It is a very simple idea to use the power of compound interest

It is a very simple idea to use the power of compound interest  Smart people are easily attracted by complex things, and underestimate the great influence and importance of simple ideas. But Monish Pabrai is a full pragmatist, and he will not fall into this trap. "It is a very simple idea to use the power of compound interest, a very simple idea to imitate, and a very simple idea to be honest." He said. However, when you apply some powerful ideas with great enthusiasm, the cumulative effect is "incomparable".

The return rate of equity assets is the highest and far ahead

The return rate of equity assets is the highest and far ahead 

According to the long-term statistics of the United States and other developed countries, among the long-term return rates of all major categories of assets, the return rate of equity assets is the highest and far ahead. Even in the past 20 years or so, even in shares, you will find that the return on investment is not lower than the increase in house prices (of course, there is no leverage) - in fact, if you ask about the performance of outstanding professional investors in the past decade or so, few of them are less than 50 times that in the past decade or so, If you don't have 100 times of income, you probably don't dare to give yourself more than 85 points (even if Beijing bought a house at the bottom of more than 3000 yuan in 2000 and now it's 100000 yuan, the increase is only 33 times. Of course, leverage is a natural advantage). However, there is a big difference between this data and everyone's perception. The main reason is that the general public does not have the basic quality of serious investment, and the characteristics of A-share retail investors have indeed experienced great historical fluctuations (but such large fluctuations are far more favorable than the U.S. stock market for smart investors). Compared with the fact that real estate is in a 20-year unbeaten super-rising cycle, the two-phase comparison will lead most people to a conclusion: closing their eyes to buying a house also makes money, Cherish life and stay away from the stock market.

In fact, for most people, this conclusion is not necessarily wrong. Because the stock market does not have the abnormal rise cycle of real estate in the past, the barriers to investment in the stock market are indeed much higher than those in real estate for those who have not received professional investment training. Just as I said: the reason why the vast majority of the middle class will not be able to play the next asset upgrading game in the future is that the asset structure of the vast majority of the middle class is that real estate accounts for 70-80%, the proportion of liquid assets is small, and even more importantly, they lack investment skills, so they will inevitably be absent from the capital feast in the future. The expectation to continue to make their real estate high-yield is equivalent to such an assumption: let the vast majority of the middle class collectively upgrade to the rich only by holding real estate - unfortunately, this has never happened on earth. Just from logic and common sense, we all know the result.

Therefore, it is almost certain that whoever has mastered the mystery of equity asset investment today and who holds more equity assets today will win in the future. Moreover, compared with real estate investment, the stock has greater advantages when it comes to the back: for example, the house price has increased ten times from 5000 yuan to 50000 yuan per square meter, but it is only three times from 50000 yuan to 150000 yuan per square meter, and 150000 yuan goes up... There is still a ceiling for price comparison. The house prices in mature developed countries and regions are there. But there is no such problem in stock investment. You can still find a good company to earn 100 times after you have earned 100 times in the past ten years. Because good companies and opportunities are dynamic changes, there is no ceiling in theory. There are industries and companies that benefit in every era. As long as you master the methodology, you can probably participate in it all the time. Even if it is only 25% compound interest, it will be 10 times more if it continues for 10 years.

However, there is a difference here, that is, the real estate investment is generally income sharing, but the stock market investors must be a minority with the vast majority of profits. Therefore, in order to catch the fast train of the next cycle, first, there must be sufficient current assets as "ammunition", and second, there must be sufficient professional literacy. You see, the level of current assets eliminated a large number of people, and the level of professional quality eliminated a larger number of people, so the last remaining winners will share all the profits and successfully advance - just logically speaking, it is much more reliable than all real estate holders to advance to the rich. Therefore, do not focus on short-term fluctuations and what groups are keen on, but firmly move in this general direction.

So don't be complacent because of your current achievements. Make a clear distinction between ability and luck. We should have a sober look at the future, and whether our ability to cope with the future has been further improved? In fact, take a long-term view. In this round of magnificent development in China, the opportunities to make big money are more than real estate and stocks? I have seen so many successful cases myself. There are only two keys: first, find the right direction; Second, be outstanding in this general direction. As long as you do it, you will succeed in your life.


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