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All previous chapters taught you "how to trade"; this chapter teaches you "how to allocate, how to preserve value, how t
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01 · Asset Allocation Basics
Next lesson · 14 · Wealth Allocation
All previous chapters taught you "how to trade"; this chapter teaches you "how to allocate, how to preserve value, how to live." Trading solves "earning"; wealth management solves "keeping" — for the vast majority of people, asset allocation matters more than trading skill: you can live well without knowing how to trade, but without knowing how to allocate, you may hand back every yuan you earned.
Trading asks "how do I win this round"; allocation asks "will the money still be there in ten years, and will it beat inflation." This chapter explains why 90% of long-term returns come from major asset-class allocation rather than stock picking and timing, walks through the risk-return profiles of six asset classes — stocks, bonds, cash, gold, real estate, and crypto — and provides ready-to-copy frameworks such as the 60/40 balanced portfolio, the Permanent Portfolio, and the All Weather portfolio, plus how to adjust ratios across life stages.
Compounding is the mathematical foundation of wealth management: 10% annualized doubles money in seven years, but a 50% loss requires a 100% gain to break even. This chapter puts numbers on compounding's four enemies (drawdowns, inflation, fees, withdrawal interruptions), and debunks the "average illusion" — a 20% annualized return does not mean earning 20% every year; in between sits a -60% year. It ends with a fillable compounding goal template.
Run your family like a company: how much goes to spending money, protection money, growth money, and long-term money? Where does the emergency fund live? Pay off the mortgage or consumer loans first? This chapter offers directly applicable templates and benchmarks — balance sheet, cash-flow statement, emergency fund, debt-rate comparison — to help you build family-level financial order that depends on no "inside tips."
The price increases you feel are often sharper than the official CPI — because the weights for rent, education, and healthcare don't match your lived experience. This chapter explains how inflation is measured, whether it is friend or foe to each asset class, how much of 1 million in cash actually remains after 20 years, and where money should hide during stagflation and deflation.
Defend first, then attack: insurance generates no returns, but it is the only asset in a wealth system that can hedge against "death, illness, or family collapse." This chapter covers the four types of insurance everyone needs, how to calculate coverage amounts, and why whole-life-with-dividend/universal/return-of-premium products are usually the most expensive and least worthwhile — teaching you to spot schemes that use insurance as a disguise for investment.
Should you allocate overseas? And what counts as compliant? This chapter objectively analyzes the reasons for and costs of currency diversification, market diversification, and richer toolsets, compares four paths — Stock Connect, QDII funds, Hong Kong bank accounts, US brokerages — with their thresholds and risks, clarifies the real boundaries of the $50,000 annual individual forex quota, the legal risks of "ant moves" and underground banks, the CRS information-exchange mechanism, and the exchange-rate math of converting USD assets back into CNY — with special warnings about cross-border insurance and overseas property agents.
"How much tax should investment gains pay" is a question of rules, not morality. This chapter explains the basic framework of China's individual income tax, item by item: A-share differentiated dividend tax rates, stamp duty, tax-free mutual fund distributions, 20% tax on bond interest, the gray zones around futures and crypto, withholding-tax basics for the US/Canada/UK and CRS filing obligations — and uses one table to draw the line between legitimate planning (long-term holding, tax-free allowances, tax deferral) and criminal red lines such as false declarations and hiding assets overseas.
① Return expectations (first master the math of compounding, drawdowns, inflation)
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② Asset allocation basics (then learn portfolios and rebalancing)
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③ Family financial planning (apply the framework to your own ledger)
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④ Inflation and purchasing power (understand the biggest long-term enemy)
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⑤ Insurance and protection (add the most easily neglected line of defense)
⚠️ Risk Warning
Everything in this chapter is for study and research only and constitutes no investment advice. Both wealth management and investing carry the risk of losing principal; returns and risks coexist, and past performance does not indicate future results. Make independent decisions based on your own risk tolerance, and consult licensed professionals for insurance, loans, taxes, and similar specialized matters.
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3 concept questions · instant grading
Why allocation beats stock picking and timing, the temperaments of core asset classes, and portfolio logic for long-term holding.
The compound-interest formula and Rule of 72 in numbers, the four enemies that destroy compounding, and how to make getting rich slowly an accountable path.
Run your family like a company: balance sheet, cash flow, emergency reserves, debt management, and the four-bucket money framework.
How CPI is constructed, how inflation treats each asset class, and how to separate genuine anti-inflation tools from marketing talk.
Insurance's defensive role in personal finance: what to buy, how much coverage you need, and which 'insurance' is actually a trap.
Compliance boundaries, legitimate paths, costs, and risks of overseas asset allocation — and an objective look at what problems it actually solves.
China's personal investment tax framework, the line between legitimate planning and evasion, covering tax categories, rates, and reliefs.
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15 · Quant Practice
Earlier chapters taught you how to read markets and manage positions; Chapter 10 (System Integration) teaches software t