[freeier]

lyxor is a vehicle created by the french bank soc gen.. however it is spelt..

[chris_in_hk]

Maddogmerrick,

Yes, that’s correct. There’s no income tax benefit for making additional contributions to your MPF.

Whether it’s a good choice or not for your money depends on a number of things.

Pros: It’s a good habit to save regularly. You don’t really need to do much as the investment managers will invest your money for you. Possibly lower upfront load/commission compared with other funds. Hardly any time is required to invest this way.

Cons: Lack of control and choice about where and how your money is invested. Performance may not be as good as elsewhere. There isn’t much choice in the MPF funds available. You need to check this but are your additional contributions locked in for the period of the MPF? As otherwise you can cash out of other funds when you like. Overall lack of flexibility.

Personally I prefer to invest the money myself. I don’t like the lack of choice, control or flexibility. But that’s because I taught myself how to invest and prefer to manage my money myself. (I do have funds but I’ve got the whole HK fund universe to choose from and they only form part of my portfolio).

[freeier]

Quite bored in office so decided to run some numbers for entertainment...
Since coming to HK, was quite puzzled by the implementation of the MPF. Of cos, back home we have the CPF (singapore).

So some comparison and some numbers:
CPF: Total of 30% of your paycheck (employer pays 10%, u pay 20%), cap at total of $1500 SGD ~ 7500HKD per month.
MPF: 5% of your paycheck paid by employer, cap at 1000HKD per month.

Running some numbers (those things that the financial planner like to dazzle u with).
Assumption: Inflation = 2.5% p.a. (i.e. everything goes up at 2.5%, cost of living and pay).
Investment return at 5% p.a.
Age start: 30, Age retire: 60, End of retirement: 80.
Expected expenditure level upon retirement: 70% of last drawn pay

With these assumptions, to last till 80 years old, a person needs to save up 24.1% of his/her monthly income.

i.e. MPF is grossly inadquate.
CPF, maybe ok, but at the rate Singapore govt allowing citizen to tap into the fund for all the housing mortage and etc needs, I am not so sure if it is adquate anymore.

8-P

[beafan]

Originally Posted by chris_in_hk

Beafan,

Savings and insurance plans are generally best kept separate and it's generally not the best idea to get one plan that does both. In general you're paying more than you have to for the savings element and it'll underperform against pure savings plans.

As for whether you need insurance or not, that depends a lot on your personal circumstances. Also, check what your work insurance covers you for.

HSBC has a range of funds, e.g. Lyxor and others, and not just HSBC funds.

Whether you should get a HSBC mutual fund portfolio depends on the charges and flexibility. You might be better off elsewhere. It also depends if you've doing a lump sum investment or willing to put aside a set amount each month for a number of years. Usually with savings plans they'll allow you free switching between any funds they hold. I don't think HSBC mutual funds will do that.

Oh, one thing. When you say your friend sells these financial plans for HSBC does that mean he/she works in the branch?

argh. my problem is capital. that's why i'm need some low risk investment scheme. i want to do long term investment (reading the 10 timeless principles i got at da book fair, excellent book) but i dont want to lock my money in for like 5-7 years in stocks or a fund, cuz it's so hard for me to save money here and things just keep coming up and i need money
i'm single and should think about saving for retirement, so i know i dont need insurance.

my mpf sucks too. china life insurance doesnt perform very well i think. i'd buy their stocks instead...

i just need a better paying job

my friend works for hsbc so he's only going to sell me their products. i wont be so easily suckered in. you suppose mutual funds is the best way to start off then?

[freeier]

many things in life is about balancing immediate wants and future needs. the constraint is either a lack of money, lack of time, etc. i.e. resources.

figuring out how to balance immediate wants and allocate the resources correctly is actually the most important aspect of life, whether one is successful.

for people with outstanding academic credential, they would have sacrificed their immediately 'recreational' wants to study and achieve their long lasting objective of a good qualification.

for people with heafty savings, they would have withhold their spending temptation and save/invest their money..

[beafan]

Originally Posted by freeier

many things in life is about balancing immediate wants and future needs. the constraint is either a lack of money, lack of time, etc. i.e. resources.

figuring out how to balance immediate wants and allocate the resources correctly is actually the most important aspect of life, whether one is successful.

for people with outstanding academic credential, they would have sacrificed their immediately 'recreational' wants to study and achieve their long lasting objective of a good qualification.

for people with heafty savings, they would have withhold their spending temptation and save/invest their money..

thanks freeier. i think i'm just really underpaid. and i dont lead a lavish lifestyle at all.

[chris_in_hk]

Beafan,

Just save what money you can. If you can't commit to saving long term then you're probably better off with stocks or no load mutual funds. That way you can get at your money more easily when you need it and not get hit too badly by commissions and charges. You can also buy them when you've got the money. However, the problem is that you may need your money when the stock market is down meaning you'd have to sell low. Remember to build up a reasonable cash/cash equivalent buffer before you start investing. That way you won't have to buy and sell as often. Typically that's around 6-12 months depending on your situation.

Freeier,

Yup, the MPF won't actually provide much of your living costs when you come to retirement age. However, even at its present levels it was difficult to pass this bill into law due to resistance from mostly the SME end of the business community.

[beafan]

thanks chris, will look into those suggestions. right now learning to invest and saving capital is my priority. just hope it's not too late to start investing.

freerier:
i think for me investing is more practical than taking up a post-graduate course, which are so overrated here in hk.

[freeier]

One observation, chinese tends to have the view that the offsprings (children) shall pay for the elder's retirement.
hence this term, yang-er-fang-lao.

so many chinese are willing to spend chunks of money 'developing' their kid into some talent despite eating into their own retirement savings.

it is quite a problem. without continuation of this 'philosophy', as seen by the Singapore example, where the CPF is doing too good a job in giving people the sense of security in taking care of their retirement needs, the family ties that supposedly bind the confucious or chinese traditional values breaks. so sg govt has to go back and implement other incentives for kids to help take care of aging parents, etc.

this kind of view is not held by most of europeans. their pension is able to take care of them when they retire. young kids are expected to go and fight their own in the world, taking education loan or working to fund their studies...

[freeier]

Originally Posted by beafan

thanks chris, will look into those suggestions. right now learning to invest and saving capital is my priority. just hope it's not too late to start investing.

freerier:
i think for me investing is more practical than taking up a post-graduate course, which are so overrated here in hk.

-> there is never too late for investing. start from somewhere, even if its a small amount. like what chris said, put aside some cash for rainy days. the rest just think and figure out what to invest.

-> as for whether a post grad is overrated or not. well, personal experience wise my current job is quite related to my 2nd postgrad degree. more than double income. so its a matter of how you choose your degree and how you use it. 8-P