Retirement for Middle Class

People who need to pay a large amount of tax and cannot enjoy welfare given by the government, are regarded as the “poor middle class" in Hong Kong. These people worked hard when they were young, and tried to save as much as they can to buy a residential flat. Although they earn high salary, they have a lot of expenses. Sometimes, the increase in their wages cannot catch up with that of the inflation rate. These create huge burden to their living.

When income can’t catch up with expenditure…
Let’s look at an example. Mr. Chan has a monthly household income of $60,000. He has to maintain his retired parents, give pocket money to his son, settle property mortgage and so on. These account for half of his salary. On the other hand, he has to pay for MPF, insurance, transportation and meals. These might take up another 25% of his wage. Sometimes, he has to reserve money for irregular expenses such as family trips and buying clothes. After all these spending, he has not much left. How to make good use of the remaining $10,000 each month is always a challenge for Mr. Chan.

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Manage your wealth wisely

Don’t want to be a “poor middle class”? Plan wisely for wealth management and investment. In terms of financial planning, we should bear in mind that earning is more difficult than spending. Therefore, we have to learn how to allocate our income wisely. Once we receive the monthly salary, distribute it properly, such as 20% for daily consumptions, 20% for monthly installments and 10% for savings etc. and don’t use more than that proportion.

Secondly, we can boost our wealth by proper investment. In general, the middle-class has sufficient capital to plan for investment. Therefore, they can consider buying funds, bonds and blue chips stocks as these products have higher threshold, but they can provide a more stable return. It is also necessary to review your investment portfolio regularly and strike a balance between risk and return.

Not only investment, but also plan for retirement

Lastly, middle-class should plan for retirement deposit. The deposit is not only for retirement spending, but also for our families and the next generation. Therefore, you can consider buying insurance plans with options that enables relatively steady returns. There are some saving insurance plans in the market which guarantee flexible withdrawals with no limits. These plans also provide life protections and help to maintain your living quality after you retire. At the same time, the accumulated wealth can be inherited to the next generation.

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Note: The information in this website is for reference purpose only, and should not be considered as an offer or solicitation for any of the products or investments mentioned herein. FWD reserves the right to make changes and corrections to its opinions expressed and information contained in this website at any time, without any prior notice. You are advised to seek independent advice from appropriate professionals if you have any enquires with the related information. FWD expressly disclaims all liability for the use or interpretation by others of information contained in this website.

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