Actually, I had always wanted to write an article, and I even had the title ready: "Should programmers manage their personal finances?" Later I thought about it, and as for "should" or not, there was no need to think further — we absolutely must manage our money! But with so many personal finance methods on the market, how should we ordinary programmers choose?

Actually, I was the kind of person who was totally behind the times. I had hardly ever thought about personal finance before. First, when I graduated, my salary wasn't even enough to cover expenses, so how could I manage money? Second, I always felt that personal finance was something rich people did. Later, I happened to enter the internet finance industry, stayed there for several years, and gradually came into contact with many ways of managing money, but I am still a layman. This article is just to chat with everyone about how we programmers should manage our money. Consider it a brick thrown to attract jade; feel free to throw your own bricks.

I. My personal finance experience

Let me first talk about my personal finance experience. My journey probably started gradually three years after graduation. Right, it started with Yu'e Bao. Later, while working at third-party payment and internet finance companies, I gradually learned about more types of financial management products. Internet finance, that is, P2P or various variants of financial company products (in fact, they are further packaging of debt products), includes demand products and closed-end fixed-income products (daily, monthly, and yearly fixed income). I bought stocks (first A-shares, then US stocks), learned about funds (index funds, bond funds, stock funds, etc.), and later also looked at gold and futures (though I understood less), and had the least exposure to insurance.

Along the way, my ideas and understanding of personal finance have kept evolving. Some of the biases of not knowing, not understanding, and not accepting slowly disappeared, and I can now view investment and personal finance from a more rational perspective. Personal finance is really something every one of us should study seriously—how to make your hard-earned savings beat inflation and keep your assets from shrinking over time. But at work, I often find that most programmers are still quite conservative about personal finance; they often put everything in the bank or all in baby-type products. Some more aggressive ones put all their money into the stock market, and one of them lost over one hundred thousand yuan in a single year. Below, I will discuss my understanding of personal finance in stages:

1. The Baby-product era

When talking about personal finance or third-party payment, one cannot avoid a great company—Alipay. Alipay has been leading and educating our generation about personal finance. My starting point for personal finance was Yu'e Bao. I clearly remember when Yu'e Bao launched in June 2013, everyone found it novel or didn't understand it (at that time, many people still thought it was safer to put money in the bank, even compared with Yu'e Bao!). I remember at the very beginning, I transferred 100 yuan into Yu'e Bao and was satisfied every day watching the few cents of interest it brought. Then it became unstoppable: almost as soon as I received the salary notification text, the next minute the money was transferred into Yu'e Bao. There was a period when China experienced a money shortage, causing Yu'e Bao's highest yield to reach 6.76%.

But later, because this piece of the cake was too big, the major banks urgently introduced many policies to restrict it. First, they set purchase limits, preventing large amounts from entering. Second, they did it themselves: many banks launched their own money market fund products to compete with Yu'e Bao. Licaitong also appeared, and its concept of "same card for deposits and withdrawals" was quite good, greatly helping to ensure the safety of funds.

2. Internet finance

2014 can be regarded as the first year of internet finance. Actually, internet finance was introduced to China very early, but it had been developing tepidly. Suddenly in 2014, with a large inflow of capital, internet finance was catalyzed into big development. Today, internet finance is mainly divided into two major parts: P2P and crowdfunding. In China, P2P has developed into many variants. Current main products include demand debt products and monthly or yearly packaged wealth management products, then packed further later. On the debt side, they can be divided into corporate and personal. I also came into contact with P2P in 2014 because of work. After trying it on a small scale, I found it completely crushed Yu'e Bao, and I almost put all my savings into P2P. Back then, I calculated that based on a 12% annualized product, if you invested 100,000 yuan, the return for one year would be 12,000 yuan. If you invested 10,000,000 yuan, then every year you would earn 1,200,000 without working! Easily over a million yuan in annual income! And, best of all, no taxes!!

At that time, various platforms were giving away Apple phones and computers and running all kinds of activities, to our great amusement. Then in 2015, many platforms ran away with the money, and only then did I gradually withdraw a large portion. Crowdfunding has also developed many variations in China; it is mainly divided into product crowdfunding and equity crowdfunding. Product crowdfunding mainly focuses on high-tech products, but now many new product launch events are also put on it. Equity crowdfunding means investing your own money in some small companies you favor in exchange for a share of the original equity. Generally, equity crowdfunding has a threshold; unless you have millions of yuan in assets, you basically don't need to participate. The risk is also huge—it's not something ordinary people like us can play.

3. Stocks

I entered the stock market near the end of the first stock market crash. In 2015, when the market was booming, many colleagues in the company were watching stocks all day. Once it passed 3,000 points, they said that going in at that point would make you cannon fodder. Then the market reached 4,000 points, and some colleagues said People's Daily had published an article saying that 4,000 points was just a starting point. Well, what their final outcomes were, I don't need to say since everyone can guess. At that time, almost half of the programmers in our department had opened A-share accounts to some extent, and during gatherings they were discussing all kinds of stocks.

After June, I suddenly had some free time and was very curious about why the stock market was so attractive. So I tentatively opened an account online, choosing the one with the lowest commission. Many colleagues were using stock simulation software to practice for a while before entering the market, but I felt that simulation, because there was no real money on the line, was not exciting at all. So I started with 1,000 yuan to test the waters. I still clearly remember that the first stock I bought was "Suning Cloud Commerce" (Suning Yunshang). I eagerly watched every day to see whether it rose or fell, enjoying it endlessly. Not long after I bought it, "Suning Yunshang" was suspended, and the announcement said Alibaba was investing—a major positive! Many people say novice stock market players tend to be lucky: they first give you a little sweetness to trap you, then slowly play with you. Later, after "Suning Yunshang" resumed trading, it had three consecutive limit-up days, earning me a few hundred yuan.

I immediately became extremely interested in the stock market. Are you all ready to see a story about a small A-share retail investor being harvested? :) So I chased gains and cut losses, focused on technical indicators (trading volume, KDJ, MACD ...), asked stock-trading friends to recommend stocks, and analyzed stocks. I specially formed a discussion group and pulled in several IT friends who liked trading stocks. Everyone discussed the daily market conditions—what a lively scene! Gradually, I found that many tech stocks couldn't be bought, and only then did I learn that ChiNext required opening a special account offline. Well, I couldn't wait to go open the ChiNext account. In just six months, I bought a lot of stocks: LeEco, Ourpalm, East Money, Winning Health, Huayi Brothers, Wanda Cinema Line, Information Development... so many that I don't even know exactly how many. They were all short-term trades! The capital also increased from the initial 1,000 yuan to as high as 50,000 yuan. I experienced stock market crash 2.0 and 3.0, and also experienced ChiNext's lowest point at 1,800 points, the huge rebound in October, and this year's circuit breakers. Of two friends I knew, one once made 10,000 yuan per day for a week during the bull market (who would still have any mood to work then?), and the other didn't lose much in the crash but did not avoid the circuit breakers, losing nearly a year's salary.

As an IT guy, I knew that the best Chinese internet companies are almost all listed in the United States, so I was always looking into how to buy US stocks. At that time, "Yirendai" had just listed on NASDAQ and fallen below its issue price, and "Lending Club (LC)" had also dropped to about $12, which I thought was an opportunity. It happened that Jimu launched a product called Jimu Stock, so I registered and opened overseas remittance right away. After getting in, I bought LC, but it soon fell to $8, $7, $6... I was extremely disappointed. Not long after I exited, LC hit a black swan event, plunging from around $7 all the way to a minimum of $3.44! Because US stocks have no price limit, they are much more thrilling than A-shares. It is common to see a stock rise 40% or 50% in one day, but the drops can be the same, and often half the market value evaporates in an instant. Almost all of my losses in US stocks came from LC. Yirendai was a stock that shocked me deeply, because it kept falling from its opening to around $3, then started rising until it reached about $30 now. It's a great pity that I didn't catch it. The stocks I currently hold are all Chinese concept stocks: JD.com, 58.com, Cheetah Mobile, etc.

4. Funds

A person's energy is always limited. Watching stocks all day is really tiring and affects work, sometimes even affects your mood, and it doesn't guarantee making money. How can we get capable people to manage money for us? At that time, I gradually learned about funds, especially after following the WeChat public account "Stock Community" (股社区), where I learned a lot of knowledge. But right now I still only understand a little. As far as I know, funds mainly include the following types: bond funds, which mainly buy national bonds or bonds of state-owned enterprises; their risk is relatively low, and the returns are also relatively low. At present, I am doing regular investments in this type. Then there are stock funds, which find an excellent fund manager to trade stocks for us, sharing the profits when gains are made; the risk is also high, and they depend heavily on the manager's personal skill. There are also broad-market index funds, such as ETF300, which buy the best stocks on the main board, a little of each. As long as the broad market rises, our returns rise; if the broad market falls, we take losses. In the short term, returns are hard to determine, but in the long run, returns should be positive. There are also some hybrid funds that buy both stocks and bonds.

5. Gold

At the beginning of 2016, various reports said that gold falling below $1,000 would be the bottom. At that time, it was around $1,100, and I felt it was about time, so I bought Bank of Communications' gold deferred product (T+D). I invested less than 10,000 yuan, but within a few days I lost a little and got out. If I had held on until now, I would have made some money. Sometimes what you think and what you do are completely different things. If you want to invest in gold now, you can simply buy "Cunjinbao" on Ant Fortune; the key point is that it is convenient and fast.

II. My investment experience and lessons

Based on my personal finance experience and lessons from more than three years, let me share some thoughts on investing.

1. Bank deposits

There has always been a saying that poor people deposit money in banks, while rich people take loans from banks. This reflects the situation in China to a large extent. If you just leave your savings lying in the bank, combined with inflation, you are losing money! Moreover, bank service is extremely poor and transactions are super slow. Therefore, it is recommended that you keep zero money in your bank card!

2. Baby-type products

You can put money you may need urgently and daily spending money into these products. They offer both a certain level of returns and flexible deposit, withdrawal, and spending options. It is recommended to primarily use major platforms such as Yu'ebao and Licaitong, and to be cautious when choosing other types.

3. Internet finance

The platform really matters! The platform really matters!! The platform really matters!!! Important things must be said three times. If you choose a bad platform, it's a matter of 0 or 1 -- if the platform you invest in runs away, you lose every penny. The author personally invested in a company that absconded, e-ZuBao, and another company that I had invested in before it ran away. We often say that what you covet is their interest, while what they covet is your principal. But looking back, most companies that flee are scam companies. There are hardly any legitimate internet finance companies; they just use the banner of internet finance to cheat. Is P2P really very high risk? Actually, in the author's view, as long as you choose the right platform, it should still be a very good way to manage money. So how do you choose a platform? Try to choose ones with high credit ratings, or companies with state-owned or listed company backgrounds.

4. The stock market and funds

The stock market is something with very deep knowledge. Some people spend their whole lives without understanding it. It mainly depends on personality, values, and mastery of human nature. Everyone should take me as a warning: avoid chasing rises and selling on dips, avoid frequent trading, persist in value investing and long-term holding, and pursue long-term returns. The stock market is also a very high-risk investment. Everyone needs to choose investments according to their own risk preference. You can also appropriately choose suitable fund products to invest in. Generally, the stock allocation ratio should be inversely proportional to age. The younger you are, the larger the portion of your investment you can allocate. The most important thing is not to let the stock market affect our normal life and work! I have always wanted to find a product that can buy A-shares, Hong Kong stocks, and US stocks at the same time, but I have never found one, which is a pity. As for the stock market, you should fear it, respect it, and understand it.

5. Gold and insurance

Buy stocks in peacetime and gold during times of war. This depends on personal understanding; I don't know much about it either. Insurance is the area I know least about. I always feel that since we are so young, why should we consider insurance? But this kind of awareness about insurance also needs to be gradually developed.

6. Buying a house

Many people commented that I didn't mention buying a house. That's because I really don't know much about it. But I do feel the turning point is coming soon. It's hard to say about housing prices in first-tier cities, but in third- and fourth-tier cities, the necessity of investing in real estate is really not that great. Also, when buying a house, you should definitely choose a core location or a community with a good location and environment. It doesn't matter if it's a bit more expensive, as it will be easier to resell later.

7. Asset allocation

My current capital allocation is: "baby-type" products 1/4, P2P investment 1/4, A-shares + US stocks 3/8, funds 1/8. Everyone can choose their own asset ratio based on their risk tolerance.

III. Finally

Financial management is something every one of us must pay attention to, even if we don't have much money right now. I often see an ad saying that investment is the last career in your life. As we age, investing and managing money become increasingly important to us. Investing is also a cautious and serious matter, after all, it concerns the hard-earned blood and sweat money we work for.

The final word

For us, investing in ourselves is even more important! Investment carries risk, and financial management requires caution!

Source: http://www.ityouknow.com/生活/2016/05/08/What Posture Should Programmers Use for Financial Management?.html