What if Confucius was an investment advisor?
Beyond name recognition, most people outside of China aren’t really familiar with Confucius. It’s a shame because this Chinese sage has some powerful insights on how to navigate our way through the journey called life. In fact, even today, 2,500 years after his passing, his philosophies continue to influence civilisation — and for good reason.
As we celebrate China National Day and reflect on China’s achievements — from the growing middle class and shrinking poverty figures to the success of numerous Chinese businesses in the global arena — it seems clear there is much we can learn from Confucius’ teachings, including how to make better investment decisions.
Here are 5 pieces of ancient Confucian wisdom that you can apply to your investment journey today:
#1 Invest early
Regrets — we all have them. One of the most common regrets in investing is, “If only I had started investing sooner”. Unless you started investing at a young age, you can probably relate.
Yes, if you had started investing earlier, you may be better off today as savings accounts don’t typically take into account inflation, but we can’t let that hold us back. Confucius believed that we naturally tend to dwell on the ‘what ifs’ at the expense of focusing on our future. But remember, we can’t change the past, but we can set ourselves up for a better future.
So, if you haven’t been the most diligent investor, don’t worry about what ‘could have been’ if you had started 5, 10, or 20 years ago. Start right now. With the LU Global investment app, you can prepare for retirement or save for your child’s education by accessing the same billion-dollar global investment products that the financial elite invest in, but at a lower minimum buy in that goes as low as US$5,000 instead of the usual $100,000 and above starting capital. There are also no subscription fees on all fixed term products.
#2 Invest wisely
This proverb cautions against relying on mere surface-level judgments — to make better decisions, instead, we must attempt to grasp the essence of the situation. Have you ever known someone who has made major investment decisions based on reasons like “it seemed like a good idea”, and “so-and-so told me so, and he made money!”
The problem is, our brains evolved to make such snap judgments because it saves us the time and energy of deeper analysis. Nobel laureate Daniel Kahneman called this System 1 and System 2 thinking in his seminal work ‘Thinking Fast and Slow’.
While this fast, surface-level thinking process served us well when dodging predators in the African desert, it’s not conducive when making investment decisions. When it comes to investing, we must consciously set aside our tendency toward fast, shallow thinking and really take the time to consider the implications of our decisions.
A good example of this is our predisposal to stick with the default options. You don’t need to think too deeply; it’s the default, after all. So, it’s not surprising that, as we showed in the whitepaper by our parent company Lufax, 73% of investors still stick with the default wealth management products offered by their banks — forgoing diversification — even when they know better.
To help our customers invest wisely and make informed investment decisions, LU Global provides detailed product information beyond targeted rates and tenors durations. At a glance, the app displays information on the customised structured fund, asset manager, product highlights and the historical performance of our flexible term products including Blackrock, Partners Group, PIMCO, Schroder, and Amundi.
#3 Invest flexibly
If we let an easily fixable small problem sit and fester, it will soon grow into a big problem that is not so easily fixed. For example, credit card debt. It can start out relatively small; but if we’re only paying the minimums for a year, we’ll soon find out how a small problem can balloon into a large one.
In investing, this situation can be forced upon us. Imagine locking our money in say, a pharmaceutical fund for a multi-year period. If a negative macroeconomic event hits the pharma industry (say regulators forcibly breaking up the pharma giants), there would be quite a bit of uncertainty around that investment, and we would not be able to move our money without incurring severe penalties.
In essence, the lack of flexibility has turned a minor problem into a major headache. That’s why the LU Global investment app balances out lengthy lock-in periods. You can still invest in globally renowned investment products, but with shorter tenor lock-ins starting from as low as 3 months. Some are even as short as 15 or 28 days.
#4 Invest patiently
This proverb speaks to the power of seemingly small but consistent efforts over a long period. Investing follows the same principle – exercising patience and enabling the magic of compounded returns take effect. That’s why due diligence is important. We must set up a strategy to consistently invest (e.g. dollar-cost averaging into LU Global’s range of investment vehicles), be patient and to not jump in on quick high returns opportunities. You’ll be surprised at what a difference this can make.
#5 Invest with the right tools
In other words, if you have five hours to chop down a tree, spend the first four hours sharpening your axe. When it comes to investing, there are factors that can ‘sharpen’ our effort. The first tool is our mind which we must sharpen by learning. By performing proper due diligence and educating ourselves.
The second tool is the platform used to make the investments. In this case, it’s less about sharpening the tools as it is choosing the right one. LU Global’s cutting-edge investment app gives you the trifecta of flexibility, control, and convenience.
Timeless investment lessons
There is a reason why Confucius’ ideals are called ‘timeless wisdom’ — because we can apply it to a variety of situations in our life, including investing. Millenia ago, Confucius’ teachings helped shape the direction of Chinese civilisation so this China National Day let’s embrace his wisdom to guide us on our investment journeys. And, may the cutting-edge technology on the LU Global app be your flexible and convenient investment companion.
Join the 300,000 other investors who have chosen us on their investment journey and see why they love the control and convenience we give them through our award-winning app.