Since the reform and opening up, with the increase in residents' family income, the accumulation effect of wealth has become more pronounced. The concept and topic of "wealth management" have a history of more than ten years at the very least.

As people's understanding of concepts related to "wealth" and "wealth management" deepens, the criteria for judging whether individuals or families have financial awareness are also constantly changing.

In the era where "saving is the most honorable," having savings was a sign of financial capability and awareness; after the birth of bank wealth management and before the marketization of interest rates, buying wealth management (products) gradually became the "new fashion" of wealth management...

At present, from the "new perspective" of asset allocation, what are the manifestations of a lack of "financial awareness"?

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01. Manifestation One: Excessive Idle Demand Deposits

The surplus of wealth creates a demand for "cash management" for everyone. The demand deposit rate of 0.3% (some banks are 0.35%) means that if you deposit 100,000 yuan for a year, the income is only 300 yuan, and the daily interest is 0.82 yuan. In the current context of interest rate marketization reform and deepening product innovation, this is a "waste" of funds.

Looking at the structure of urban and rural residents' savings deposits, not only is the demand balance close to half, but there is also a large part that has been idle for a long time. Rich innovative products have made the existence of family "emergency funds" no longer in the traditional "demand" form. There are many ways to manage finances without affecting the ability to withdraw funds at any time (T+0 deposit and withdrawal), and there is no need to endure an income arrangement close to zero.

"Tired people, idle money" is the most common misconception in wealth management.02, Manifestation Two: Focusing Solely on Product Returns

Common sense tells us that when purchasing items, we should not focus solely on the price. The same applies to choosing financial products, which require a comprehensive assessment and careful selection, albeit with higher demands for professional knowledge and capabilities. It can be affirmed that judging the quality of a product merely by comparing the numbers of return rates is an immature "monolithic thinking."

One should observe a financial product from three aspects:

First is "safety." Financial investment is a credit transaction, and the brand and strength of the institution are the primary considerations. The frequent "explosions" of miscellaneous wealth management companies in recent years, from the investor's perspective, are the tragic consequences of choosing returns over brand.

Second is "liquidity." It includes two levels: one is the matching of the fund's term with the demand for use, as the use of funds is not sudden but needs to be gradually completed in short, medium, and long terms, hence the term should also be correspondingly matched; the second is the conditions for early withdrawal and the losses caused by it, which means paying attention to whether the product supports early withdrawal or partial early withdrawal (to cope with sudden unplanned needs), and the opportunity cost paid due to early withdrawal (equivalent to breach of contract). For example, when considering "fixed deposits," one should not only set the term but also look at the conditions and interest rules for early withdrawal. The differences between different products in this aspect are very large.

Lastly is "profitability." "Looking at returns" is not as simple as comparing numbers; there are several issues to pay attention to: first, it is essential to clarify whether the numbers you see are "guaranteed returns" or "expected returns," meaning whether the return figures listed by the product are guaranteed to be paid or are hypothetical, or merely the upper limit of returns. Secondly, attention should also be paid to the fund's interest-accruing date and the date of arrival, as any gap between the actual deposit time and the interest-accruing date, or between the product's maturity date and the actual receipt of principal and interest, will result in invisible "idle" funds and opportunity losses (losses due to missing higher returns during the same period). It is worth noting that some very short-term financial products create a financial illusion of "high nominal interest rates" but "low actual returns" for investors precisely through these small "time differences."

03, Manifestation Three: Viewing Risk Products Extremistically

Investing in funds or stocks is risky: there are occasional paper riches, but losses are inevitable. The current situation of "seven losses, two breaks even, and one profit" is due to investors' improper investment philosophies and strategies, but the problem does not lie in the products themselves.

After a series of ups and downs, investors' attitudes towards risk products often exhibit two "extremist tendencies": either they avoid them entirely due to fear of losing money (especially during market downturns, or even when the market is desperate but the cost of establishing a position is low), or they invest too much (especially in the later stages of a highly risky upward trend). The weaknesses of human nature and simplified thinking lead most investors to lack a proper understanding of risk assets and thus go to extremes.

To put it simply, equity investments "should not be too much, but they cannot be absent either," much like "salt" in asset allocation—if you put too much, it becomes too salty to eat (the proportion is too high and exceeds the risk tolerance limit), and without it, there is no flavor (the opportunity to achieve excess returns). This "measure" is indeed difficult to grasp without the guidance of professionals.Controlling the upper limit of investment is equivalent to controlling risk. Only after this can the selection of investment timing and types make sense. This is the core value of "asset allocation."

04. Manifestation Four: Lack of Arrangement for Long-term Funds

The so-called "long-term funds" refer to money that will not be used for 10 or even 20 years, such as funds for retirement and for supporting the next generation of the family.

In the context and trend of declining interest rates, a lack of foresight for the future and no prior planning for long-term funds may lead to significant losses in family wealth.

As an emerging country, we have not yet experienced a complete market-oriented economic cycle, hence we lack "complete experience."

Continuing from "Manifestation Three," the riskiest asset in current family investments is not actually funds or stocks, but real estate (for investment purposes) that is currently at a high level. It is evident that most people's judgments about the future are not based on rational analysis but rather on "experience," which is the so-called error of experientialism! The result of poverty is "no money," but the cause is "no brains."

Just as those who have never seen a decline in housing prices believe that housing prices will always rise, it is also common to hear people say that "money in the future will depreciate quickly." In fact, the latter judgment still stems from our country's "experience of the past 20 years," without serious consideration for the future.

The lack of long-term fund planning may not have an obvious impact on the present, but it is profound and long-lasting for the future. The correct order of wealth planning may not be "short → medium → long," but rather "short → long → medium."

05. Reluctance to Face Potential Risks

There is a saying, "One does not turn back until they hit the south wall": when faced with "small certain losses in the present" and "large uncertain losses in the future," most people tend to focus on the former and ignore the latter—before the latter occurs, they not only lack a prevention plan but even refuse to think about or confront it.In financial planning, this psychological tendency is primarily reflected in the lack of health and accident insurance coverage—unwilling to temporarily forgo the small certain benefits (premiums) in exchange for the uncertain large benefits (compensation from "windfalls" in the event of sudden large capital needs). Never procrastinate on something that seems "important but not urgent," allowing the mentality of luck to lead to a tragic outcome.

As a professional in financial management, understanding the "psychology" of investors is more important than understanding the products themselves. Use the power of reason to overcome the weaknesses of human nature, step out of the many pitfalls of wealth management, and transition from a passive state of "being driven by money" to a beautiful realm where "money serves people's welfare"!

Manifestations of a Lack of Financial Concepts and Suggested Measures:

Manifestation One: Excessive Idle Demand Funds

— Actively engage in cash management

Manifestation Two: Only Comparing Product Returns

— Comprehensively assess product features

Manifestation Three: Viewing Risky Assets Extremistically

— Moderately allocate and scientifically investPerformance Issue Four: No Arrangement for Long-term Capital

—— Lock in Long-term Returns as Soon as Possible

Performance Issue Five: Unwillingness to Face Potential Risks

—— Proactively Allocate Protective Products