First, define what ordinary investors are. Here, ordinary investors mean that they do not have the ability to recognize the enterprise (including the inability to understand the enterprise's finance and operation, and the inability to distinguish between good and bad business models), the ability to recognize the market (that is, they do not recognize that the market is complex, changeable and unpredictable, and they do not recognize the characteristics of the short-term negative sum game of the market), and the ability to think independently and make rational decisions (including the ability to be easily affected by the market and others emotionally). In addition, they have no information advantage and are unable to manipulate the market. They are also ordinary people. In fact, most people are ordinary people in terms of stock investment, which has little to do with their status, professional nature and educational background.

So what is the right investment preparation? First of all, investors should not only avoid stock market investment, but also take stock investment as the main investment choice. Why? Because your assets need to fight against the continuous depreciation caused by inflation. From the perspective of global history, equity investment is the most profitable investment.

Secondly, objectively understand and evaluate yourself, accept that you are probably an ordinary person in investment, and therefore choose funds, especially index funds, as the main investment varieties. In terms of fund selection, do not simply listen to the marketing rhetoric of various sales intermediaries such as fund companies and banks. Because of interests, it is difficult for them to fully consider the interests of customers. The key here is to look at the long-term performance and choose the best one. But it is also very difficult. You need to face changes in fund managers and investment styles at any time. There are many index funds, including various industry indexes and broad base indexes. In the long run, it is better to choose a broad base that does not require industry selection.

Third, lower expectations and believe in the power of compound interest. The return on stock investment can be divided into two parts: market return and excess return. Excess earnings α， No matter when, where and what kind of market, there are always some people who can get α， But it is difficult to identify in advance, and the whole market α Is zero, α Ordinary investors from the market. Many investors can accept 2-3% of the deposit and financing income, but are not satisfied with the stock market investment income of about 10%. This may be because they subconsciously regard the stock market as a casino, so they have high psychological expectations for stock investment. If expectations are lowered, a 10% return is acceptable.

conclusion

If you are an ordinary investor, then I suggest you accept the possible fluctuation of net worth and stick to long-term holding. In the long run, the fund investment income is higher than the deposit financing, but not without cost. The price is that you have to hold it for a long time and be prepared for net worth fluctuation. In extreme cases, you may not make money for several years. You need to be prepared to face all this to achieve wealth freedom.

（Writer：Ganny）