Citibank: The Ten Must-Know Rules of Foreign Exchange Investment
With the increasing accessibility of financial services, people are faced with more choices and an increasingly complex investment environment. In this context, the importance of financial education becomes even more evident for making wise investment decisions. Citibank has compiled its accumulated experience and business knowledge from various regions into a book titled "Citibank Guides You to Build Personal Wealth," written in the simplest terms possible, helping mainland investors establish a correct financial management perspective through ten key investment tips.
1. If you're looking for higher deposit rates or have a need for foreign currency (for example, if your children are studying abroad), then foreign currency preferential deposits can help you achieve higher returns at relatively low risk.
2. If you want to protect your investments from significant risks, structured notes can serve as derivative tools to meet your personal financial needs.
3. Credit cards can help you save a lot of money while shopping. Card issuers can leverage partnerships with merchants to secure substantial discounts for customers.
4. Are conservative investors only suited for bond investments? Not necessarily. You can combine investment products of varying risk levels into a portfolio to achieve optimal returns, which might yield unexpected results. For example, between 1988 and 2003, the risk level of a 100% global bond portfolio was the same as that of an 80% global bond and 20% global stock portfolio, but the latter provided higher returns. This is because the correlation coefficient between global bonds and global stocks is very low at just 0.23 (1.00 represents complete correlation), making the 80/20 allocation a good mix.
5. Make a will. You'd be surprised how many wealthy individuals cause trouble by neglecting to make one. A will can help reduce estate taxes and ensure that your assets are distributed according to your wishes.
6. When analyzing investment performance data, don't forget to consider inflation factors.
7. Use the "Rule of 72" — divide 72 by the annual return rate to estimate how many years it will take for your investment to double. For instance, if the annual return rate is 5%, dividing 72 by 5 means it will take 14.4 years for your investment to double.
8. Are you a rational investor? There's a theory suggesting that investors make different investment decisions based on how wealthy they feel. For example, the wealthier they perceive themselves to be, the more inclined they are to invest, and the more they feel they've lost, the more likely they are to sell their holdings. If stocks perform poorly but investors buy at low prices, it indicates they expect higher-than-average returns, contradicting their previous behavior.
9. Observing the overall performance of your investment portfolio is more important than focusing on individual investments. Effectively diversifying assets based on your personal risk tolerance helps achieve the best returns.
10. Developing a financial plan is the most effective way to help you achieve different life goals. By setting reasonable goals, you can manage your wealth more effectively and reduce financial uncertainties.