Investment involves risks, but will it be free of risk if not invest?

 

Money put in banks as deposit with interest payment is considered safe. However, Hong Kong is experiencing inflation in recent years; purchasing power of money will be ultimately eroded by inflation in the long run. Therefore, solely deposit money into banks also possesses risks. Set clear objective, understand your needs and risk tolerance level, and select the portfolio that best suit your needs, you can also invest safely and effectively.

 

To invest safely and effectively, here are some general tips for your reference:

 

The Rule of 72:

 

Presently, the growth in interest rate for saving deposit is unable to catch up the rising inflation rate; the purchasing power of money will gradually decrease. Obviously, to manage your wealth effectively, invest early and wisely is critical.

 

The rule of 72 tells us that a small percentage difference in return rate can make a huge difference over a long period of time. Of course, the rate of return highly depends on the level of risk that a portfolio possesses. Yet, invest via diversification and professional management, you may reduce the investment risks and enjoy a more stable return over the long run. Take a look at the below example:

 

Instrument Rate of Return No. of Years to Double the Capital
Savings / Fixed Deposits 1% 72 years
2% 36 years
3% 24 years
4% 18 years
Investment-Linked Products 5% 14.4 years
6% 12 years
7% 10.3 years
8% 9 years
9% 8 years
10% 7.2 years

 

Types of Funds VS Risk:

 

Everyone acquires different risk tolerance level over different life stages, at different ages and various environments. Given a wide variety of types of funds available in the market, investors can select a range of funds accordingly to their capability to manage risk.

 

 

Start Early:

 

Time is money, and it is never too soon to start planning for your investment portfolio. The sooner you start, the easier it will be for you to reach your goals thanks to the power of compounding. Assume you start to save $10,000 each year from the age of 30 for 10 years' time with a return rate of 10% p.a. By the time you reached 60, you would have saved 87% more in comparison with saving for only 20 years from the age of 40.

 

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The above information is for reference only and will not be considered as professional opinion and suggestion, and do not contain any intention or inducement to form a contract. Therefore, no investment decision should be made upon the above information. Investment involves risks. Please read corresponding investment information carefully before making any investment decision. If you have any query regarding investment or investment-linked products, please contact your consultant or refer to corresponding Principal Brochure for further information.