Walk away when you see "high returns," "principal guaranteed" or "sure profit"
- Top value
- Evidence A
- Saves money
- Free
- Takes minutes
- No willpower
In plain words
The regulator's own words are: a return above 6% should raise questions, above 8% is very dangerous, and at 10% or more you should be prepared to lose your entire principal. Legitimate wealth products are no longer allowed to promise a guaranteed principal or return. Money lost in illegal fundraising is, by regulation, borne by you, and no one steps in to cover it when things go wrong.
- Cost
-
Free. Just pause when you hear these words.
- What you get
-
In 2018 at the Lujiazui Forum (陆家嘴论坛), the then chairman of the former China Banking and Insurance Regulatory Commission (银保监会) said it in these words: "A return above 6% should raise questions, above 8% is very dangerous, and at 10% or more you should be prepared to lose all your principal." The new asset-management rules (资管新规) require financial institutions not to "promise a guaranteed principal or return," and also require that "when payout becomes difficult, a financial institution may not advance money to pay in any form." So legitimate wealth products no longer have such a thing as a guaranteed principal. Losses from taking part in illegal fundraising are "borne by the participants themselves," and no one pays you back when things go wrong (China, 2018 and 2021)
- Notes
-
The three lines of 6%, 8% and 10% were drawn by the regulator from experience and are not legal provisions. The remarks were made while discussing the crackdown on illegal fundraising, and they were aimed at wealth products and investment companies that promise high returns. This is not investment advice.
- Evidence grade
- A : Specific numbers from meta-analyses, large cohorts or randomized trials; for law and policy, the statute or official text.
- Sources
-
- 郭树清 (2018). 防范化解金融风险 奋力跨越重大关口（第十届陆家嘴论坛讲话，国家金融监督管理总局官网）：「在打击非法集资过程中，努力通过多种方式让人民群众认识到，高收益意味着高风险，收益率超过6%的就要打问号，超过8%的就很危险，10%以上就要准备损失全部本金」. https://www.nfra.gov.cn/cn/view/pages/ItemDetail.html?docId=182418
- 天津市地方金融管理局转载. https://jrgz.tj.gov.cn/ztlm/ztzl/jrjfwphjr/202006/t20200625_2744709.html
- 中国人民银行等 (2018). 关于规范金融机构资产管理业务的指导意见（银发〔2018〕106 号，第二条、第六条）. https://www.gov.cn/gongbao/content/2018/content_5323101.htm
- 国务院 (2021). 防范和处置非法集资条例（国务院令第 737 号，第二十五条）. https://www.gov.cn/gongbao/content/2021/content_5588815.htm
Mentioned in
Translated from the Chinese original. Original book, section 5, tip 6. This section is about money and spending. It is general information, not financial or investment advice. Content may be out of date and rules differ by place. When you actually deal with an agency, a doctor or a court, follow what local officials, doctors and lawyers tell you. Disclaimer