Financial Management: Avoiding Small Loan Companies And P2P High Risk

Not a little precaution, and no worries. Two months ago, the central bank cut interest rates.

This interest rate cut, for ordinary people, the most likely question is: after the interest rate cut, which financial products are strong? In answer to this question, we must first know what the financial products are, where their profits come from, and what their risks are.

In the Margin Call (2011), in 2008, when the economic crisis broke out, Will's company had to clear its holdings. As a trader, Will naturally had to persuade customers to buy their positions in a short time.

He has discounted the assets he owns, and has always used this phrase to convince other traders to buy assets: "today, your earnings are my losses."

Although in the movie Will used this phrase to trick other traders into buying toxic assets, this is the truth for fixed income financial products: your financial income is the financial cost of other people, whether it is bank financing, trust products, Internet P2P products, financial products of microfinance companies, or the balance of treasure that yields daily change (i.e. Monetary Fund), in essence, you lend money to others.

Since it is lending money to others, the most important concern is the ability of the other party to repay.

It is logical that our eyes should focus on assets invested in financial products.

At present, bank financial products are mostly invested in interbank market bonds and interbank borrowing / storage. These assets can be traded, and most of them are financial institutions. Credit risk is relatively small, but most of them are not high in yield and short in duration. And the second type of bank financial products are directly lending to certain items, with higher yields and longer maturities. This requires a good screening of the industry: in the economic downturn period, the risk of such online trading assets (which means it is difficult to find people to take over) is more risky than the investment bond market.

For now, the financing platform of government financing platform and large state-owned enterprises is better, while real estate, coal and iron ore resource industries should be avoided.

In order to distinguish these two types of bank financial products, we need to read the scope of investment in the product brochures: if they are "bonds, money market tools, deposits, etc.", this shows that this product is mostly invested in the financial market, and the risk is small. If we are to invest in a certain type of project, we must pay close attention to the project itself.

Trust products are similar to second types of bank financial products. It can be said that the target of two investments is almost the same, and banks issue second kinds.

Often use the trust product as a channel, and the two are basically the same in the credit risk of the project.

The difference is that the initial amount of trust product subscription is 1 million yuan, compared with the initial amount of 50 thousand yuan /10 million yuan in bank financing, many people have been excluded.

But because of this, the expected rate of return of trust products is often much higher than that of banks.

The returns of microfinance companies' financial products and Internet P2P are often surprisingly high. They also attract customers and earn middle income with such high returns.

However, high yield also creates high risks for these products: high quality, unrestricted financing people will choose the low cost way of bank loans. Those who are rejected by banks and who are out of their way will choose small loan companies and Internet P2P.

From the point of view of the quality of the financing person, the small loan company and the Internet P2P are much worse.

Besides, finance is a technical activity. Auditing loan is very simple. Is it not analyzing and analyzing financial statements, collecting data and checking credit? But controlling risks is not so simple.

General Internet P2P companies and microfinance companies can't build banks.

That is a process oriented and specialized risk management system.

From the point of risk management, the security is much worse.

In this financial system with Chinese characteristics, the issuing agencies of financial products often provide implicit guarantee for products issued by themselves, which is what people often call "rigid payment".

Since it is "rigid payment", the credit of the issuer will naturally be partly attached to the credit of the product.

Compared with the credit of issuers, banks are naturally most trustworthy, followed by trust companies supervised by the CBRC, while those who are not within the scope of financial regulatory authorities are the least able to guarantee the Internet P2P.

To ensure the safety of funds, investors should choose financial products that are strictly supervised by banks and trusts, and choose the industries with high quality and low credit risk when choosing projects.

Recent central bank

It shows the attitude of the central bank to change its monetary policy.

Looking back at history, a rate cut will not be the end of the central bank's interest rate cut. There may be more monetary easing policies in the future. These policies will reduce the interest rate of the real economy, and naturally, the yield of financial products will also decline.

In addition, 43 of the State Council has been implemented this year. Local governments will no longer be allowed to guarantee the lending behavior of local government platforms. Government loans can only issue bonds, which will further reduce the proceeds of second types of bank financial products and trust products.

Therefore, those who want to buy fixed income financial products should seize the tail of long-term financial management with high yield and low credit risk, and avoid the high-risk financial products issued by small loan companies and Internet P2P.