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Finance 101: Basic investment options for mamas!

ExpertsPost Category - ExpertsExperts

We can all agree that living in Hong Kong is a blast – the culture, the expats, the food and the adventures around! But when you’re staying in one of the financial hubs of the world, it’s important to have that little bit of financial know-how as well – especially when you’re raising a family and have things like kids’ college funds to worry about! We mothers sometimes take a backseat when it comes to family investment decisions but it’s really not that difficult when you get around to it and there are umpteen investment options available around us. It just takes a bit of preparation, planning and research and you can be on your way to becoming the family finance guru! 

Before we get on to what to invest in, I need you to answer a couple of questions first: 

1. Why do you want to invest? What is your ultimate goal?

2. How much can you invest monthly?

3. How much risk are you willing to take?

4. For how long are you willing to invest your funds?

Once you have answers to these questions, it’ll be fairly easy for you to decide your investment options and prepare a basket of assets to invest it.

When you’re ready to move onto investment options, it is important to read up and do a bit of research to figure out which asset class suits your goals. Here, I am going to talk about a few simple investment options that are readily available and are easy to understand for those who are diving into investments for the first time.

Mutual Funds
These are my favourite asset class as they are made for investors who don’t have much market knowledge but still relay the benefits of investments made by professionals. These are pools of funds invested in various asset classes and are managed by fund managers. What do you have to do? Simply choose a fund that aligns with your objectives and invest in it. For example, if your objective is to earn an income out of your investments periodically, you can choose a fund that gives out dividends. You can choose to invest a lump sum or can set up a monthly plan where you’ll invest a specific sum of money each month, which keeps adding to your initial kitty of investments. This option also allows for greater flexibility as you can change your  monthly investment amounts depending on your current situation. Ready to start? There are many online websites to compare and learn more about various options – I would personally recommend hopping on www.trustnet.hk.

Insurance Products
There are options today to invest in certain types of insurance plans, such as investment-linked assurance schemes (ILAS), which not only give you insurance coverage but also have investment yields, thus killing two birds with one stone. In case of an ILAS, you buy an insurance cover that is linked to investments and is thus a packaged product to cover both your investments and insurance needs. Be sure of your investment plan before committing to these, as they are most beneficial if you’re a long-term investor and do not require liquidity in the short- or medium-term. Also, apart from such technical products, you also have more simple options like basic life insurance products and health insurance products, etc. that can help you plan for the future. All the big banks and their websites have details about the various insurance products that they sell and can be easily compared.

Government Backed Securities
These securities or bonds are probably the safest form of investment as they’re backed by the government. They might not yield the best returns, but they’re definitely one of the most secure forms of investment. Your return is calculated in the form of interest accrued and is paid on interest payment dates. For more information on government bonds in Hong Kong, visit www.hkgb.gov.hk.

Real Estate
Without question, over the past two decades or so, this has been one of the best investment options. Be it for your own living or for rental purposes, investment in real estate gives brilliant returns over time. Just be sure of the property that you are investing in before hand, explore the rental levels in that area if you’re looking to let it out. Some research early on is required but should help in your future returns.

Any wealth management expert or a financial planner can help you with your investment decisions and plans, but knowing your risk appetite and some asset classes that you like beforehand is always better, so you can make an educated decision. Good luck planning, mamas!

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