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Zhi Finance » Making money through investment and working together

Making money through investment and working together

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As for the freedom of wealth, there has been a saying in the past that the freedom of wealth can be achieved by relying on the passive income of assets to cover the needs of life.

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Even if you don’t work, the income can cover your living expenses. Whether in a bull market or a bear market, or whether the stock price rises or falls, the passive income of assets is enough to enable you to live a decent life.

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The key for amateur investors to achieve financial freedom:

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Making money through investment and working

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Making money by investing means making money. In addition to the necessary investment ability, you also need to accumulate the investment principal. This means that before your investable assets accumulate to a certain level, the absolute amount you can earn by investing is limited, and the absolute income will also be restricted due to the limited principal.

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Making money through work depends on labor skills and knowledge and experience. Your ability to make money depends on your position and the scarcity of labor skills. You can make money by yourself.

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For example, it is difficult to earn 1 million yuan a year by salary. The degree of difficulty depends on the size of your principal. It is difficult to earn 1 million yuan by 1 million yuan, and it is not too difficult to earn 1 million yuan by 10 million yuan.

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The initial principal of most ordinary people’s investment comes from the consumption surplus of their working income.

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This means that your asset accumulation speed depends on your investment ability and compounding speed; Second, it depends on whether your salary income can continue to invest, accumulate investment principal continuously, and continue to create investment compound interest.

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The majority of amateur investors are also wage earners, and it is impossible to invest too much money at one time. In addition to investment compound interest, can you continue to accumulate cash flow from wages and continue to invest in financial assets to obtain passive income, so that your total assets can be accumulated to a certain level as soon as possible, and the absolute income will be high only when the snowball is big.

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Many people attach importance to investment ability, but ignore the accumulation of wage income, which may lead to the slow accumulation of assets or the pursuit of high-risk speculative products, which is counterproductive.

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A good investor should make investment and earn money to complement the accumulation of wages. On the one hand, the long-term compound interest of financial assets increases steadily. On the other hand, good investment returns encourage the continuous investment of wage income into assets to obtain more passive income. The combination of these two aspects leads to the rapid expansion of financial assets.

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Of course, it is not necessary to constantly invest your salary income into financial assets, but your salary income can keep your investment behavior uninterrupted, which is very important for long-term investors. This is one of the reasons why amateur investors are not recommended to give up their jobs too early.

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Improve the ability of fund management and fund planning

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In the real world, money is scarce for every family, which requires investors to improve their ability to manage and plan funds in real life in addition to constantly improving their investment ability.

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1、 Work hard, improve your position as soon as possible, and improve your labor skills and knowledge and experience. Your salary depends on your position and the scarcity of your labor skills. It is not advisable to economize on clothes and make investments. Only when you earn more can you save more.

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Before your financial assets accumulate to a large amount, you should not delay your work because of investment. Only your work can provide you with continuous cash flow, which is very important for everyone.

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2、 The amount of initial investment should be within the capacity, not too large, and should not affect the quality of life.

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When you are young, you should devote your time and energy to the place where you can create the most value for the society and give full play to your comparative advantages. At this time, financial investment is the learning stage and the accumulation stage, which requires not only the accumulation of investment principal, but also the accumulation of investment experience and ability.

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3、 Moderate consumption and delayed satisfaction. When you are young, your consumption mode must match your income. No matter how much your salary is, you should pay more attention to savings. Everyone has a ceiling in the workplace, and you need to cut costs while opening up.

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When you are young, it is necessary to give up some luxury consumption for the family’s long-term benefits. For example, luxury cars will continue to consume the family’s cash flow.

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4、 Flexible use of funds. Bank loans can be used for large consumption such as buying a house and a car. It is also necessary to live in a big house and buy a good car when you are middle-aged. Making money is for living, and there is no need to be an investment ascetic.

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Of course, you need to pay interest when you use loans. It is cost-effective to use loans only if your investment income can exceed the bank interest with a high probability. If you buy a house and a car with your own money, the principal that can be invested will be much less. In the long run, it will have a greater impact on investment income.

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Financial freedom is defined as that it is appropriate for passive income to cover living expenses, but financial freedom is not necessarily related to whether or not to work. Financial freedom provides you with the right to choose how to work, allowing you to have more choices of work or not or what to do. Labor is the first need of people, and free labor can make people happier.

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Although in the eyes of real rich people, covering basic living expenses can only be regarded as entry-level financial freedom.

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But for ordinary people, the goal of financial freedom is to solve the basic problems of our lives, not to become rich.

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