As a new borrower of a financial platform, Xiaomi Chen has raised many questions. This is not a question about the future development trend of the platform. She lacks financial knowledge, and she has some technical terms on some websites. It’s a headache. Let’s take a look at some of the jargon in financial management.
First of all, there is often a word on the platform called the value date, which refers to the day when the borrower and the lender complete a transaction and start calculating interest. What we need to make clear here is that each financial platform is different for the calculation of interest. Some platforms will stipulate that interest will be calculated from the date of completion of the transaction, and some platforms will stipulate one or two days after the completion of the transaction. And we must look at this after we become a user. The second is the rate of return. This should be the most important value for all financial users. It mainly refers to the ratio of actual income to principal. It should be emphasized that in the actual operation process, the income will fluctuate due to many factors. For example, if you buy a three-month loan on the platform, the principal is 10,000, its actual income is 500, and its yield is 5%.
Secondly, in general, when calculating the profitability of wealth management products, in order to facilitate comparison, we will uniformly calculate the yield of all products for one year. This is the concept of annualized rate of return. In the second paragraph, the three-month annualized rate of return is 5%, and the one-year rate of return is 20%.
The above is some introduction to the common concepts in financial management, of course, there are other important concepts, we will introduce them separately in future articles.