One of the common mistakes about investment is that people equate financial management with investment. Although investment is important, it is only one of the many aspects of financial management. There are other priorities in financial management, such as saving, insurance, and buying a house, which need to be addressed.

A complete financial plan is like establishing a building, constructed layer by layer——

The first layer is setting goals.

Goals contain two key elements: time and amount. For example:

Two years later, prepare to study for MBA, and the tuition is expected to be 200000 yuan;

Within five years, the plan is to buy a house of 2 million yuan, and the down payment is still 300000 yuan short;

Plan to retire in 30 years, it is estimated that 5 million retirement assets will be needed to provide for the elderly in a decent way.

When you write down your goals, you can know the purpose of financial management and the priority between goals, so that you can control the progress.

The second layer is to sort out finance.

2000 yuan a month for investment, certainly faster than 1000 yuan to accumulate wealth.

Check the income and expenditure every month to know where our money comes from and how much we can save.

The third layer is to establish a system.

Generally speaking, we can divide the fund into three parts——consumption and emergency for daily expenditure; safeguard against the risk of disasters and illness; investment for the steady growth of wealth.

The fourth layer is the investment target.

According to your own risk preference, you should first decide the proportion of equity and debt assets to be allocated, and then see what stocks or funds to buy.

For example, with retirement as the goal, the proportion of stocks in the investment will be on the high side. As time approaches, it will be adjusted to be more conservative.

A lot of discussions about financial investment are all on the last level, that is, the choice of investment objectives. This is actually the last thing to consider.

With an aimless investment or an unsystematic plan, no matter how great the investment is targeted, the success may be limited. If you have built your own financial system, please keep the following tips in mind: first of all, don’t go to the place where is overcrowded. It can also be suitable in regarding of investment. Secondly, try to avoid too much or too little risk. Investors who take too much risk and put their value on high-risk assets often leave the market when it is in an extreme situation. Thirdly, avoid falling into the trap of "learned helplessness". Learned helplessness is a psychological phenomenon, which refers to the state that no matter how hard you try, you can't change the result when facing an uncontrollable situation, and then you give up. Especially in a bear market, only seeing the amount of loss, it is inevitable to be immersed in pain, and it is easy to stop investing and financing.

（Writer：Frid）