Many individuals who are completely unfamiliar with financial management or harbor "doubts" about investment and financial management might ask a question: Don't most of us work hard, earn money, or start our own businesses to make a living? How many have actually become wealthy through investment and financial management? On the contrary, we often see people being deceived by investments and many gamblers ending up with broken families.

To address this question, let's start with a story:

On an isolated island, there were three young workers—a net maker, a fisherman, and a weaver. Initially, the fisherman could exchange 10 pounds of fish for a bolt of cloth, or 40 pounds of fish for a fishing net. Everyone worked in their respective roles, exchanging for the items they needed.

Then a banker arrived on the island. He was trusted by everyone because he had gold. He had a deck of playing cards and stipulated that each card could be exchanged for 10 pounds of fish, a bolt of cloth, or 1/4 of a fishing net. If one could collect the entire deck, they could exchange it for the gold he held. Consequently, everyone began using the playing cards as a payment tool for trading goods.

Additionally, there was a highly respected manager on the island. The workers paid him a certain number of playing cards each year, and when they grew old, they could withdraw a certain amount of living expenses monthly or live directly in the island's nursing home.

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After several years, the fisherman noticed that more and more people were buying fish, and there weren't enough to sell. So, he increased the price of fish, making it so that one playing card could only buy 8 pounds of fish. This made the net maker and the weaver suffer, as their previous income allowed them to eat fish every day, but now they could only afford one meal a day. It turned out that the cunning banker had hidden another deck of cards and secretly took a few more cards, increasing the purchase of fish.

The net maker, unwilling to accept this, started fishing in his spare time and also wholesaled some cloth from the weaver to sell to those who came to buy nets. This way, he could eat more fish and even made a small profit.

The weaver, who had a hard time getting by, finally retired, thinking he could enjoy his old age. But then the island's manager announced that there was not enough money, and since everyone was living well and living longer, retirement would have to be postponed by five years. ... N years later, the net maker, who had been living comfortably, also retired, only to find that the quality of his retirement life had suddenly dropped by two-thirds, a gap that was completely unacceptable.By now, you should all be quite familiar with the story. I have only three points to make:

Firstly, even if your annual income remains unchanged or increases slightly, the amount of money circulating in the market is constantly growing. This is known in professional terms as "inflation." China's broad money supply, M2, increased from 7.5 trillion in 1996 to 167.7 trillion in 2017, a growth of more than 22 times. Meanwhile, the average annual income in Shanghai rose from 10,668 yuan to 85,582 yuan, only an 8-fold increase. Therefore, to preserve the value of your hard-earned salary, to be able to buy 1 jin (0.5 kg) of apples today and still afford 1 jin of apples in 10 years, you must learn to make your money generate more money. This is what financial investment and "preservation of value" are all about. Hence, we must not be like the weaver in the story, doing nothing and willingly accepting a decrease in our standard of living year by year.

Secondly, you could also engage in some side businesses to generate additional income, much like the fisherman who made nets. He could even hire people to work for him. If you can create more passive income from the money in your pocket and the resources at your disposal (rather than relying on your physical or mental labor), and if this passive income can cover all your expenses, then you could achieve a basic level of "financial freedom." For instance, you could consider investing in financial products as a side business. Even with a monthly investment of 500 yuan at an annualized return of 7%, after 5 years you would have 35,800 yuan, after 10 years 86,500 yuan, after 20 years 260,000 yuan, and after 30 years 610,000 yuan. By starting to save 500 yuan per month immediately after graduation, you could have extra funds for travel when you get married, education when you have children, security in middle age, and a pension in your old age. Those without the habit of forced savings or financial awareness might carelessly spend that 500 yuan each month, and their future quality of life will be far inferior to yours.

Thirdly, when it comes to retirement, each of our incomes and expenditures follows a life cycle curve. Income and expenditure increase with age, reaching a peak in income around 45-50 years old, but expenditure only reaches a phase high. After retirement, income is limited to pensions, while expenditures (especially medical expenses) can rise sharply, leading to a "deficit" and a significant decline in the quality of life for many retirees.

People often joke about the different eras' slogans for old-age support, such as relying on the government or children, which are now deemed unreliable. Social security provides only a small amount, and the pension gap continues to widen. China is also entering an aging society ahead of schedule. To address the future pension issues for our generation born in the 80s and 90s, the government has been proactive, which is why we see the continuous introduction of tax-deferred pension insurance and pension FOF funds in recent years. The aim is to encourage everyone to plan for other supplementary pension methods early on. It is crucial to recognize the "serious situation of future pension issues" implied by this.

To avoid the tragedy of the weaver in the story who ends up with "no support in old age" and the fisherman who is "severely downgraded in quality of life after retirement," we must continuously enrich our financial investment awareness and capabilities.

If, after hearing this, you still have no sense of crisis about the future or no interest in financial investment, then there is no need to listen to the rest of the course. However, those who are interested will surely ask:

So, how should one go about financial investment and management? Or, I have invested and managed my finances, but I have never made any money. Why is that?

To answer this question, we inevitably have to talk about "compound interest." In simple terms, it means that the money earned today is included in the principal tomorrow, to earn even more money, which is the concept of interest on interest, and the wealth "snowball" can keep rolling indefinitely. There are also three key elements to maximizing compound interest: a sufficiently large principal, sustained high returns, and the power of time.We all understand this principle, but why is it so difficult to put it into practice? Today, we'll take the opposite approach and ask why everyone can't achieve these points, and then dissect and share them one by one:

Firstly, you need "capital," but why can't you save money?

Saving money essentially comes down to "increasing income" and "cutting expenses." My friend Xiao Zhang is a designer and, as a young person who has just entered the workforce, his salary is his main source of income. Therefore, his life motto is also very simple: work hard, grow quickly, and hope to earn a higher salary through his own efforts. After work, friends often ask him to create a design, and gradually this side job has become a lucrative "side business." He has become a "slash youth," and his income is much higher than that of his colleagues who work the same hours.

Xiao Zhang is also quite organized in his life. For example, he plans his monthly expenses in advance, makes a list, and distinguishes between necessary expenditures—those that must be purchased, needed expenditures—those that can be bought depending on the situation or more economically, and wanted expenditures—asking himself if they are really useful to him. Here, I'd like to introduce a trendy term—"latte factor." Simply put, if you drink a cup of coffee every day at a price of 32, the accumulated cost over time can become an astronomical figure. Therefore, Xiao Zhang's method of "making a list" helps him effectively eliminate the "latte factor" in daily consumption and achieve rational spending.

If one can achieve what Xiao Zhang has done, it's hard to imagine that he wouldn't have any surplus money to invest.

Secondly, you need "sustainable positive returns," but why do you always lose money in investments?

We have an old colleague, Old Wang, who is a seasoned stock investor with 10 years of experience. But if you ask him "how much money have you made from stock trading?" he gets angry. Upon inquiring with people around him, we find out that he is an extremely emotional investor, buying whatever is hot at the moment. Each time, he ends up being the last one to buy at a high price. People in the office say he is a "contrarian indicator"; if you invest the opposite of what he does, you're sure to make money.

Even worse, one day Old Wang heard that Bitcoin was very profitable and started dabbling in digital currencies. As you might have guessed, Bitcoin's value plummeted from $20,000 to just a few thousand dollars within a year...

Let's not talk about Old Wang anymore. There are countless reasons for losing money, but ultimately, it boils down to two things: the inability to overcome human nature and the lack of the right methods. As for how to make money consistently, it requires learning knowledge, overcoming human weaknesses, and establishing one's own investment system. This is the purpose of our "training camp," to let everyone have their own growth system and a correct investment posture.

Thirdly, you need to wait for the "rose of time," but why can't you persist?Warren Buffett once said, "Life is like snowballing; the important thing is to find enough wet snow and a long enough hill." The "wet snow" refers to buying good assets at the right place, which ensures the ability to make money in the future; while the "long hill" represents time.

Just like Old Wang, many people around us have similar issues, such as being afraid to buy when the market is low and chasing when it's high. Many are accustomed to being "happy with short-term profits but numb to long-term losses," rather than being "fearless of short-term fluctuations and focusing more on long-term stability and consistent earnings."

In fact, in investing, it is difficult to predict the direction of many things in the short term, but the long-term trend is easier to discern. For example, if the index falls from 5,000 points to 2,500 points, I don't know whether it will rise or fall tomorrow, but I know that within a few years, the index will return to 4,000 or 5,000 points. So, does the next investment become simpler? (Of course, it cannot be denied that if you buy at 2,500 points and the index continues to fall to 2,200 points, many people will give up. Therefore, how to judge the appropriate humidity of the snow, how to find a good method, and how to stay clear-headed when the future is unclear, is also a science.)

Well, today's content is quite rich, so let's do a simple summary.

Okay, today we mainly discussed two major points:

1. Why should we manage our finances?

- To outpace inflation;

- To prepare for retirement in advance;

- To achieve financial freedom where "passive income exceeds active income."

2. How to manage our finances?1. First, you need "principal"—please examine why you can't save money;

2. Next, you need "sustainable positive returns"—reflect on why you always seem to invest without making a profit;

3. Finally, you need to wait for the "rose of time"—ask yourself: why can't I persist?