Singles' Day is coming soon, and I believe that those who participate in the Singles' Day promotion have become the final payment people. The final payment people are closely related to the recently popular "working people" tag. The "working people" and "final payment people" tags represent the majority of people, and almost everyone hovers around these two tags. The new term "working people" is both self-deprecating and mocking for most people, and it is also a true reflection of most people's inner thoughts. The phrase "Good morning, working people" successfully trended on social media. So, as a working person, should you learn about financial investment? The answer is definitely yes. Then, how much money should you put into investment?
In the article "Understanding the Risk of Funds," we know that fund investment carries risks. Since there are risks, we cannot invest all the funds at once. We need to consider how to allocate funds reasonably to avoid a situation of no cash flow. For example, buying a paid course may seem very useful at the time of purchase, but it may not be useful after buying it. This is also a risk. You should not buy a paid course just because someone recommended it. You should choose a paid course that you need. This way, you won't waste money and it will be useful for yourself. When it comes to investment activities, we need to consider how to allocate limited funds and how to buy undervalued financial products with limited funds.
Because investment carries risks, the money used for investment must be spare money. It must be considered after solving the basic needs of clothing, food, shelter, and transportation. If your salary is only enough for daily expenses, it is better to improve your earning ability before considering investment activities. As working people, how should we allocate our funds? Here are two allocation methods:
- One-Third Rule
There is a Western saying that everyone should divide their money into three parts: one part for buying property, one part for doing business, and the remaining part for savings. This method divides your funds into three parts, used for buying a house, investment, and savings. You can take one-third of your monthly salary for financial investment, regardless of the amount. Starting to try is a kind of change, and cognitive change is the first step in taking action.
- Finger Counting Algorithm
This algorithm is used to estimate how much of your assets should be used for investment and how much should be saved. The idea is that you can know the answer just by counting your fingers. Allocate funds based on your age:
If you are 30 years old, at least 30% of your assets should be invested in savings, and other investments should not exceed 70%;
If you are 40 years old, at least 40% of your assets should be invested in savings, and other investments should not exceed 60%;
And so on. The proportion of various assets = 100 - your current age.
This is a very good suggestion. The older you are, the less you can afford to take risks. The older you are, the more conservative you should be. Adjust your investment style according to your age, and you can also consider your own situation to find a suitable way to allocate your funds and put it into practice.
Summary:
- Invest with your surplus money.
- Allocate funds reasonably to ensure sufficient emergency funds.
- Do not borrow money to invest in funds because you cannot determine when you will make a profit, it could be short or long.
- Maintain a good investment mentality and avoid speculation.
- Never invest all your funds.