Xiao Bai entering the financial market must understand the following two aspects of financial knowledge and five pieces of advice:

1. Understand what finance is.

The essence of finance can be summarized with four nouns: credit, risk, leverage, and forward returns. Credit is also an asset; usually, institutions and individuals with high credit can borrow money at a lower cost. Since investment returns are proportional to risk, that is to say, the higher the return of a financial product, the corresponding risk is also higher; the lower the return of a financial product, the risk is usually lower.

Of course, to obtain more investment returns with limited resources and funds, leverage must be used. Leverage is also a reflection of credit; only those with better credit can obtain higher leverage.

The leverage behaviors we commonly see in the financial market include, for example, the margin trading in the stock market, the margin system in the futures market, and the behavior of guarantee companies to magnify credit in proportion to the margin, etc.

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At the same time, the greater the leverage ratio, the greater the corresponding risk, that is, leverage and risk are also positively correlated!

There is also a distinct feature of the financial market, which is that financial products earn future returns. How to understand this layer of meaning? It's simple; we can easily understand it by viewing money as a kind of production material in economic activities.

Behind any financial product in the financial market, it corresponds to the economic activities of the entity enterprise, such as using the money from financing to buy land, factories, raw materials, hire workers, etc., and then complete the production and manufacturing of goods, and then realize profits through market transactions. Therefore, the profits of financial products all come from future profits. It is nothing more than the market pricing of a certain economy or behavior through the principle of corresponding risk and return in the financial market, thus obtaining the future profits of the enterprise in advance.

2. Understand what the financial market is.

The financial market can also be divided into the money market and the capital market in terms of time limits.The money market refers to the financial market with a term of one year or less, such as commercial bills, bank acceptance bills, treasury bills, large-denomination negotiable certificates of deposit, interbank lending, repurchase agreements, and other financial products.

The capital market refers to the financial market with a term exceeding one year, such as medium and long-term bonds, stocks, funds, etc.

Understanding the above two basic concepts of financial management, then here are 5 suggestions that novice investors must remember:

1. Avoid chasing rises and selling on dips when investing in stocks.

2. Do not put all your eggs in one basket.

3. Do not blindly pursue high profits; always assess your risk tolerance.

4. Do not follow the crowd; do not invest in what is currently popular just because it is popular.

5. Avoid excessive luxury and waste; spend money where it is most needed.Please provide the text you would like me to translate into English.