Investing and managing finances is not merely about saving money or depositing it in a bank, nor is it simply about trading stocks. Personal investment and financial management involves proactively planning, arranging, swapping, and restructuring all assets and liabilities, including tangible and intangible, liquid and non-liquid, past, present, future, inheritances, wills, and intellectual property rights, to achieve preservation and appreciation of value. This is a comprehensive, systematic, and holistic economic activity. The former is just a specific act of investment, at most a utilization of cash. Cash management, as part of personal investment and financial management, is much more complex and challenging than just using cash. Below are ten of the most direct methods of personal investment and financial management.
1. Savings - An investment that benefits from wealth accumulation
Savings, or depositing money, is an investment behavior that is popular among ordinary households and is also the most commonly used method of personal investment and financial management. Compared to other investment methods, savings offer safety and reliability (protected by the constitution), convenient procedures (savings services are available nationwide), flexible forms, and inheritability. Savings are a business through which banks mobilize and absorb the surplus monetary funds of residents through credit. After banks absorb savings deposits, they invest this money in various ways into the social production process and earn profits. As a cost of using the savings funds, banks must pay interest to depositors. Therefore, for depositors, participating in savings not only supports national construction but also allows their surplus monetary funds to appreciate or preserve value, becoming a form of household investment.
2. Investing with foresight - Insurance
The greatest mystery in life is the future. No one can predict whether a family will encounter uncertainties such as accidental injuries, serious illnesses, or natural disasters. Insurance is a financial protection umbrella that allows families to hand over risks to insurance companies, ensuring that even in the event of accidents, the family can maintain a basic quality of life. Insurance investment may not be the most important in family investment activities, but it is the most necessary. The main reasons for people to take out insurance policies include: buying a long-lasting peace of mind (prevention of unexpected family life events), being prepared for the future while living comfortably in the present (prevention of future risks), and investing in insurance instead of relying on children for old-age support. There are various types of insurance available for urban and rural residents in our country, mainly divided into two major categories: property insurance and personal insurance. Home property insurance is a type of insurance that compensates for economic losses of material and interests. Personal home property insurance that has been launched includes: home property insurance, home property theft insurance, home property all-risk insurance, and various agricultural planting and breeding insurance. Personal insurance is a type of insurance that pays insurance money for life events such as birth, aging, illness, death, and unemployment. The main types include pension insurance series, return series insurance, and personal accident insurance series.
3. The pet of investment - Stocks
Although the scope of interest tax collection also includes interest on personal stock accounts, the state will continue to implement a policy of temporarily exempting personal income tax on stock transfer gains. Therefore, after the interest tax is levied, cautiously entering the stock market is also an effective way to manage finances.
By depositing demand deposits into a personal stock account, you can use this money to apply for new shares. If you are lucky enough to be selected, and after the stock is listed, you can sell it for a stable profit. Even if you are not selected, you still have the demand interest. If your financial situation is good and you can bear certain risks, you can also buy stocks in the secondary stock market. Gold, real estate, and stocks are considered by economists to be the three major investment hotspots in today's world. Stocks, as a type of valuable security issued by joint-stock companies to raise funds, are a proof of investors' investment in shares and a basis for obtaining dividend income. They have long entered thousands of households and become an important target for many families' investments. Stock investment has become a hot topic of daily discussion among the public. Due to the characteristics of high returns, high risks, transferability, flexible trading, and convenience, stocks have become a powerful force supporting the development of our country's stock market. The return on stock investment can be reflected by calculating the stock investment return rate.
4. Bonds - A moderately profitable investment
The newly issued policy treasury bonds and financial bonds issued by the state have "temporarily exempted personal income tax on interest." By comparing the face interest rates of certificate-style (3rd issue) three-year and five-year treasury bonds in 1999 with the actual returns of three-year and five-year bank deposits, it is not difficult to find that the interest income from purchasing three-year and five-year treasury bonds is 28.7% and 28.9% higher than the income from bank deposits of the same period, respectively. Nowadays, the liquidity of treasury bonds is also very strong, and they can also be withdrawn in advance and used as collateral for loans. Therefore, for cautious investors who do not have very high income and may need to use their deposits at any time to cope with unexpected needs, treasury bonds are the most ideal investment channel. If you have a sum of money that you do not need to use for a long time and hope to obtain a little more profit, but do not dare to take too much risk, you can boldly buy some corporate bonds. Although the interest income from corporate bonds also needs to pay interest tax, the after-tax income is still much higher than the savings deposits of the same period.5. Expert Financial Management - Investment Funds
Investment funds refer to a method of investment where the fund initiator pools dispersed funds from investors by issuing fund certificates (i.e., beneficiary vouchers), entrusts the funds to a fund custodian for safekeeping, and manages the operations through a fund manager, distributing the investment returns to the holders of the fund certificates. For residential households, purchasing investment funds is akin to entrusting funds to experts, which not only reduces risk but also saves time and effort, making it the best investment tool for family investors who lack time and professional knowledge.
6. Foreign Exchange Investment
Foreign exchange refers to various payment instruments denominated in foreign currencies used for international settlements, that is, foreign currency funds that can be directly used to repay external debts and achieve international transfer of purchasing power. According to the relevant regulations of China's foreign exchange management, foreign exchange mainly includes: (1) foreign currencies, including paper money and metal coins, such as the US dollar, British pound, German mark, Japanese yen, Hong Kong dollar, and other freely convertible currencies in China; (2) foreign currency securities, including government bonds, treasury bills, corporate bonds, stocks, interest coupons, etc.; (3) foreign currency payment instruments, including bills, bank deposit certificates, postal savings certificates, etc.; (4) other foreign exchange funds. For a long time, China has implemented foreign exchange controls, and individuals are not allowed to trade in foreign exchange. Although the foreign exchange black market has never been truly banned, it is illegal. With the increasing frequency of international economic, technical, and cultural exchanges, individuals are holding more and more foreign exchange. Especially with the gradual establishment of China's socialist market economy system and the imminent entry into the World Trade Organization, the demand for foreign exchange among ordinary residential households is growing. By the end of 2000, China had achieved the free convertibility of the renminbi. Residents can choose from various types of foreign exchange investments, including: foreign exchange deposits (i.e., investing in foreign currencies to earn exchange rate differentials), foreign exchange exchange (buying and selling at the right time under the premise of being familiar with the recent foreign exchange exchange rates to achieve considerable foreign exchange income), and investing in the foreign exchange securities market (buying and selling foreign exchange bonds and stocks through Bank of China, overseas institutions, and trade companies to achieve legitimate foreign exchange investment returns).
7. Collectibles Investment - The Organic Combination of Art and Money
In today's reality, collecting is not only a leisure cultural activity for self-cultivation but also a way to become wealthy and a golden key to open the door to wealth. Among various collectibles, antiques, calligraphy and paintings, coins, stamps, and matchboxes have a long history and form a system, occupying a significant position in the collecting world, and are collectively known as the "Five Great Families"; subsequently, especially in the past decade, the "Four Celebrities" have emerged with great fame: magnetic cards, food coupons, stock certificates, and lottery tickets. In addition, commemorative medals, various handicrafts, and other items can be collected, and people are accustomed to calling these collectibles the "Three Teachings and Nine Streams". Collector enthusiasts should follow the business adage of "not doing what they are not familiar with" and should be familiar with the types, properties, characteristics, market conditions, and principles of interest and appreciation of a certain collectible, collecting in time, and selling at the right price to achieve the ultimate goal of investment returns. As for the speed and level of growth, it depends on various factors, and it depends on whether you can choose the right "stock" with a discerning eye. There is an interesting phenomenon in the collectibles market: the more the collectibles appreciate, the more people participate in collecting; the more people collect, the faster the collectibles appreciate. In recent years, the collectibles market is accelerating this "snowball" type of virtuous cycle.
8. Personal Gold Investment - The Unchanging You
Gold has always been a symbol of wealth in people's minds and is a universally accepted investment tool. As long as the gold has a purity of 99.5% or above, or has a recognized logo and text from a globally reputable bank or gold dealer, no matter where you take it, it can be sold at the standard price of the London gold market on that day. Gold, as the best value preservation tool, has been favored by investment theory and ordinary investors since ancient times, and it is believed that having gold in addition to traditional stocks and bonds is the best strategy. Especially in a turbulent world, many investors believe that gold is the safest asset. Therefore, investors unanimously regard gold as an important part of their investment portfolio. There are five major forms of gold investment: physical gold investment (i.e., gold bars), gold coin investment, gold jewelry investment, paper gold investment, and gold futures investment. Investing in gold can make money, mainly by looking at appreciation. Although gold prices may fluctuate slightly due to international political and economic situations, they will generally rise steadily.
9. Real Estate Investment - High Input, High Output
As one of the world's three major investment hotspots, real estate has always been favored by businesses. Real estate refers to the combination of property (real estate property) and land (land property). In fact, real estate not only meets the residential needs of residents (shelter from wind and rain) but also has the effect of preserving and increasing value, making it a good investment tool to prevent inflation. A family that wants to invest in real estate should make a good financial plan, arrange housing funds reasonably, and learn about real estate knowledge. After all, buying a house is a very significant investment for every family. The real estate market is divided into three levels: the primary market (state monopoly), the secondary market (real estate developers' business activities), and the tertiary market (real estate resale, leasing, and mortgage places). Investors can choose long-term investment and short-term speculation according to the actual situation. After purchasing real estate, investors should adapt to changes and decisively sell out when the market is significantly bullish to obtain a large amount of price difference income.10. Futures Investment
Futures trading refers to the transaction where both parties, within a futures exchange, buy or sell contracts for the delivery of a standard quantity of goods at an agreed-upon price on a future date through an open bidding process. Futures trading is divided into two major categories based on the trading object: commodity futures and financial futures. Futures that use valuable goods as the trading object are called commodity futures. Commodity futures are the most important part of futures trading and also the foundation of it. Products that can be used for futures trading are divided into two major categories: agricultural products and mineral products. On the other hand, futures that use standardized financial instruments as the trading object are known as financial futures. Financial futures mainly include three major categories: foreign exchange futures, interest rate futures, and stock index futures. With the relaxation of the financial environment, the accession to the World Trade Organization, and the popularization of futures trading knowledge among investors, futures investment will become one of the commonly used personal investment and financial management methods, just like spot investment.
