How to reduce financial risks?

Risk and financial management are inseparable. Where there is investment, there is risk. Learning methods and knowledge to avoid risks can reduce financial risks in a limited way. Next, let's look at how to reduce financial risks.

I used to think it was not bad, but now I am losing money; Always save money and dare not make any investment; Can't accept losses, but hope to earn more. If you are such a person, please slide to start.

Let's talk about what is risk first.

When investing, there are about two risks:

1, the risk level of the investment product itself. For example, stocks are said to be risky, but when they go up, they earn more every day. There is no risk! Actually, it's not. Its risk is that the price changes at any time and may fall one minute before the rise. Just because someone is angry now doesn't mean that he will never have an attack.

2. The second risk is people's feelings. You feel "dangerous" and "unsafe". The performance is that when you make money, you worry about earning less tomorrow, and when you lose money, you worry about losing more tomorrow. This theory is called the uncertainty of expected annualized expected return.

To deal with risks, you have to know what kind of risks you encounter. Know yourself, 80% of the risks will not be encountered at all!

Why are you so domineering? Because fear of risk is like catching a cold: if you prevent it, you won't catch a cold at all; If there are symptoms, just prescribe the right medicine for two or three days; But if you take the wrong medicine, or let it go, it will become pneumonia and even death. You certainly didn't expect that 2 million people still die of colds every year in the world today, so we need to know the risks before we can prescribe the right medicine.

How to treat the first kind of risk? Three methods:

1. Make low-risk investments, such as deposits and money funds, and give up the possibility of high expected annualized expected returns;

2. Reduce the risk level of your "all money" through asset allocation, so that the money you buy stocks is still high-risk, but "all money" is very safe;

3, learn to take profit+stop loss, dare to sell if you earn, and dare to buy if you lose.

This solution is: how can I not catch a cold? Prevention first!

How to treat the second kind of risk? Two ways:

1, look at the big trend and don't pay attention to small fluctuations. The profit and loss of today and tomorrow is not important, but it depends on whether an investment can make money in a period of time. For example, there are many people who lose money in three months, more in six months, but everyone can make money in seven years.

2. Second, don't be too confident, study hard with the old class, so that you are no longer a veteran player of the "zero-sum game", that is, people who make money in a bull market and pay back their profits in a bear market.

Therefore, fear of risk does not mean fear of losing money! Losing money is only a possibility, and many people who are afraid of risks finally make money by risk. Therefore, we care about risk, not only the present it causes, but also the future it affects.

(2) "Windproof" First, determine the expected annualized expected income target.

If there is no limit, everyone hopes that the higher the expected annualized expected return, the better. However, due to the positive correlation between expected annualized expected return and risk, everyone's tolerance for risk is limited, so it is very necessary to set a reasonable expected risk expected annualized expected return target.

How to set goals? Mainly consider three aspects:

1. Personal risk tolerance

How high your personal risk tolerance is, this is the most important, and it can be said to be the first threshold in the process of determining the expected annualized expected return target of the risk. To put it bluntly, the so-called risk tolerance is: investment is risky, and there are gains and losses. If the worst happens, how much loss can you accept at most? Is it a 30% loss 10% loss, or can't tolerate hurting the principal at all? Everyone is different. Your risk tolerance determines your overall configuration. For example, if you can't accept the loss of principal at all, then stocks and stock funds are completely unsuitable for you.

2. Current market environment

I have determined the annualized expected return target corresponding to my own investment method and risk expectation, and the matter is not over yet. Because the market is always changing, your goals should be adjusted in time.

For example, the performance of stocks or equity funds in bull market, bear market and shock market is bound to be very different. If you invest in these two categories, you can set the historical expected annualized expected return to 30% or even higher in the bull market, but once the market enters the shock stage, continuing to pursue unrealistically high expected annualized expected return may make you unable to stop in time, leading to the expected annualized expected return shrinking or even turning losses.

3. Where are the trends?

There is inertia in the investment market, and many times, some signs will indicate the upcoming trend. Investment can't go against the trend, the most famous example is: Chinese aunt takes over.

For example, for products with fixed expected annualized expected return, the expected annualized expected return ability is closely related to the expected annualized interest rate, so you have to care: is the currency loose or tight? Is the market in the interest rate channel or the interest rate channel? If there is an expected annualized expected return product with a fixed expected annualized expected return in the interest rate reduction cycle, it is necessary to pay attention.

Here, you will find that if your expected annualized expected return target is much higher than the market, then you must bear the "high" risk; If you don't get the "average" expected annualized expected return level when the market is good, it means that you are too "worried" about the risk.

Therefore, it is important to know the "average risk" level of the market.