[grandcider]

I've made an appointment with an HSBC financial advisor just to see what they have to pitch. I feel like I'm not all that much wiser after my initial investigation. My situation is basically that I have this lump sum I need to do something with. I've purchased some stocks in the past that have performed quite poorly so I want to be somewhat conservative with this investment. I may return to Canada in several years' time and may need to do something with the capital then. Or then again I may not!
I can get about 5% interest with a USD time deposit at BEA and I'm still trying to figure out if I can do better than this without assuming much greater risk. Are capital guaranteed funds worth looking into? REITs? How about a mix of Vanguard index funds? Any ideas most welcome!

[freeier]

5% is the risk free rate, if u want higher return WITHOUT higher risk, no chance at all. if u are willing to take some risk for higher return, ya then u can look at other stuffs.

capital guaranteed product in this market needs alot of 'faith' to get you better return than your 5%. reit are over valued with their financial engineering innovation. they are very much based on valuation of asset in addition to the cash flow generated.

index funds ? well, if u have a strong directional view of the market, yes. else, not for a risk averse person.

[beafan]

freerier:
what did you take for ur 2nd post grad?

[discobay]

Originally Posted by grandcider

Are capital guaranteed funds worth looking into?

In a word no. I bought one from HSBC nearly two years ago and it was so underperforming I had to cash it in and have since reinvested it. Overall it made less than 3% which was worse than putting it in a time deposit.

[freeier]

Originally Posted by beafan

freerier:
what did you take for ur 2nd post grad?

financial engineering

[grandcider]

Originally Posted by freeier

5% is the risk free rate, if u want higher return WITHOUT higher risk, no chance at all. if u are willing to take some risk for higher return, ya then u can look at other stuffs.

So what then are the best options for someone willing to take low or moderate risk and what levels of return can be expected?

[freeier]

Originally Posted by discobay

In a word no. I bought one from HSBC nearly two years ago and it was so underperforming I had to cash it in and have since reinvested it. Overall it made less than 3% which was worse than putting it in a time deposit.

i did invest in one capital protected deposit.. but do have some form of view in what you want to invest in.

if you go into a structure that is like 5 years maturity, and u need your money urgently in 3 years time, a capital protected fund/deposit will not return you the full capital. u have to suffer some form of losses when you break that contract.

[discobay]

I know but what decided it for me was the HSBC "financial advisor" admitting that the fund was "not looking too good".

[freeier]

Originally Posted by grandcider

So what then are the best options for someone willing to take low or moderate risk and what levels of return can be expected?

i think it is all dependent on your time horizon and your expectation, requirement.

for a decent sum of money, i'll break it into different tranches.
as of the current climate:
- 40% of it in fixed deposit (5%?)
-30% of it in a interest rate structure deposit (--> explain more later)
- 15% of it in commodity linked fund or structure
- 15% of it in global equity or certain themed equity (e.g. financial institution, technology, something u have a strong view on).

interest rate structure deposit is an interesting thing.
HSBC is offering this 24 months HKD deposit, 3.80% interest rate p.a.
But the bank has the right to terminate your deposit 1 year from now.
If not terminated, u continue to receive 3.8% for 2nd year.

Find something similar from BEA (HSBC is taking a large fee out of it so the interest rate is lower). In USD term if you do a 24 month deposit (callable after 12 months) you can probably get around 6.0 to 6.5% p.a.
The risk in this product is the reinvestment risk, i.e. if interest rate were to collapse within 12 months u won't be able to get anything close to the 5% currently offered.


anyway this kind of allocation is just my recommendation of a semi low risk portfolio. i am still like ~50% invested in stocks i think. 8-)

[chris_in_hk]

I don't really like capital guaranteed funds/deposits as generally they don't promise enough return for me. I'm looking for 10-15% average gain a year including dividends and I'm at that rate at the moment. It doesn't seem overly aggressive as it's only slightly above how the Hang Seng Index has done over the same period.

Grandcider, without knowing anything about your background or situation I couldn't really recommend anything for you. But to give me an idea ... what would your response be if someone suggested HSBC? It's got a dividend of 4.4% the last I looked all by itself.

Freeier, around 50%, hmm. Do you have a mortgage or property? I'm around 90% invested in the market. I don't have a mortgage or property.