We, those of us born in the 90s, didn’t really feel much about the financial crisis of 2008, because we were young and not yet at the age of investing. The bull market in 2015 was grand and spectacular, and its decline was equally dramatic, ultimately requiring intervention from the government to save the market. At the same time, it brought the concept of funds into the view of ordinary people.
Ant Financial and Alipay
Alipay, as a natural traffic entry point under Ant Group, was positioned as a payment tool from its inception. When it comes to buying funds, most people chose Alipay over WeChat. Alipay successfully transformed fund sales into ordinary shopping. The bull market that started in 2019 and the mutual warming among fund managers were ultimately driven by the monetary easing guided by the pandemic. Those who entered (the market) made money, and those who watched from the sidelines became envious and rushed to enter. The speed at which new funds are breaking through the billion-dollar mark is accelerating. With “aunties” now starting to buy funds, trillion-dollar funds are not far off.
Before the booming popularity of Ant Financial’s internet-based fund sales platform, ordinary people typically encountered fund sales only when depositing money at banks, where branch managers would enthusiastically introduce various financial products. The packaging and promotional information on the internet, along with the exorbitant advertising fees paid by fund sales institutions, have made Alipay’s fund advertisements completely detached from reason.
Normal bank fixed-term wealth management yields 4%, P2P wealth management, which was popular a few years ago, yielded 8%, and credit card interest rates are 12%. Our protagonist, the fund promoted by Alipay, yields 150% and 250% when the market goes up, making everyone happy. But what about when the market goes down? Alipay is playing with fire. The growth data provided only shows the returns for the past three years on the surface, and established funds only show annualized average returns. Why don’t they dare to write out the average annual return each year? Is it because it’s difficult to calculate? The answer is no; it’s because the data isn’t good-looking and doesn’t easily guide customers to buy funds.
Fixed income wealth management
China hasn’t entered the era of negative interest rates yet; bank deposits and government bonds are the most secure fixed-income products. Pure bond funds are also good options. You can easily find China’s average salary by checking data released by local statistical bureaus. The author describes a simple scenario: an asset size of 2 million yuan, with an annualized return of 4%, resulting in annual earnings that exceed the average salary in most cities.
Afterword
It’s mostly based on my personal experiences, there’s a lot I could write about. If you want to learn more, I recommend reading books on economics; don’t blindly follow anyone. For ordinary families, the core of financial management is preservation of value, not chasing dreams of getting rich quick.
My uncle often says:
Doing the right thing at the right time yields the greatest value; studying diligently and obtaining a good education is better than earning pocket money by distributing flyers; working hard when you first graduate can bring substantial returns in salary increases; when starting a family, learn to take care of your home
Those interested can take a look at this speech: Regarding time, you need to read many books to find the answer. The text transcript is available on this site.