In this era of rapid financial change, a quiet change is affecting everyone's wallet. In July 2024, China's six major state-owned commercial banks collectively lowered their RMB deposit rates, which is not only the first adjustment this year, but also the fifth since September 2022. With the implementation of this measure, the deposit interest rate of state-owned banks has fallen below 2% across the board, officially announcing the "1% era". In the face of such a seismic shift, how should ordinary investors respond? Let's explore new financial strategies in this low-interest rate environment.
The interest rate adjustment involves Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications and Postal Savings Bank. After the adjustment, the annual interest rate on demand deposits was reduced from 0.2% to 0.15%, the interest rate on one-year time deposits was lowered to 1.35%, and the interest rate on five-year time deposits was only 1.8%. This change has undoubtedly brought a huge impact to the traditional "saving money" model.
So, what is the reason for this across-the-board interest rate cut? Industry experts pointed out that the 10 basis point drop in the loan prime rate (LPR) for loans with a maturity of more than 1 year and more than 5 years on July 22 was the direct cause of the bank's cut in deposit rates. This initiative aims to reduce the cost of financing for companies and stimulate economic growth. However, this is undoubtedly a blow to the average saver who relies on interest on their deposits.
How should investors respond to this situation? The experts gave the following recommendations:
1. Diversified asset allocation
In a low-interest rate environment, it is difficult to achieve effective asset appreciation by relying solely on deposits. Dong Ximiao, chief researcher of Zhaolian, suggested that investors should adjust their investment mentality as soon as possible, balance the relationship between risk and return, and carry out comprehensive asset allocation. This means that we need to diversify our funds into different types of financial products, such as stocks, bonds, funds, etc., to diversify our risks and improve our overall returns.
2. Pay attention to bank wealth management products
Despite the decline in deposit rates, bank wealth management products are still a relatively stable investment option. Investors can pay attention to the low- and medium-risk wealth management products launched by major banks, which can usually provide higher returns than the deposit interest rate, and the risks are relatively controllable.
3. Consider investing in Treasury bonds
As an investment product guaranteed by the state's credit, treasury bonds have extremely high security. In the current environment, the yield on government bonds is likely to be higher than bank deposits, making it an investment direction worth considering. Investors can purchase treasury bonds over the bank counter or online platforms, which not only ensures the safety of the principal, but also obtains relatively stable returns.
4. Explore stock market investing
For investors with a strong risk tolerance, investing in the stock market may be a good option to increase the return on assets. However, it should be noted that stock market investment is highly risky and requires investors to have certain professional knowledge and risk management capabilities. It is recommended to reduce the risk of individual stocks by purchasing equity funds or index funds.
5. Don't neglect insurance products
Some insurance products, especially those with investment attributes, may show good income potential in the current low interest rate environment. Investors can consider allocating some of their funds to high-quality insurance products, which can not only obtain protection, but also may achieve certain returns.
6. Keep an eye out for emerging investment opportunities
With the development of technology, some emerging investment opportunities are also worth paying attention to. For example, P2P lending platforms, crowdfunding projects, etc. However, these investment methods are risky and require investors to carefully evaluate and not invest a large proportion of their funds in them.
7. Improve financial literacy
In a complex and volatile financial environment, it is important to improve one's financial literacy. Investors should continue to learn financial knowledge and understand the characteristics and risks of different investment products so that they can make more informed investment decisions.
8. Review and adjust regularly
Investment strategies are not set in stone. As the economic environment and personal circumstances change, investors need to regularly review their portfolios and adjust their asset allocation in time to adapt to the new market environment.
It is worth noting that although the impact of the reduction in deposit interest rates on ordinary depositors seems to be small (taking a 100,000-year time deposit as an example, the annual interest is only reduced by 100 yuan), the long-term cumulative impact cannot be ignored. Especially for those with large deposits, the reduction in interest income can significantly affect the quality of life.
In addition, we need to be vigilant about the impact of inflation. When the interest rate on deposits is lower than the inflation rate, savings are actually depreciating. Therefore, it has become particularly important to allocate assets rationally and seek returns above the inflation rate.
In general, after the deposit interest rate has entered the "1% era", the traditional "saving" model has been difficult to meet the needs of asset preservation and appreciation. Investors need to change their mindset and adopt a more proactive approach to their finances. Diversified allocation, risk diversification, and continuous learning will become the key words of financial management in the future.
At the same time, we must also recognize that there is no such thing as a completely safe and high-yield investment product. While pursuing higher returns, you must fully assess your risk tolerance and do not blindly follow high-risk and high-yield investment products. The ultimate goal of financial management is to achieve financial freedom, not to lose yourself in the sea of investment.
Finally, in the face of this new era full of challenges and opportunities, we should remain optimistic and confident. Through continuous learning and practice, I believe that everyone can find their own way of financial management and achieve steady growth in wealth in the "1% era". Let's join hands to welcome the arrival of this new era of financial management, and use wisdom and courage to create our own wealth future!