"No more?" Yun Luo asked.

"It's gone." Jin Yao's palms were sweaty, and she waited quietly for the verdict of fate.

After studying hard, she found that financial management knowledge is extensive and profound. She could only understand the most basic and simple parts by herself, and it was quite difficult to learn the rest by herself.

Therefore, Jin Yao urgently hopes that the system will agree to guide her.

"The results of your self-study are better than expected." Yun Luo said, "To be honest, I didn't expect you to work so hard."

I would look up information and read literature everywhere about things I didn't understand, and ponder them over and over again, as if I would not give up until I understood them.

Jin Yao said in a muffled voice, "I'm 29 this year. If I don't work hard, my future blind dates, marriage, and life will revolve around my children and family."

"This is my last chance."

Whether she succeeds or fails, she wants to try again.

Yun Luo looked at the host deeply and announced, "You have passed."

Jin Yao showed a happy expression, "Then what's next..."

Yun Luo: "What you said is generally correct, but there are some aspects that need to be supplemented."

Jin Yao quickly took out paper and pen and prepared to take notes.

Yun Luo: "Pure bonds are divided into short-term bonds and medium- and long-term bonds. Short-term bonds have a yield of 3%-4%. Medium- and long-term bonds have a yield of 4%-6%."

"Bond funds have a slightly lower investment risk, but they are not absolutely safe. Companies issue corporate bonds to raise funds, but if the subsequent business is not doing well, there is a risk that they will not be able to repay the principal and interest."

"In addition to the ordinary bonds you mentioned, there is another special type of bond called a convertible bond, which has the characteristics of both bonds and stocks."

Jin Yao: "I know about convertible bonds, but I don't understand the instructions..."

So I didn’t mention it.

Yun Luo: "In a bear market, convertible bonds pay interest every year just like ordinary bonds. However, the coupon rate of ordinary bonds is 4%-6%, which is generally fixed. The coupon rate of convertible bonds increases year by year, such as 0.6%, 0.8%, 1%, 1.2%, and 1.5%."

"Then investing in convertible bonds is not cost-effective!" Jin Yao was puzzled. "The interest rate of ordinary bonds is stable and higher every year."

Yun Luo: "During a bull market, the stock market soars. When it rises to a certain level, convertible bond investors can choose to convert their convertible bonds into stocks of the corresponding company."

“The last bull market lasted less than a year, and funds that specialized in convertible bonds returned more than 100% (trough to peak).”

“If you invest in ordinary bonds, it will take many years to make this much money.”

Jin Yao was slightly stunned, as if she understood something, yet also seemed confused.

Yun Luo directly pointed out, "Investing in convertible bonds is equivalent to taking ultra-low interest rates and betting on a bull market in the future."

"If you lose the bet, you get a small amount of interest."

"I won the bet and made money from the stock boom."

"So that's how it is." Jin Yao wrote quickly, writing down everything the system said.

After the host finished writing, Yun Luo continued, "Index funds are also called passive funds. Compared with active funds, each type has its own advantages and disadvantages."

"The overall stock market environment is not good, and stocks are generally sluggish. The fund manager (the person who manages the fund) happens to pick high-quality stocks, and the fund (stock portfolio) may surge."

"The stock market is full of speculation, and many stocks are rising wildly. If a fund manager chooses the wrong stock, the fund may fall instead of rise, and the market will be missed in vain."

"For active funds, the investment level of fund managers is very important. If the level is high, the returns will greatly exceed the market average. If the level is low, the return ranking will always be at the bottom among similar products."

"Mixed funds are similar. Fund managers may increase their stock holdings when the stock market is bearish, resulting in additional losses; and reduce their holdings when the stock market is bullish, reducing expected returns."

"Of course, there are also talented people. They keep the rhythm exactly right, reducing positions when necessary and increasing positions when necessary. This not only reduces risks, but also significantly increases investment returns."

Jin Yao was shocked. She couldn't help but ask, "How do I choose a good active fund product?"

Yun Luo: "Click on the 'returns in the last 3 years' or 'returns in the last 5 years' sorting to see the long-term performance of the fund and select the best one."

“But there is a problem. Historical data only means that the fund has performed well in the past, but it does not mean that it will continue to perform well in the future.”

"What's even more embarrassing is that fund investments often last for years or even decades. During this period, excellent fund managers often leave or change jobs. After these experienced veterans leave, the fund's performance is often much worse than before."

"It is not easy to select funds with exceptional performance from more than 3,000 funds. After selection, there is also the risk of the manager leaving and the fund's performance suddenly deteriorating. Therefore, it is generally not recommended."

Jin Yao suddenly realized, "No wonder everyone on the web and in forums generally recommends buying index funds."

Yun Luo: "Index funds track indexes. The underlying index is composed of which stocks and what proportion each of them occupies, and the index fund completely replicates it."

“Regardless of whether the fund manager leaves or not, index funds will always maintain their consistent investment style.”

"Relatively speaking, the index performed poorly, and the fund returns were not much better."

Jin Yao wrote two full pages, and finally looked at the notes and concluded, "So-called diversified investment is actually a certain proportion of money funds, pure bond funds, and index funds?"

Yun Luo reminded, "There is also insurance."

"Yes, you should also buy some insurance. It's mentioned in the financial management guide." Jin Yao lowered her head and made a note.

The more you learn, the more you understand.

At this moment, she even felt that she could tailor a suitable asset allocation plan for herself without the help of the system.

"I saw on the forum that buying an index is buying national fortune. As long as the country rises, no matter how much the index falls in the short term, it will rise again in the long term. Is this true?" Jin Yao asked.

When she was looking up information, she saw that many investors lost money, and she felt a little uneasy.

What's more, she herself had bought (the company's) stocks and lost a lot of money.

Yun Luo: "It's right, but it's not right either."

Jin Yao pricked up his ears and pretended to listen.

Yun Luo: "There is a very famous index called the 'Shenwan Active Stock Index', which specializes in investing in the 100 most active stocks in the market in the short term, also known as 'hot stocks', and is adjusted once a week."

“The index was released on December 30, 1999, with a base point of 1,000, and it stopped updating in early 2017 because it fell from 1,000 to 10, a drop of 99%.”

“So even if the country is prosperous, it is still necessary to choose a good index.”

"For the most common index, the CSI 300, this statement is logically valid. As long as the country rises, no matter how much the index falls in the short term, it will rise again in the long term."

"Why?" Jin Yao didn't quite understand.

Yun Luo: "The CSI 300 Index is composed of the 300 most representative stocks with large scale and good liquidity in the market, which comprehensively reflects the overall performance of the securities market."

“The index is compiled according to certain rules, and the sample stocks are adjusted in June and December every year, stocks that do not meet the rules are removed, and new stocks that meet the rules are included.”

"Therefore, no matter how long it has passed, the CSI 300 Index will always be composed of the 300 most representative stocks with large scale and good liquidity in the market."

"Take the Dow Jones Index as an example. Originally, the index consisted of the 20 largest and most influential companies in the market. More than 100 years have passed, and the 20 components are now wiped out. Some have gone bankrupt or been acquired, but the index is still running well."

"This only proves that the index will last forever, but it does not mean that the index will always rise." Jin Yao raised an objection.

Yun Luo: "The index composed of companies that make money will only get higher and higher."

"Give me an example."

"If you invest one million to open a supermarket, you can earn 100,000 yuan a year. If you take out all the money you earn, you will get your money back in 10 years (pe=10)."

"If you invest 1 million and earn 100,000 a year, 50,000 of which is dividends, and the other 50,000 is further invested to expand the scale of operations. Assuming the return on equity (ROE) remains unchanged, what will happen in the second year?"

Jin Yao thought for a moment and replied, "With assets of 1.05 million, I earn 105,000 a year. If the dividend ratio remains constant, then the dividend in the second year will be 52,500, and the other 52,500 will be invested in production."

Yun Luo: "In the first year, the supermarket's net assets were 1 million, and it made 100,000 a year."

"In the second year, the supermarket's net assets were 1.05 million, and it made 105,000 per year."

"If someone wants to buy the supermarket business, they can invest 1 million yuan in the first year and get their money back in 10 years. If they invest 1.05 million yuan in the second year, they can get their money back in 10 years."

“The same valuation (pe=10, pb=1), but the offer price is getting higher every year.”

“The CSI 300 is a stock portfolio formed by 300 profitable companies.”

"Wait a minute, wait a minute." Jin Yao felt that she could understand what was said before, but suddenly she couldn't understand anymore.

Yun Luo: "One supermarket can make 100,000 yuan a year, and another supermarket can make 200,000 yuan a year. If you want to buy the business, should the second one's offer be higher than the first one?"

"Yes." Jin Yao answered subconsciously, "It should be twice as much."

Yun Luo: "So, as the scale of constituent stocks expands, the index points will get higher and higher."

Yun Luo: "If you still don't understand, open the stock software."

Jin Yao acted as instructed.

Yun Luo reported the code of a dividend index fund and asked the host to check it.

Jin Yao entered the code and found that the dividend index showed an overall upward trend.

Yun Luo: "The dividend index is composed of 50 stocks with high cash dividend yields, relatively stable dividends, and a certain scale and liquidity."

"I bought it six years ago, and six years later the fund has increased by 60%, with an annualized return of 8%, and an additional 4%-8% dividend every year."

"The valuations (PE, PB) are basically similar at the two time points. No other operations are needed except buying and holding."

Jin Yao pondered for a long time before figuring it out. "This is equivalent to a supermarket with assets of 1 million, which has grown to a scale of 1.6 million after a few years. If someone wants to take over this business, the offer must be higher than before."

"Because the return on net assets remains unchanged, the supermarket can now earn 160,000 yuan a year, of which 80,000 yuan is distributed as dividends."

"Compared to the initial 1 million assets, the annual dividend rate has increased from 5% (50,000 dividends per year) to 8% (80,000 dividends per year)."

"The money we earn comes in two parts: one is the annual dividend, and the other is the growth of assets."

“Since the index is eternal and the stocks that make up the index are always profitable companies, the combination/index will continue to rise higher and higher.”

Yun Luo: “Correct understanding.”

The author has something to say:

Some people have said before that bank financial products are actually fund products. This is true. Bank financial products are very similar to financial funds, with similar returns and risks.

So, is bank financial management very risky?

Not really.

In the United States, banks, fund companies, and insurance companies can belong to the same group.

In our country, banks, fund companies and insurance are separated.

For example, China Construction Bank Fund Management Co., Ltd. was jointly initiated by China Construction Bank Corporation (holding 65% of the shares), American Principal Financial Group, and China Huadian Group Capital Holdings Co., Ltd. It is one of the first fund management companies initiated by commercial banks in China.

For example, ICBC-RBC Fund Management Co., Ltd., Industrial and Commercial Bank of China Limited (80%), and Credit Suisse (20%).

Minsheng Bank of Canada was jointly initiated by Minsheng Bank (63%), Royal Bank of Canada and Three Gorges Finance Co., Ltd.

There are also China Merchants, Ping An and Bocom Fund Management Co., Ltd.

Money funds, bank wealth management products, and financial management funds all invest in the monetary instrument market and in theory they will not lose money.

A certain current financial product sold by China Construction Bank is actually a money fund of China Construction Bank Asset Management Co., Ltd., and can also be purchased through a fund account.

Industrial Bank and China Merchants Bank also have similar wealth management products.

**

In the past, when corporate bonds collapsed, banks would help repay the loans, but this may not be the case in the future.

Some people think that the risk of bond default is not big and it is worth investing. I am used to investing in currencies, government bonds, index funds, absolutely risk-free products + high-risk products.

If you are looking for high returns, allocate more to funds; if you are looking for stability, buy more money funds/government bonds.

Part of this chapter is quoted from the source

**

The dividend fund mentioned in the article is the dividend ETF (510880)

To put it simply, these are 50 solid companies that particularly like to pay dividends.

Buy at pe=8, and the annualized return is about 12%.

Of this, 4% is distributed as dividends each year, and the other 8% is reflected in prices, with an average annual increase of 8%.