Picture: The New York Times
If you retire at the age of 65 and live to be at least 85, how much pension do you need to save? The three major banks in Hong Kong recommend that if you want to spend NT$30,000 a month for retirement, you should prepare at least NT$7.2 million including work pension. If you want NT$40,000 to NT$70,000 a month, you should live a comfortable life and be able to travel around. , you may need to prepare more than 10 million yuan.
That is, the earlier you start managing money, the better your chances of retiring at a younger age.
A local bank in Hong Kong conducted a questionnaire survey on its customers and found that 58% of customers expected to retire before the age of 60, but 51% of customers had not yet started financial planning for retirement. To prepare, looking at financial management customers, about 24% of financial management customers over 40 years old have saved 5 million to 10 million yuan to prepare for retirement. At the same time, 42% of customers hope to have about 50,000 to 70,000 yuan per month after retirement. Cash flow income, that is, the earlier you start managing your money, the better your chances of retiring at a younger age and having enough money to live a comfortable retirement life.
The source of retirement funds is the Mandatory Provident Fund MPF paid during work and the pension prepared by oneself. According to the recommendations of the Organization for Economic Co-operation and Development (OECD), the income replacement rate after retirement must reach at least 70%. The MPF MPF can be about If 50% is provided, then 20 to 30% of the part needs to be saved or managed by the public themselves. If you retire at the age of 65 and need at least 30,000 yuan per month, you will need 5.7 million yuan, which can be used until the age of about 81, but if you want If you go abroad once a year and have medical-related expenses, you need to prepare at least tens of millions of yuan.
If you start preparing at the age of 30 and the annual investment rate is 5%, you need to prepare 8,800 yuan per month; if you start preparing ten years later, that is, at the age of 40, the amount you need to invest every month will be doubled, that is, it will take 16,800 yuan to save. get enough pension.
html If you retire at the age of 65, assuming the average life span is 80 years old, you need to prepare a cash flow of at least 15 years, and this does not include medical and nursing expenses. If the average life span is extended, that is, the retirement period is calculated as 20 to 25 years, and the average monthly expenditure per person is 30,000 to 40,000 yuan after taking into account inflation, it is estimated that at least 7.2 to 12 million yuan of retirement pension will be prepared. Basically, you can care for your elderly with peace of mind. If medical expenses and long-term care needs are taken into account, the pension needs to be at least more than 12 million yuan. It is recommended to prepare early and focus on fixed-income products.
New World View on Investment and Financial Management
Amid the raging pneumonia epidemic, major central banks around the world have cut interest rates to rescue the market, accelerating the transition into a low-interest-rate environment. This has directly caused the effect of compound interest to become worse and worse. It is necessary for people to re-incorporate new thinking into their retirement financial planning. Many bankers It is recommended to adjust the long-term financial management concept and the most suitable product mix to cope with it.
In the post-epidemic era, people should have three new worldviews on investment and financial management. The first is to continue to make arrangements and increase investment on dips. The second is the era of low interest rates, where profit locking is king. The third is risk management and protection first. It is recommended to use conservative products with "insurance + fixed income characteristics" as the main configuration. Since Taiwan and the world are currently facing an era of low interest rates or even zero interest rates, conservative products can increase the monthly cash flow income after retirement, and are subject to The impact of financial market volatility will also be lower.
Insurance recommends planning repayment insurance to create stable cash flow after retirement, and configuring linked full-account investment insurance to achieve an annualized clawback rate that takes into account expected returns and life insurance protection. Products with "fixed income characteristics", such as overseas bonds with fixed interest distribution and no credit default, will be 100% returned at maturity. Choose internationally renowned overseas bonds with high credit ratings.
In the face of diversified investment tools, three concepts should be established, that is, you cannot choose products based on returns alone, choose the right investment method, and you must review it regularly. Then make plans based on the hard work period, accumulation period, and wealth harvest period based on different personal attributes. For example, during the working period, when you are about 30 to 45 years old, it is recommended to invest a fixed amount in funds or ETFs on a regular basis, with a core allocation of multi-asset funds, and a satellite allocation of stock funds that conform to market trends. During the harvest period, you can choose annuity-type investment products or overseas bonds, which have relatively stable risks. Fixed cash flow guarantees stable income in retirement.
Three golden rules
The three golden rules are earlier, more, and better. They are to make all-round asset allocation as early as possible according to different life stages, to be more prepared in a disciplined and methodical manner, and to take into account family harmony and wealth distribution. Better planning of intentions. It is recommended that investments be adjusted according to age, by adjusting fund positions between stocks and bonds, or by allocating target date/risk funds related to retirement types to achieve ideal retirement financial goals.
For insurance, you can refer to investment policies that combine investment and protection to obtain stable cash flow. Due to the characteristics of fixed income and diversified interest distribution, overseas bonds can achieve the effect of capital preservation in the original currency and meet the needs of flexible retirement planning and stable investment.
Ordinary people can use the three principles of ART to review their financial allocation, namely, Asset allocation, Risk-management, and Trend/Technology. For long-term retirement financial management, they can adopt multi-directional planning and risk tolerance. Lower, give priority to government bonds or investment-grade bonds with good liquidity and sound creditworthiness, and bear higher risks in exchange for a yield of 3 to 7%. You can also choose investment-grade compound bonds, paired with public bonds, investment-grade bonds, high-yield bonds or Emerging bonds, increasing yields and balancing risks.
Hong Kong financial consultant Li Wuyi LEO contact information
Proficient in Mandarin, Cantonese and English
Tel: (852) 5931 1005
Email: [email protected]
Address: Unit 3003. Hysan Place. 500 Hennessy Road. Causeway Bay. Hong Kong.
Author: Li Wuyi LEO, currently living in Hong Kong, graduated with a master's degree from the Chinese University of Hong Kong, has been engaged in financial planning for more than five years, and has insurance, fund, investment licenses and financial planning qualifications recognized by Hong Kong. We have planned personal and family financial management for more than 200 customers from different walks of life in the Asia-Pacific region. From 2016 to 2020, we have been awarded the Global Million Dollar Round Table MDRT membership for five consecutive years, and won the "Hong Kong Quality Consultant Award" in 2020.
