'Be cautious with high-risk retirement investments'
While many Hongkongers could be turning to high-return and high-risk investment products to meet their retirement needs, the Hong Kong Investment Funds Association is advising caution, calling on people to manage their expectations and not to blindly chase short-term gains. A survey by the association found that Hongkongers believe they have to save an average of over HK$7.6 million to maintain the standards of living after retirement. It also found that while in general they hope to retire at 61, that amount of savings would only last 17 years, leaving a seven-year gap considering the city’s average life expectancy of 85. And with the Mandatory Provident Fund accounting only for about 22 percent of people's retirement savings, many are eyeing other investment options. These include sustainable development funds and high-yield bonds that are currently not available under the MPF. “Most pre-retirees and retirees are interested in funds that have exposure to ESG (environmental, social and governance) funds and infrastructure bonds, with expected average return between 12 percent to 13 percent,” according to the survey. “But high returns come with high risks,” warned Philip Tso, co-chairman of the organisation’s pensions sub-committee. He advised people to be more realistic in managing expectations, and take a long-term view when it comes to adjusting their investment portfolios. Charles Brooke, co-chairman of the committee, added that they hope authorities could widen the product availability under the MPF schemes to offer more diversified investment options. But he also stressed the need for more education for all stakeholders. “It has been a while since a wider number of assets have been available [under MPF], therefore if we were to look at some of the additional product options that are highlighted in the survey, I do think trustees and those within the trust business would need more education,” he said.