of the relevant laws, taxes and accounting, and decide whether the investment is in line with their financial position and investment objectives according to their own circumstances, and whether it can withstand the relevant risks, and should seek appropriate professional advice if necessary.
Investment involves risks, and investors should carefully read the fund information and related documents (including its risk factors). Investors are advised to note that the prices of fund products can rise or fall, and may change substantially within a short period of time. Investors may not be able to get back the amount they have invested in the fund. The past performance of the fund does not predict future performance. If there are similar forward-looking statements in this document, such contents or statements shall not be regarded as guarantees of any future performance, and it should be noted that the actual situation or development may differ materially from such statements.
Those whose investment income is not in Hong Kong dollars or US dollars are subject to the risk of exchange rate fluctuations.