Honglou Fortune E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Investment Classic Series
• Sprache: Englisch

Seitenzahl: 197

Veröffentlichungsjahr: 2012

Beschreibung

Most economic writings fail to impress readers as they are often obscure and abstract. However, Honglou Fortune is the complete opposite. Using the characters from Honglou Meng, it conveys the true essence of wealth management through the simplest language. Honglou Fortune makes learning these concepts a joy and a pleasure to read. Even those who are not interested in wealth management will enjoy this book as a well-written literary piece. --Wang Biao, Deputy Editor-in-chief, Wealth Management Weekly Honglou Fortune cleverly depicts how the women in Honglou Meng engage in investment and wealth generation through techniques used in managing the household. The author, Rena He Hanxi, graduated with top honors from Fudan University's School of Economics. With a strong foundation in economics, she offers rare and valuable insight into the investment and financial schools of thought. --Zhang Jun, Professor, Fudan University School of Economics, Director, China Centre for Economic Research

Leseprobe

Contents

Foreword

Chapter 1 The Matriarch Cautions the Youngsters

Chapter 2 The Matriarch of the Grand Garden Poses a Question

Chapter 3 The Wise Matriarch Explains Inflation

Chapter 4 Concubine Zhao Wants to Invest Impulsively

Chapter 5 Tan Chun Ventures into Money Market Funds

Chapter 6 Tan Chun Explains What an “Expert” is

Chapter 7 No Plans are Made to Settle the Predicament

Chapter 8 Plans are Made to Revive the Clan

Chapter 9 The Young Master Awakes to Ponder His Future

Chapter 10 Leng Zi Xing Talks Animatedly About the New Red Chamber

Chapter 11 Li Wan Complains Tearfully About Financial Records

Chapter 12 Loving Mother Plans for Son’s Education Fees

Chapter 13 Little Boy Draws Favor with Lavish Gift

Chapter 14 Sister Feng Seeks Financial Education

Chapter 15 Sister Feng Gains Insight into Investment

Chapter 16 Bao Yu Tells Tan Chun of Failure

Chapter 17 Comparing Clothes, Dai Yu Talks Fashion

Chapter 18 Sister Feng Repeats Her Mistakes Due to Greed

Chapter 19 The Foolish in Love Throws All Reason

Chapter 20 Lady Wang Buys Insurance with a Muddled Head

Chapter 21 Disagreement Occurs During Shi Xiang Yun’s Honeymoon

Chapter 22 The Intelligent Lass Clarifies Financial Responsibilities

Chapter 23 Misspendings of the “Month Bare” Tribe

Chapter 24 Through Many Trials and Tribulations, Xiang Mai Supports the Family

Chapter 25 Doting Grandmother Worries About Grandson

Chapter 26 Comparing Investment Products, Tan Chun Explains Reasons for Poverty

Chapter 27 Jia Huan is Bitter About a Relatively Small New Year Red Packet

Chapter 28 Jia Lan Learns Wealth Management Through Fairy Tales

Chapter 29 Granny Liu Brings Laughter Through Pun

Chapter 30 Brave Bao Yu is a Risk Taker

Chapter 31 Sensible Village Woman Considers Investment

Chapter 32 Muddle-Headed Man Naively Purchases Gold

Chapter 33 Aunt Xue Wants to Buy Treasury Bonds

Chapter 34 Bao Chai Does Her Best to Manage the Fund

Chapter 35 Tan Chun Talks About Her Concerns

Chapter 36 Tan Chun Marries Abroad

Index

Copyright © 2009 John Wiley & Sons (Asia) Pte. Ltd.

Published in 2009 by John Wiley & Sons (Asia) Pte. Ltd.

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Library of Congress Cataloging-in-Publication Data

ISBN 978-0-470-82434-4

The HSBC logo is a registered trademark of the HSBC Group. HSBC Jintrust is duly authorized to use the trademark.

Foreword

The world’s attention is currently focused on China. But what is the focus of the Chinese? The answer is wealth management. Wealth management has become an everyday topic, immediately following basic survival. An often-heard sentiment that epitomizes the wealth management attitude of the average Chinese today is: “You can fall behind Liu Xiang (Olympic men’s 110m hurdles gold medalist), but you definitely can’t fall behind the consumer price index!” Having gone through the financial crisis, many of the average investors in China have finally discovered the vast difference between managing and not managing their wealth!

However, China does not have a very long history in the financial markets, with its stock market having only just reached “maturity” (18 years). Trusts, funds, pensions—the mainland Chinese are only beginning to get acquainted with investment tools that have been popular overseas for many years. Therefore, it is a general phenomenon that everyone talks about wealth management, but few actually know how to achieve it. The majority of people either keep their money in the banks or buy treasury bonds. In 2007, China’s population’s savings deposits totaled a whopping RMB1.7 trillion (US$242.8 billion)! In the same year, the penetration of Chinese bank accounts investing in funds was only 3–4 percent, with penetration in families at 3 percent, a far cry from 33 percent and 51 percent respectively, in the United States.

Why have the investment modes of the Chinese people remained so conservative? This is largely attributed to the general consensus of average people that investing is too complicated. Financial assets are intangible, unlike consumer goods that can be seen and touched, so they are difficult for investors to comprehend. Investors either become very apprehensive when making decisions, resulting in less than optimal timing, or they do not have a clear understanding of the basic concepts throughout the entire investment process and end up making erroneous judgments by choosing the wrong investment products or exiting the market too early.

If learning about investments were simplified, people could become more financially astute. With precisely this objective in mind, investment specialist HSBC Jintrust has embarked on its educational endeavor. Armed with a better understanding of investment concepts, funds and various investment products, people would realize that investing can be a very straightforward and lighthearted affair.

So how can learning about investments occur almost subconsciously while readers experience the joys of reading? This is where Honglou Meng or Dream of the Red Chamber comes into play. It is one of China’s four great classical novels that almost every Chinese national has heard. There is no lack of mention of investment and wealth management in the book, either. “Who among the thousands of men could manage the country, yet just a lady or two to set the household right?” Under the pen of author Cao Xue Qin, the “leading figures among the ladies” have all become worthy exponents of wealth management. Doesn’t Wang Xi Feng already know how to “grow dollars from pennies”?

Therefore, we send Tan Chun to Harvard to become a wealth management expert; Wang Xi Feng fails in her investments in bonds and securities, causing the splitting of finances in the Jia household; Li Wan is pleased with her son Jia Lan when he displays a good “financial quotient”; Bao Yu’s funds are tied up in stocks and he sacrifices for Dai Yu’s poetry series. Inheriting the original characters and their personalities from Honglou Meng to develop a novel storyline with a twist, the unchanging principles of wealth management and investment are depicted through the overlapping of ancient and modern times.

Upon completing this book, each reader will be one step closer to realizing his or her dreams of true financial freedom.

Steve Lee

CEO

HSBC Jintrust Fund Management

Chapter 1

The Matriarch Cautions the Youngsters

An “Idol” Competition is Launched

One day, the poetry club of the Grand Garden met to discuss the differences between Western and Eastern mysticism shown in the film Wu Ji. The members—Bao Yu, Bao Chai, Dai Yu, Xiang Yun, Ying Chun, Tan Chun, and Xi Chun—all gathered at Li Wan’s Fragrant Paddy Fields, which the eldest daughter-in-law was in charge of. Xiang Yun re-enacted a scene where Princess Qingcheng stood on the city wall and spoke to the soldiers, which made everyone laugh. At the height of their excitement, a servant came in to report the arrival of Matriarch Jia.

Everyone stood up hastily as Xi Feng, the second eldest daughter-in-law, helped the frail matriarch into the room. Upon entering, Sister Feng winked repeatedly at Li Wan, but the eldest daughter-in-law failed to grasp her hint. This prompted Sister Feng to point at Grandmother Jia discreetly, and then wave her hand as though to caution Li Wan about what she should say.

Li Wan observed Grandmother Jia intently, and noticed her eyes were red and puffy and her expression mournful. Surprised yet curious, she asked, “How are you, Mother-in-law?”

Grandmother Jia sighed and said, “All you youngsters know is how to have fun in the Grand Garden. Do you realize that we are being criticized by others?” Silence filled the room, and after a pause, she continued, “There is a person named Leng Zi Xing (literally meaning ‘wet blanket’) who spoke about the younger generation of eminent and well-off families like us going from bad to worse. Both masters and servants live lavish lifestyles, yet none know about wealth planning. He even claimed our wealth would not last beyond three generations!”

Li Wan pulled Sister Feng aside and asked softly, “Why is Grandmother Jia angry out of the blue?”

Sister Feng responded, “The Zheng Family from Jiang Nan came over today to inform us that their matriarch had passed away. They told us that seconds before the old lady drew her last breath, she lamented, ‘I’ve been thrifty all my life, yet the wealth that I painstakingly accumulated is now for others to enjoy.’ Grandmother Jia was not pleased when she heard the news. She flew into a rage when she heard the impudent remarks made by others.”

While Li Wan and Sister Feng were talking, Grandmother Jia let out another long sigh and said, “All along, I never intended to interfere in your affairs, but now I worry that our family’s wealth will be squandered even before I’ve passed away. I’m not afraid of poverty, but how can I live in peace if that actually happens?”

Upon hearing these remarks, everyone consoled the matriarch. Grandmother Jia, now calmer, continued, “From now on, you all need to change your mindsets. There’s an old saying, ‘If a person fails to plan, he plans to fail.’ Even though you are all still young, wealth management should not be treated lightly. If you fail to make financial plans, how will you support yourself in your old age? There’s another popular saying, ‘If you ignore wealth management, wealth will ignore you.’ All of you are intelligent; you should understand my point. Besides having a humanities club, history club, and literature club, it is also vital to have a wealth management club.” Everyone nodded in agreement.

Sister Feng laughed. “Grandmother’s words have enlightened all of us. I am sure learning wealth management will be beneficial to the youngsters, but where do they start?”

Grandmother Jia paused, and said thoughtfully, “That’s a good point. In that case, I’ll pose a question. Whoever gets the correct answer, I’ll use my own savings to send him or her overseas to study. After that, he or she can impart the knowledge to the others.”

Sister Feng laughed again. “Mother-in-law, you are really such a big fan of the Idol competition that you want to hold a competition within our household?”

Grandmother Jia laughed with her. “It’s called keeping pace with the times!”

What question did the matriarch pose? Read on to find out.

HSBC Jintrust investment advisors recommend:

The most important move in wealth management is taking the first step

The greatest obstacle to wealth management is neither choosing a style nor a method; rather it is one’s mentality. If a person knows only how to work for money and not how money can work for him or her, this person will not be able to escape from the traditional, conservative “Grand Garden” of the mind.

Chapter 2

The Matriarch of the Grand Garden Poses a Question

The Girls Talk Wealth Management in a Bid for Selection

Grandmother Jia decided to pose a question to assess the girls’ financial acumen. She began, “I’m going to pose a cliché question. Nonetheless, I want an intelligent and novel answer.”

Before she could pose the question, Bao Yu interrupted. “Grandmother, I would like an opportunity to further my studies, too.”

Xiang Yun laughed. “Don’t worry, you’re one of us. We won’t leave you out.” Everyone laughed together and Grandmother Jia asked, “Why do we need wealth management?”

Bao Yu clapped his hands and replied confidently, “Grandmother, you posed such a simple question. Let me try to answer!” He assumed a scholarly air, bobbing his head up and down, and began speaking. “The phrase ‘wealth management’ literally means to manage one’s assets, to further one’s wealth. However, that should be left to the men. Girls should not meddle in such issues. Their ignorance will only be a hindrance. Any windfall will become a downfall; any fortune will become a misfortune.”

A normally restrained Dai Yu decided to speak her mind: “If you are in a well, you can only see a small piece of the sky; when you are held down by prejudices by the common man, how can you ever rise above them?” The matriarch heard this but did not utter a word.

Bao Chai added, “Bao Yu, you call yourself our best friend, so why discriminate against our gender? Guys may be more knowledgable than we are about wealth management, but in terms of hands-on application, girls are on par with the guys. Take, for instance, Sister Feng. She did a great job of taking care of such a big family. No man is comparable. Then look at Tan Chun. She contracted out the maintenance work in the gardens. This saves us $400 to $500 a year. She is arguably the pioneer of outsourcing.”

Bao Yu immediately replied, “That’s true. I was wrong about wealth management.”

Tan Chun laughed. “Grandmother Jia is testing our knowledge of wealth management. Why did you end up talking about me? In my opinion, it is vital that everyone engage in wealth management. Take, for instance, the rising inflation our country is experiencing! Should one not bother about wealth management, with an annual inflation rate of 5 percent, what is $1,000,000 today will only be worth $600,000 in 10 years—$400,000 will have been lost.”

When Grandmother Jia heard this, she recalled asking her servant Yuan Yang to open her safe and count her assets. To her dismay, after 10 years of saving, there was not even enough for Bao Yu and Dai Yu’s weddings.

Xi Chun, who was standing in a corner, spoke: “Wealth is but an external thing. So what if one person is wealthier than another?”

Ying Chun added, “A lady does not control her destiny. Her wealth depends on her fate.”

Tan Chun shook her head in disagreement. “Second Sister, you are too good-natured and dependent, and so you are easily swayed by others’ opinions. But for me, I don’t want to be at anyone’s beck and call. Hence, I must be financially independent.”

Xiang Yun pouted. “But even if we do want to practice financial planning, how are we to do so with just $200 per month?”

Tan Chun explained: “Financial planning starts with whatever little wealth one has. Wealthy individuals do not become rich overnight but do so through proper planning so that they increase and multiply their monetary assets. Take, for example, our monthly allowance. Everyone else complains it is insufficient, but with proper planning, I am able to save a sum of money and I have asked Second Brother to help me buy some trinkets.” She turned around and took something from the servant behind. It was a scent box woven of bamboo shoots. Xiang Yun and the rest had seldom seen such an object, and they marveled at the box.

Read on to find out Grandmother’s comments for the ladies.

HSBC Jintrust investment advisors recommend:

Wealth management protects and adds value to your assets

Why is it vital to understand wealth management? Firstly, it helps maintain the value of your wealth. Secondly, your assets can appreciate in value with proper planning. This will help you to realize your aspirations.

Chapter 3

The Wise Matriarch Explains Inflation

The Intelligent Tan Chun Fulfills a Long-Held Wish

Grandmother Jia paused before speaking again. “I understood all your suggestions, and of them all, I think Tan Chun’s explanation is the best.”

Sister Feng laughed. “Mother-in-law, what you’ve said is right. Tan Chun is knowledgable and eloquent. She will be a great help to the household!” Everyone nodded in agreement, except Dai Yu. She regretted not displaying her talents fully and missing a great opportunity.

Grandmother Jia continued: “In my opinion, there are two objectives of wealth management. The first is to suppress the effects of inflation; the second is to accumulate wealth through investment, as opposed to scrimping with the already miserly $200 you all receive every month. Though it is important to save diligently and be thrifty, being overly stingy does not reflect well on the reputation of our family.”

Sister Feng said, “I wonder what the terms inflation, CPI, and negative interest rate that have appeared in recent news mean.”

Grandmother Jia laughed. “Many people praise you for your vast experience; even men pale in comparison. Yet you do not know what the news is about!”

Sister Feng protested: “Mother-in-law, your experience and exposure are much wider and richer than mine! Would you teach me?”

Grandmother Jia responded: “CPI is the acronym for Consumer Price Index. The state statistical bureau tracks the prices of a hundred commodities and services and uses these data to formulate the CPI. It also indicates the general trend of commodities. For example, in 2004, the CPI rose by 3.9 percent. This indicates that our living expenses, when compared to the previous year, have risen by 3.9 percent. If the interest rate for bank deposits is 2.25 percent per annum, after deducting an interest tax rate of 20 percent, the actual deposit interest rate is 1.80 percent. Based on the existing CPI of 3.90 percent, the real interest rate is 1.80 percent minus 3.90 percent which gives −2.10 percent. Hence, we would have had a negative interest rate. During this period, should a person invest $10,000 in the bank, wishfully thinking his savings are ensured, he would probably not expect that the value of his savings would only be $9,790 after a year.”

Li Wan laughed. “Grandmother Jia, you have explained it fully. Not only is Sister Feng unaware of these terms, but I am also ignorant.”

Grandmother Jia continued: “There are more things you do not know. The CPI doesn’t fully reflect the actual inflation rate. With property doubling in value every two years, if you do not buy the property now, doesn’t it mean you lose the chance to double your wealth? The prices of properties are not included in the data for CPI statistics; only rentals are taken into account. This is one of the reasons people feel that the inflation rate is much higher than the increase reflected in the CPI statistics.”

Everyone was impressed with Grandmother Jia’s knowledge of wealth management. Sister Feng thought to herself, “Grandmother Jia is so well informed about household matters. I think she already knows I am lending people money. What should I do?”

Unknown to everyone, after Grandmother Jia had found out from her servant Yuan Yang that her assets accumulated over many years had devaluated significantly, she asked her servants to find information regarding wealth management on the Internet. This is why she was able to share her wealth management knowledge at length.

Grandmother Jia stood up and spoke: “I’m tired now. Xi Feng, remember later to ask Yuan Yang to take out some of my assets. Help find a good and reputable school and arrange for Tan Chun’s admission.” After saying that, the Matriarch left with her entourage.

Everyone rushed to congratulate Tan Chun. Bao Chai laughed. “You often grumble that you’re unable to carve out a career for yourself like a man could. Now your wish has come true.” Tan Chun smiled without saying anything.

Read on to find out what happened next.

HSBC Jintrust investment advisors recommend:

Only investments can stop inflation from eroding your wealth

Due to inflation, your spending power will decrease continually. For instance, at an annual 5 percent inflation rate, $1,000,000 today will become the equivalent of $613,900 in 10 years, which is a loss of 40 percent! In 30 years, you would have only $231,400 left, which means you would have lost almost $800,000, or 77 percent!

An inflation rate of 5 percent might not seem like a big issue at the moment, but a continuous inflation rate of 5 percent annually will affect your assets’ values drastically.

It is only through investment that one can overcome inflation. Based on a relatively long historical cycle, stocks and equity funds are effective protection against inflation effects. Between the years 1998 and 2005, China’s stock funds (including mixed funds) produced an annual investment profit of 8.49 percent, which is higher than the inflation rate in the same period.

(Source: Tianxiang Investment Analysis System)

Chapter 4

Concubine Zhao Wants to Invest Impulsively

Li Wan Suggests a Prudent Plan

The news that Matriarch Jia was sending Tan Chun for overseas study initiated a host of activities. Jia Lian spent days scouting for the best school for Tan Chun, before notifying Grandmother Jia he had found the right one. He informed her: “I’ve secured a place at Harvard University for her.”

Grandmother Jia questioned: “Can this university be compared to Jin Ling University where your father and uncles studied?”

Jia Lian laughed. “It is definitely better.” A delighted Grandmother Jia immediately ordered her servant Yuan Yang to take out her collection of jewelry and give it to Jia Lian to exchange for cash to pay for Tan Chun’s school fees and living expenses. Jin Lian promptly did so.

Tan Chun was packing her luggage when Ping-er came happily into her room, placing a heavy bag on the table. Tan Chun asked: “What’s inside?” She was astounded when Ping-er untied the bag. Before her eyes were bundles of cash.

Ping-er laughed. “Our second master is careless. He forgot to put the $2 million he got in exchange for the jewelry into the bank. It’s up to you to decide what to do with it. Second Mistress is taking care of your travel arrangements, and your visa should be approved in two months.” Tan Chun thanked Ping-er profusely.

After escorting Ping-er to the door, Tan Chun stared blankly at the pile of cash, at a loss about what to do. At that instant, a high-spirited Concubine Zhao came into the room, exclaiming, “You have brought honor to our Zhao family.” Concubine Zhao was startled when she saw the huge stack of cash on the table. She paused for a moment before speaking. “You don’t need all this cash urgently, do you?”

Tan Chun replied: “I’ll need it in two months.”

Concubine Zhao immediately said, “How about leaving it with me?”

Tan Chun, sensing ill intentions, said, “Mother, come straight to the point.”