Youngsters are often seen as big spenders, but that may not necessarily be true for today. A recent research indicates that within the Asia Pacific region, Hong Kong has the highest percentile of youngsters (aged 25 – 35) preparing for retirement at 69%, with 81 out of 100 Hong Kong youngsters having retirement plans or preparations.1
As electronic media continues to surround the world, information on financial management information are readily available for youngsters, and appreciate its importance earlier compared with the previous generation. The constantly high standing Hong Kong property prices sparked varying thoughts and options on property amongst youngsters, such as overseas property ownership, applying for public housing before graduation, even renting an apartment until their parents reach the age of 65 to applying for public housing.
Broaden investment portfolio with more tools
To own a home, saving is the first step. But how do you build and grow on what you’ve saved? Research reflect 70% of Hong Kong youngsters are engaged in stock investments, a far higher percentage compared with peers in the Asia Pacific region (42%); with stocks taking up to 29% of their investment portfolios, twice as much peers in the region1. Hong Kong youngsters are comparatively aggressive in their investment behavior, but relying on a single investment tool may not be the perfect investing strategy. Reviewing your investment portfolio regularly to gauge risks is also an important factor.
The 100 rule – allocating investments at different stages of life
The “100 rule” is a popular method of setting investment strategies at different stages of life. With 100 deducting your age, the remaining number is the acceptable percentage for investing venturesome stock products, whilst the remainder should be allocated to stable and lower risk products.
Generally speaking, you can bear a bigger risk at a younger age. Workplace novices would think according to the 100 rule, 70% of income can be invested before the age of 30, in other words, they can use a more aggressive investment strategy for 70% of their income. The remaining 30% might be considered for capital protection investments such as saving plans. Short term saving plans are available in the market, such as the Wealthree Endowment Plan that guarantees up to 4% maturity benefits after 3 years (calculated with RMB) 2, allowing you a steady return in a short period of time, growing you capital, and starting the first step to owning your home.
As we age and gain experience, our income probably has grown from when we first started in the workplace. But with a family and increased responsibilities, so does the need for diversified investment to hold less high-risk investments and stock up on products with a stable return. This strategy lets the investor handle regular expenses, such as mortgage or your children’s tuition fees. When choosing long term investments or saving plans, flexibility is also a concerning factor aside from return. The MaxFocus Signature Insurance Plan by FWD has a total return of up to 6.7%3, and grants considerable flexibility for you to tackle different needs at different stages of life, such as the initial deposit for a mortgage, tuition fees for your children’s oversea studies, and your own retirement.
It all starts from savings
Wealth management is one’s lifework. Regularly reviewing your wealth portfolio, balancing risks and returns, are both keys for a successful saving. Owning your dream home starts with a plan of saving, a lasting habit of accumulating wealth becomes our financial backbone in different stages of life. Combined with the compound effect of saving, it proves the earlier we start saving the sooner we achieve our goals.
1. According to BlackRock Global Investor Pulse Survey 2017, Hong Kong millennials are Asia’s risk takers, 81% of them have started retirement planning.
2. When the Policy matures after 3 years, you will receive 100% of the Notional Amount as Ma-turity Benefit, which is inclusive of the guaranteed return of 4.0% p.a. in RMB. Notional Amount is used to calculate premium and Guaranteed Cash Value. Notional Amount is not related to Death Benefit and FWD will not pay this amount upon the death of the Insured.
3. The projected return is non-guaranteed, based on the Insured at age 1 (Age Next Birthday), male, with premium payment term of 2 years and annual premium at US $50,000. Assuming no withdrawal or partial surrender has been made before the policy maturity date, the policy may have this projected total return upon maturity. The above figures are rounding numbers for illustrative purpose only. Please refer to the figures in your policy for details. The above product features are for reference only. For terms and conditions, please refer to the Prod-uct Brochure and Policy Provisions for details.