"As the saying goes, 'You don't manage your finances, and your finances won't manage you.' Many people have heard this phrase and are quite fascinated by it, always believing that if they don't do something in their daily lives, they will be abandoned by wealth. While there is some truth to this idea, some individuals adopt improper methods in their operations, leading to irreparable losses. Today, let's take a look at the common pitfalls in investment and financial management.

Firstly, there is the issue of overconsumption. In recent years, especially among many young people, there has been a blind admiration for the concept of 'using tomorrow's money to enjoy today's life.' As a result, they recklessly overdraw their credit cards and even take out loans to buy houses and cars without considering their consumption and repayment capabilities. However, excessive consumption brings tremendous pressure for future repayments.

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Many people, under high debt and high consumption, find themselves unable to repay the amounts that far exceed their capacity, resorting to borrowing from Peter to pay Paul, continuing to take out loans and apply for credit cards, and even seeking online loans. In the end, the high principal of the loans, coupled with significant interest, can deplete a family's wallet. Some young people even drag their parents and relatives into financial distress, leading to a chaotic and disastrous situation. Therefore, everyone should still consume within their means during their daily lives!

Secondly, there is the blind belief in high-yield products. Investing to earn returns is not inherently wrong, but all investments come with risks, and 'the higher the return, the higher the risk' is an eternal truth. However, in the face of profits, many people choose to ignore this and blindly pursue high-yield products, neglecting the existence of risks associated with the products themselves, which is not worth it.

For example, many of the financial products that have recently suffered significant losses are high-risk products above R3. Although the expected returns may be high, the losses can be just as severe. Therefore, when choosing high-yield products, it is still necessary to reasonably assess the risks involved."Thirdly, there is a belief in only savings, rejecting all other options. Some individuals, in an effort to avoid investment risks with their savings, will refuse any product other than regular deposits. However, in the investment market, there are many excellent products beyond the common demand and time deposits, such as large-amount certificates of deposit, structured deposits, fund regular investment plans, low-risk financial management, bond funds, and pension financial products, among others. These products often offer higher returns than regular savings. Of course, when choosing these products, it is essential to fully understand them before investing to avoid the risk of losing the principal, which would be inappropriate.

Fourthly, there is the issue of blindly following trends. This is a common occurrence in our daily investment lives. Many people, upon hearing about someone else's investment in a particular project or the purchase of a certain stock, become eager to follow suit. However, they often end up losing money, with numerous examples of such cases. Many people overlook a very important issue here, which is human nature. A significant weakness of human nature is the desire to "show off," and this is particularly evident in the field of investment. For instance, if someone recently made money from investing in a particular stock, they will surely boast about it. But when they lose money a few days later, they will keep silent. This outcome creates a false impression that investments are a surefire way to make money.

Therefore, when you blindly follow the trend in the hope of making money, what may await you next is a loss and financial loss. So, in the field of investment and financial management, do not blindly follow trends in areas you are unfamiliar with.

In summary, the most basic goal of investment and financial management is to preserve and increase wealth. It is important to note that the term "preservation" comes first, followed by "increase." Therefore, when engaging in investment and financial management, we should have a fundamental understanding that the priority is to protect the principal before thinking about returns. Please pay attention to the term "returns," not "getting rich." So far, I have not seen any ordinary person become wealthy solely through financial management, so please always maintain a clear mind.So, what misconceptions have you all experienced in the process of investment and financial management?

Feel free to leave a comment, and let's discuss together.

That concludes all the content for this episode. If you have any topics in financial management that you would like to know about, please leave me a message.