Investment is essential. It's really a must.
Where do you spend only how much money you make in your life? Rather, more and more spend.
But you're going to put money in a bank that can't keep up with inflation? It's rather a loss?
Normal life is like this. Are you really going to give money to the bank normally?
That institution is a place where tie our money and do business.
Let's not be normal!
Shall I explain more?
🔥Low interest rate era!
Now if you want a double digit bank rate, it's faster to be reborn.
This is because the nation has already risen to the ranks of advanced countries, and the nation has quickly solved the crisis, such as the IMF.
In other words, the bank itself is too "stable".
🔥Increase in life expectancy
Assuming that living expenses of 2 million $ per month are required based on two couples, if the life expectancy increases by 7 years, the total amount of retirement living funds will need to be 168 million $ more.
This is a scary longevity risk.
Let's soak up when you're young for a day.
🔥Investor environment
Due to the aging population and declining fertility rates, the demand for real estate is difficult to sustain as in the past.
The number of stock account subscribers this year is said to have exceeded 10%.
Of course it's a zero-sum game.
However, as long as I grow the sense of being able to read the flow of money myself, the win rate goes up.
Don't buy because the green looks pretty.
Let's paint red with green.
Let's enter when in the blue ocean.
We live without knowing tomorrow anyway.
I don't know what will happen right away.
Let's build a life of uncertainty, putting a small amount of money.
Throwing money towards the future, welcome to the investment!!!
👍 So how should you design your investment?
In general, in order to recommend a product to a customer, a financial planner will design it based on the customer's sufficient information and tailored to their risk acceptability and ability.
Let's study so that we can become financial planners ourselves, recommend products to ourselves and create a portfolio (asset allocation).
👊 Step 1
Establishing relationships with customers
This is the step of providing self-introduction and information to customers as a financial planner, and determining the scope of work according to the customer's request.
In other words, it is the first step to meet, greet and build trust.
👊 Step 2
Collection of information related to investment design
Priority between goals should be determined by taking into account the financial goals that the customer wants to achieve through investment, the timing of achieving them, economic margin, and sentiment.
Target example
Maximization of fixed income
Preservation of investment funds
Fixed income and increased investment assets
Long-term wealth growth
Maximizing return on investment
Tax savings
👊 Step 3
Analysis and evaluation for investment design
Calculate the investment period to be invested, risk-acceptance propensity, risk-accepting capacity (find the appropriate risk to take), and the target rate of return required to achieve financial goals.
👊 Identification of investment period
The investment period refers to the period from now to the scheduled time to recover some or all of the investment funds.
If the investment period is long, even if an valuation loss occurs in the middle, you can wait for a bull market without losing your composure, so you can take a relatively high risk and eventually lead to a high rate of return.
On the other hand, if the investment period is short, there is no time to recover the risk of loss that may occur in the middle, so it is desirable to organize the asset in a form that secures stable income.
👊 Analysis of risk acceptability and risk acceptability
Risk-acceptance is the "psychology" of "how do I feel when I'm at risk."
It is of course different from person to person, and it is an individual characteristic that does not change easily.
Risk-taking capacity is "how long can you withstand an unexpected crisis without changing your financial goals?"
The two are not correlated.
If an 80-year-old man wants to ride a snowboard, he or she has a high risk-accepting tendency, but the risk-taking capacity is low because recovery is difficult in case of injury.
Even if you don't get hurt well because you're young, if you don't like dangerous play, you have a low risk tolerance.
Risk-accepting propensity and risk-taking capacity are essential factors for asset allocation.
Distributing high-risk assets to low risk-acceptance tends to be anxious and often halting. Conversely, distributing low-risk assets to high-risk-acceptance tends to complain of low returns.
In addition, if a person with low risk acceptability challenges a product that requires a high risk acceptability to join, bankruptcy may result.
👊 Calculate target rate of return
Target rate of return is the rate of return required to achieve financial goals with the customer's available investment assets.
If you already have a lot of money or you can use most of your income for savings or investment, it is advantageous to achieve a low target rate of return.
On the contrary, if your asset size is small, you should choose products with high returns.
In addition, the target rate of return is linked to the investment period, risk acceptability, and risk acceptability.
If the investment period is long or the risk-acceptance/capacity is high, it is advantageous to achieve the target rate of return.
Conversely, if the target rate of return is high despite the short investment period, you should lower your eye level.
👊 Step 4
Preparation and presentation of investment design proposal
This is the stage where asset allocation to achieve the target rate of return suggested by customers, preparation of investment guidelines that will guide future investments, and creation and presentation of investment proposals that select specific products according to these investment guidelines are performed.
👊 Asset allocation
Asset allocation refers to the investment process in which a portfolio is formed by allocating investment funds to various assets with varying levels of risk.
The classification of assets is as follows:
Equity products
Bond type product
Real Estate Product
Pensionable products
Alternative Investment Products
And each asset is classified again as an “asset group” and the weighting is determined in detail.
For example, equity instruments are classified into asset classes such as large stocks, small and medium-cap stocks, value stocks, growth stocks, domestic stocks and overseas stocks.
Rather than relying on stock selection or trading timing for successful investments, it is said that this "asset allocation" will play a strong role in allocating losses.
So we have to build a portfolio that's right for you.
👊 Investment guidelines
An investment guideline is a documented investment objective and the rules that clients and financial planners must follow together to achieve these objectives.
Therefore, it protects each other from losing composure even in uncertain market conditions, and plays a role in preventing misunderstandings or arguments about each other in advance.
The investment guidelines contain the following information:
Investment (financial) goal, investment priority and investment period
Risk acceptance propensity, risk acceptability and target rate of return
Investment means and management suitable for portfolio
Constraints on investment (individual/legal constraints)
Asset allocation strategy
Risk factor analysis (risk exposed to selected asset classes and individuals)
Benchmark and regular evaluation methods
👊 Investment design proposal
Upon completion of asset allocation and investment guidelines, we propose specific investment products to customers based on them.
At this time, we consider to be able to select 3~5 investment products suitable for the customer.
However, don't hesitate with too many options.
👊 Step 5
Implementation of investment design proposal
When customers and financial planners decide to invest in a variety of diversified funds to achieve their financial goals, they are concerned about when to buy cheap and when to sell them expensive to increase trading profits.
The reason for losing money on investment is simple. It's like buying at a high price that has already risen because others are buying it by ranking and selling it late only after it's bubbled up.
How do we see the future? I'm not an insider either.
There's nothing more stupid than just messing around.
Therefore, we must use the "fixed-in-division investment method", which continuously invests a certain amount of investment products regardless of fluctuations in investment product prices.
This is a long-term savings method, so if the price decreases, you can buy a large quantity because it is cheap, and if the price increases, you can buy less because it is expensive.
👊 Step 6
Monitoring of customer situation
This is a process that reflects whether or not the portfolio is modified according to the customer's modification request or environmental change while executing the investment.
Financial planners should periodically monitor whether the strategy being implemented is in line with the client's current financial situation, or should be revised, and, if revised, the transaction costs and risks associated with the revision.
It is important to note that only in the short term, you should not significantly modify the composition of your investment portfolio.
If you allocate assets to your portfolio, you are already looking at the "long term".
Short-term is an odd and even gamble without feeling.
Therefore, you should use the investment guidelines to remind yourself of your existing goals and rules and keep pushing forward.
Let's think of "financial planner" and "customer" as "me" here.
It will get very busy!😃