1. The investment direction mainly depends on its own preference

Unlike institutional investors, individual financiers do not have professional financial management knowledge and ability. We often use our financial management funds on financial management tools we are familiar with, mainly because we are familiar with this tool and can use it easily, and often pay attention to its trend because we are interested in it, so we can grasp the opportunity accurately and have a high probability of success. The use of familiar financial management tools for financial management is also praised as the best financial management means by some financial management experts. But at the same time, this financial management method has a very big defect. If you are good at financial management tools with high risks and returns, such as stocks, our final income will have great uncertainty, and we can't determine our financial management objectives. Moreover, if you put all your money into it, once the economic form deteriorates, you will lose everything.

2. Rarely use low-risk and high-yield instruments

When selecting financial management tools, the wealth managers value nothing more than their risk and profitability (since financial management is a long-term behavior, liquidity is not considered temporarily), so they choose the financial management tool with the highest risk and return rate to invest. Almost everyone hopes that the financial management tools they choose have the best returns and the best risks. However, some financial management products with high returns and low risks are often ignored at the initial stage of launch. It is a recognized fact that the interest rate of bank deposits is low, but its security is high, and the yield of treasury bonds is higher than that of ordinary deposits without increasing risk. However, at the beginning of the implementation of treasury bonds, there was no response, and they had to be purchased by administrative assignment. Similarly, the fund invests the funds it raises into the stocks of different sectors, thus diversifying the risks while ensuring the returns. However, we have only recently begun to realize the advantages of the two financial management tools, so is there any better financial management tool that we have ignored?

3. Insurance is often excluded from financial management tools

Insurance refers to the financial compensation provided by the insurance company to help the wealth manager to overcome the difficulties when the insured suffers huge losses due to force majeure. It should be said that insurance is the most effective tool to prevent accidents and transfer investment and wealth management risks. However, in practical application, investment and wealth management personnel rarely consider this wealth management tool into their wealth management plans. On the one hand, we misunderstand insurance as a business that only pays for nothing. If the force majeure event does not occur, we will not get any return for our efforts. Secondly, we believe that the probability of force majeure events is very small, and we will not encounter them by chance. There is a fluke mentality. On the other hand, insurance companies are smiling when applying for insurance, but they pay no attention when settling claims. Even if the wealth manager has an accident, he may not get compensation, which is full of resentment towards insurance as a wealth management tool.

Conclusion

The above is our summary of all aspects of the choice of investment and financial management tools. I hope that after reading this article, you can reasonably choose the right tools for your investment and financial management. I hope you can achieve wealth freedom as soon as possible.

（Writer：Tommy）