According to the latest survey by the U.S. Department of Human Resources, the list of the 19 most expensive cities to live in globally includes China's Beijing, Shanghai, Guangzhou, and Shenzhen.

Data released by World Union in 2016 shows that the threshold for purchasing a first home in Shenzhen has risen to 2.9 million yuan, matching Hong Kong and surpassing Beijing and Shanghai.

This means that for young people in Shenzhen to have a home of their own, they would need a down payment of nearly 1 million yuan, with monthly payments exceeding 10,000 yuan.

From 2012 to 2014, the thresholds for purchasing a first home in Shenzhen were 1.51 million yuan, 1.65 million yuan, and 2.09 million yuan, respectively.

This also indicates that as the cost of living and consumption becomes increasingly expensive, your ability to earn money must become stronger.

Therefore, you must learn and possess the ability to invest and manage finances in order to keep up with the pace of inflation and avoid a hard life.

I. Why Invest and Manage Finances?

Investing and managing finances can better help you plan for the future;

Advertisement

Investing and managing finances can better utilize every penny of your income and expenses;

Investing and managing finances can allow you to achieve your dreams earlier;No matter what your current foundation is, as long as you make up your mind, you have the courage and perseverance to work hard, your life will not only have poetry and distant places in front of you, but also infinite beauty.

II. What kind of investment and financial management concept is the right one?

1. Keep in mind the concept of money generating money, while avoiding financial scams. The best and most effective way to invest and manage finances is to let money generate more money. Whether you invest in fixed assets, buy trust funds, or put it into Jack Ma's Yu'e Bao, in short, you should not let your money stay in a corner and gather dust, which would be a great disservice to yourself.

2. Investment is not limited to form or method. As long as it can have a positive impact or role in your life, work, or future, it is all up to each individual's starting point. I once read a story about emotional investment: A guy fell for a girl, and during the pursuit, he bought her everything she liked, took her on various high-end trips, and spent about 200,000 in about half a year. Naturally, they got married later.But after marriage, the girl only realized that the money spent on pursuing her was all the boy's savings at that time. This is also an investment, an investment in emotions and a lifetime of love in the future.

III. Pitfalls to Avoid in Investment and Financial Management

1. Stable employment with no worries about food, clothing, and expenses

Personally, I agree that if possible, one should try to start a business. Although starting a business carries risks, there is also a 50% chance of success. Moreover, if you don't take risks when you're young, do you really expect to have the ability and strength to do so when you're old?

If the business venture is not successful, one can always return to a regular job, working from nine to five. However, if it is successful, not only can you achieve financial freedom, but you might also gain freedom in terms of both time and wealth.

But with a regular job, you can almost predict what your life will be like in five or even ten years. Moreover, some professions have a shelf life; the older you get, the more likely you are to lose your competitive edge.

I always feel that a regular job is not a stable occupation. Companies can fire you at any time, and even if they compensate you with three months' salary, what does that really matter? It's less secure than starting your own business, and I can't understand why everyone says that having a regular job is stable.

Of course, if you are fortunate enough to work for a Fortune Global 500 company, the situation may be different. The platform you are on is different, and the resources you can access are different, but you should still strive for a good future for yourself.

Otherwise, even if you have dedicated your life to a company, when the time comes, can't they still fire you just like that? I believe many have heard about the recent incident involving Ms. Dong from Gree, right?So, why bother to give it a try?

2. Stock trading can lead to great wealth

Can stock trading lead to great wealth? It cannot be denied that there are those who have made a fortune in the stock market and then retired comfortably, just like buying lottery tickets, will they win? Occasionally, don't we also see on TV that someone has won tens of millions or even a hundred million?

However, for the majority of retail investors, they end up losing everything in the stock market.

When there were no restrictions on stock trading financing, many people used leverage to amplify their trading capital. Banks provided leverage platforms and cooperated with securities firms to magnify your trading principal, but at the same time, they also increased your risk many times over.

For example:

If you deposit 300,000 into your account, the bank can lend you five times the principal, allowing you to have 1.5 million in stock trading funds. But the bank will have a rule, mandatory liquidation. This means that if your 1.5 million in funds lose 20%, the bank will forcibly liquidate to protect the safety of their funds. Once you encounter forced liquidation, your 300,000 principal will be gone.

Last year, a friend, who used to have two luxury cars at home, a Cayenne and a BMW, with two nannies taking care of the children and three servants managing the villa, ended up losing everything due to leveraged stock trading and is now on the run from debts.

3. Keeping money in a bank with fixed deposits is the safest

Using money to keep in a bank with fixed deposits feels like the most foolish approach.The interest given by banks can't even keep up with the annual inflation, causing money to shrink invisibly over time.

It's unclear why there are still so many people willing to deposit their money in banks, as even buying some funds or saving in Yu'e Bao would yield higher interest than bank deposits, right?

IV. How to Plan Investment and Financial Management from Scratch?

1. Purchase commercial insurance appropriately

Commercial insurance is a type of insurance in addition to the normal social security. It can be pledged at banks and then loaned out proportionally, typically up to 70%, with very low interest rates. However, the principal of your commercial insurance purchase and the loan will both be counted as your assets by the bank.

When you apply for a credit card, the bank will calculate your credit limit based on this overall asset assessment.

For example, I bought a dividend-type commercial insurance worth 200,000 yuan at ICBC, which requires continuous payment for three years. If I want to redeem it within three years, a certain percentage of fees will be charged. So, I pledged this 200,000 yuan insurance to ICBC and was able to loan out about 180,000 yuan in cash. Based on the 180,000 yuan, my assets at ICBC would be 380,000 yuan.

Of the 200,000 yuan dividend income, the annual return is about 5%, and the loan interest is around 8%. The difference between them is the interest income of three percentage points. Additionally, about 20,000 yuan is equivalent to being deposited in the bank as a fixed term. But if you apply for a credit card with a satisfactory credit limit, isn't the difference of these three percentage points offset?

Of course, you can also choose not to purchase such a high amount and opt for annual payments. You can analyze based on your own asset situation. Generally, when buying commercial insurance, you can consult them on what plan is suitable.2. Obtain multiple credit cards, use them wisely, and make payments on time.

(1) Why should you apply for credit cards?

① You can enjoy interest-free use and increase your liquid funds.

Different banks offer varying policies, with interest-free periods ranging from over 20 days to about 45 days. This means that if your credit card statement date is the 1st, and your payment due date is not the 28th, you can use your credit card after the statement date. For example, if you use it on January 2nd, you can make the January payment on February 28th, and the usage after February 1st will be due in March.

There is an interest-free period in between, which is much more convenient than borrowing money from relatives and friends. The only difference is that you have to make payments every month, but you don't have to face any disapproval.

Moreover, once a bank issues you a credit card, other banks will not only review your assets, liabilities, credit, and other comprehensive situations when issuing you a card, but they will also refer to the credit limit of your existing cards. Of course, this reference is just for consideration; banks will still approve based on your actual situation.

I remember when Everbright Bank issued me a credit card with a limit of 100,000, the one from Bank of Communications immediately exceeded Everbright's limit by nearly 50,000. If you have three credit cards with a limit of 50,000 each, it means you can use 150,000 in liquid funds every month.

② It can increase your credit history with the bank.

Banks are entirely data-driven institutions. They prefer to have some debt transactions with you, and if you are a person who keeps your credit, and if you can repay the borrowed money on time, banks will particularly like it.Banks are not afraid if you owe them money, so if you frequently use your credit card and make payments on time, banks will consider you to have good credit. Consequently, when you apply for services at a bank, they will be more favorably inclined towards your behavior.

(2) So, which banks offer a more 'comfortable' experience when applying for a credit card?

There are some tricks to applying for a credit card at a bank. Currently, the approval limits for credit cards from the four major state-owned banks are relatively strict, and their limits are not as lenient as those from non-state-owned banks.

Especially at the end of the year, banks like Shanghai Pudong Development Bank, China Everbright Bank, Bank of Communications, Baoshang Bank, and China Minsheng Banking Corp., Ltd. have slightly more relaxed approval limits, so it's worth trying them out.

When applying for a card, try to submit materials that can prove your assets, such as property deeds, driving licenses, social security cards. If you have commercial insurance, bring the policy along as well. Banks will assess your assets holistically; the more assets you have, the higher the corresponding limit they will approve for you.

Of course, if you are fortunate enough to work for a Fortune 500 company, or if you are a public servant, or a bank employee, the credit limit you receive when applying for a credit card will be higher than average. This is because your job nature or the enterprise is vouching for you, so it is recommended to open more cards.

(3) What if you want to apply for a credit card without assets?

There is also a situation where you have just graduated and have been working for about a year, with no savings, let alone property. Even in this case, it is possible to obtain a credit card with a higher limit.

For example, in Shenzhen, Citibank specifically targets working professionals for credit card issuance. As long as your salary has been paid through the bank for more than six months and you have social security, you can generally be approved for a credit card with a limit of around 50,000 yuan.

Take Shanghai Pudong Development Bank as another example; even if you don't have many assets, the initial limit they approve for you might be low, but they adjust the limit four times a year. As long as you use the card responsibly, such as using it for meals, shopping, and any other purchases, and never paying in cash where you can use the card, coupled with timely repayments, they will increase your limit quite quickly.(4) When using a credit card, remember to repay on time and never be overdue. If you have credit cards from multiple banks, it is crucial to manage them uniformly and avoid any overdue payments. Overdue credit card payments can cause significant inconvenience in your future life, such as:

- When you want to buy a house and have a history of overdue payments, the bank may refuse to approve your mortgage;

- When you want to buy a car and have a history of overdue payments, the bank may refuse to approve your auto loan;

- When you apply for a credit loan from the bank and have a history of overdue payments, the bank may refuse to approve any of your loan applications.

(5) How to manage your credit cards uniformly?

① The most basic method is to create a unified EXCEL spreadsheet, recording all the basic information of your credit cards, including the billing date, repayment date, credit limit, and updating the repayment status on time.

② The second, very convenient and practical method is to directly link your credit card to WeChat. In WeChat's Wallet section, under Credit Card Repayment, you can add your credit card and set up repayment reminders. WeChat will then regularly remind you when and how much you need to repay, making it clear and easy to manage.

③ The third method is to use an app for management. There are many apps specifically designed for managing credit cards, such as the 51 Credit Card Manager, but after using them, I always find that the one integrated into WeChat Wallet is more convenient. This is because I prefer not to download numerous apps on my phone, as they can take up a lot of storage space.3. Invest wisely in fixed assets, such as purchasing real estate

Perhaps when you see this title, you may feel helpless and think that you lack the ability to buy a house, especially in the first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, where housing prices can easily reach tens of thousands per square meter, and there are plenty of places where they are even more expensive.

You might feel that buying a house is such a distant dream, thinking that after working hard for a few years in Shenzhen or Shanghai, you can then go back to your hometown to buy a house and live a comfortable life...

In fact, such thinking is very one-sided and mistaken.

Of course, I'm not saying that living in a small city is not good; I just want to remind you that if you start working and living in a big city, after a few years, when you return to a small city, you will mostly be unaccustomed to it.

Moreover, when housing prices double a few years later, you will regret not buying a house earlier. Perhaps, if you had gritted your teeth and endured a bit of hardship, you would have made it through.

(1) Buy a house to earn principal during the booming years of real estate

The booming real estate market in Shenzhen and Nanjing in 2015 is probably well-known to many people, and it has driven the surrounding markets to be hot as well. Those who did not participate in this activity only felt that the rise in real estate prices made homeowners richer, but they did not realize the true speed of real estate appreciation and the speed of making money.

For example:Following the '3.30' policy in 2015, which was implemented in April, you immediately went to a real estate agent to find a property for you. At that time, you purchased a small two-bedroom apartment with an elevator in the city center of Shenzhen, approximately 57 square meters, for about 1.86 million yuan. You paid a deposit of 100,000 yuan, a bit more than usual to prevent the seller from breaching the contract. Then, with a down payment of 30% plus an appropriate high appraisal, the actual down payment you needed to pay was 480,000 yuan. It was around the end of July when the property was finally handed over to you.

Before the property was handed over, you could entrust the agent to rent it out for you, finding tenants in advance. The monthly rent was 5,000 yuan, and the monthly mortgage payment was around 7,500 yuan. Therefore, you actually only needed to pay about 2,500 yuan per month for the mortgage.

At the same time, you could also entrust the agent to list the property for sale, as the market conditions last year were such that property prices changed daily, sometimes even differing between the morning and the afternoon. Eventually, the property was sold in January 2016 for 2.85 million yuan.

(2) Earning property with 'zero down payment' during a real estate downturn

Of course, later on, due to government policy interventions, it has become difficult to have the same market conditions as last year. However, there are investment methods for times when the real estate market is in a slump.

In Shenzhen, due to the government repeatedly raising the appraisal prices, the tax payment prices have been setting new historical records. Coupled with various policy restrictions, this has led to a 'temporary' downturn in Shenzhen's real estate market.

It is common to see real estate companies advertising 'zero down payment' property purchases. Zero down payment means that the selling price of the property is much lower than the bank's appraisal price, and the bank's mortgage loan is based on the bank's appraisal price. For example:

a: The selling price of the property is 2 million yuan, and the bank's appraisal price is 2.8 million yuan. The down payment you actually need to pay is calculated as follows:

a: The down payment you need to make: 2 million * 0.3 = 600,000 yuan

b: The loan the bank gives you: 2.8 million * 0.3 = 840,000 yuanc: 840,000 - 600,000 = 240,000

This means that not only do you buy back a house, but at the same time, you also get back 240,000 in cash. The interest rate on your loan this time is around 4.5%.

When the housing prices rise, all your liabilities also become your assets because, as the housing prices increase, your total assets increase as well.

Therefore, during periods of low real estate activity, there will be a large number of sales listings. Due to the scarcity of buyers, these listings do not have a sufficient market to be absorbed, leading to a phased decline in prices. As long as you search carefully, mainly by describing your needs to various real estate agents and asking the agencies to help you find houses every day, you will eventually find a suitable deal, allowing you to buy a suitable house with as little down payment as possible.

(3) What about the monthly mortgage payments after buying a house?

Generally, from the time you pay the deposit to when you pay off the down payment, and then receive the house, the transaction time in the second-hand housing market is usually around three months. In some cases where it takes longer, it might stretch to four months.

From the second month after the bank disburses the loan, you will need to start making monthly mortgage payments.

Using a credit card to make payments

The credit card you previously obtained will then come in handy. At the same time, your lending bank will also issue a credit card to you. You can use the credit card to pay the monthly mortgage and then split the credit card payment into installments. If you feel the pressure is too great, you can opt for a 24-month installment plan to repay gradually.Due to the national policy that has increased the credit card transaction fees, many banks now offer direct credit card cash installment services. You simply need to call the credit card center and inquire if they have a cash installment service. If available, you can directly apply for cash installments, thus saving on transaction fees. The cash is typically transferred to your savings account on the same day or by the next day.

Borrowing from Banks

You should try to manage for at least six months of repayment period because, after you have made more than six months of monthly payments, some banks may offer installment loans, which can be around 20 to 22 times the amount of your monthly payment. However, the interest rates are relatively high, almost reaching 1% per month. But the borrowed amount is generally sufficient to cover your monthly payments for a year.

Applying for Business Loans

If you own a company, banks may also provide business loans, which allow you to borrow and repay at any time, with interest calculated only on the amount used.

Another type of property involves a leaseback arrangement with the developer. For example, if you purchase a property from a developer and simultaneously sign a lease agreement, it stipulates that the property is leased back to the developer. The developer then pays you a certain rent each month, which you can use to offset your monthly payments.

Of course, this type of property is less common in urban areas and is typically done with hotel-style properties.

4. Seek Moderate Investment in Capital-Protected Projects

If you rely solely on a salary, never expect to become wealthy, unless you are like the "Emperor of Workers," but many ordinary people cannot achieve that status. Therefore, we should seek to maximize our assets according to our own circumstances.

You can pay attention to some investment projects, but you must be cautious. This is because the market often has individuals who commit fraud under the guise of investment. Therefore, in your selection, you must be meticulous, which is also the reason why this is discussed last.This is a double-edged sword; if used well, it can leverage a small point to move the overall situation, but if invested wrongly, it could lead to a total loss.

I never blindly invest money in any project, nor do I blindly believe in others' exaggerated words about the project. I will make my own judgment on the quality of the project before deciding whether to invest money.

5. Please frequently participate in some commercial learning or gatherings.

The market economy is unpredictable, and the future of enterprises is definitely oriented towards financial development. If you do not engage in learning and do not pay attention to the latest trends in business development, and only stay in your small world, you will find that friends or colleagues you haven't seen for a year may have achieved financial freedom, and the gap between you and others has been invisibly widened.

Therefore, I will also often spend time and energy to learn. Of course, I have also paid a lot of tuition fees, some are a few hundred yuan, and some are tens of thousands. Although the amounts are different, as long as a course makes me appreciate a point or learn a new theory or knowledge, I am very satisfied.

Continuous learning is the only way to keep your thoughts from falling behind and to seize the opportunities that come before you.

Of course, any of the points mentioned above can be elaborated in detail, but due to the limitations of the article's length, they cannot be discussed one by one in detail.

If you want to delve deeper into "financial projects," you can send a private message to the editor...