Financial management from the age of 35 [China]
Financial management from the age of 35 [China]
My name is WangLiangfeng.I am a migrant worker from China.I had read John.C.Bogle's three books,but i have some questions:how to do that in China? If it's so successfull as it is why still there are such peoples don't know that or don't believe it? I'm 35 years old,i want to start saving this year.Because of some personal reasons ,i have no savings.Is that means it's later for high yield investment or can be a reasonable return? Common sense is very important,then how to use the common sense?
- andrew99999
- Posts: 1021
- Joined: Fri Jul 13, 2018 8:14 pm
Re: Financial management from the age of 35 [China]
There is an ocean of misinformation on the internet, created by people trying to trick other people into giving them money. Because of this, it is impossible for most people to ever find out about passive investing unless they are lucky enough to find it by accident.
Re: Financial management from the age of 35 [China]
What country are you in now? Your current country of residence would determine most about how you can do this.
People want to get rich quick. Not get rich slow.
People also tend to think they're smarter than everyone else, so not many are willing to accept the market average.
So basically, impatience and ego.
I think its fine to start now and take it slow. Like I said, get rich slow.
When first starting out, your savings rate is probably more important than your investment returns.
Best of luck!
Re: Financial management from the age of 35 [China]
It's information age now,rational investors believe that they can get long-term market level returns,but how to specific analysis of the actual operation of the fund ?For example, how can the relationship between cost, risk, time and return be reflected in practice ?And i think John.Bogle will be sad if he know there are such peoples donn't believe in the power of the index.andrew99999 wrote: ↑Fri Jul 16, 2021 12:05 amThere is an ocean of misinformation on the internet, created by people trying to trick other people into giving them money. Because of this, it is impossible for most people to ever find out about passive investing unless they are lucky enough to find it by accident.
Re: Financial management from the age of 35 [China]
Interesting question. I think if one takes a purely rational approach, there are some logical truthswlf wrote: ↑Fri Jul 16, 2021 6:47 amIt's information age now,rational investors believe that they can get long-term market level returns,but how to specific analysis of the actual operation of the fund ?For example, how can the relationship between cost, risk, time and return be reflected in practice ?And i think John.Bogle will be sad if he know there are such peoples donn't believe in the power of the index.andrew99999 wrote: ↑Fri Jul 16, 2021 12:05 amThere is an ocean of misinformation on the internet, created by people trying to trick other people into giving them money. Because of this, it is impossible for most people to ever find out about passive investing unless they are lucky enough to find it by accident.
- Passive index investment returns == The average of all active active investments - but BEFORE COSTS
- Passive costs (<0.5%) are much lower than active costs (>1-2%). Therefore, the average passive investor AFTER COSTS does better than the average active investor
- Exercise to the reader on maximising risk adjusted returns through the free lunch concept of diversification
If you accept that, a passive fund has a better chance for net returns than active funds and that a highly diversified approach will reduce risk/volatility (as opposed to stock picking)
The assumption in there is that individuals accept they shouldn't do better than the average. In these forums, we accept we don't know better than the market. In China, everyone is looking for the edge and often end up believing they can have one. Moreover, the average China active fund has been consistently outperforming their benchmarks. (Exercise for the reader on how that's happening). Therefore education is difficult.
There is certainly a tricky question for Chinese people whether they should be investing domestically or internationally... I think that's a very tough question with no obviously right answer and also difficult to debate since it comes close to politics. Let's just say that choosing how much home bias matters for Chinese (unlike the rest of the non-US forum which probably aligns the no home bias, at least for equities).
Re: Financial management from the age of 35 [China]
wlf - In your post (3 previous from this post), I have modified the post title from Chinese in English. Google translate suggests the meaning is different than the topic.
Re: Financial management from the age of 35 [China]
We are taught average is bad, and that we should all strive to be above average. In investing, average makes you an overachiever. Most active investors underperform longterm. Many people can outperform for short periods of time, 1 year, 3 years, even 5 years. Exceedingly few people outperform year after year for decades. So few, most are famous worldwide -- Buffet, Lynch, Price. More information available makes it harder, not easier, to outperform as there is a much smaller chance of finding information that can give you an edge.wlf wrote: ↑Fri Jul 16, 2021 6:47 am It's information age now,rational investors believe that they can get long-term market level returns,but how to specific analysis of the actual operation of the fund ?For example, how can the relationship between cost, risk, time and return be reflected in practice ?And i think John.Bogle will be sad if he know there are such peoples donn't believe in the power of the index.
Most of the very rich finance people make money off their customers, not investing.
Read, learn, and if you do everything correctly, you too can be average.
Last edited by Jags4186 on Fri Jul 16, 2021 7:27 am, edited 2 times in total.
Re: Financial management from the age of 35 [China]
I removed a post discussing the Chinese political system. This is a "No politics" forum, regardless of country. As a reminder, see: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
- Common religious expressions such as sending your prayers to an ailing member.
- Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
- Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
- Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.