Setting up your investment plan
Before you make any investment, it is always worth asking what your objectives are and whether they are suitable. A financial adviser can help. A good investment plan should consider both the external and internal aspects of investing, i.e. the different types of investment that are available and your attitude to risk. The biggest problem nearly every investor encounters is a mismatch between his return expectations and risk tolerance.
Risk and return are generally correlated, and the longer you hold an investment the more apparent this should become. Broadly speaking, equity funds are more volatile than bond funds, and single country funds more volatile than regional or global funds. Money market funds are safer than either, but they aim only for cash-plus returns.
With an MIP there is an argument for weighting your MIP more to higher risk asset classes because of the smoothing effect of dollar cost averaging, with your investments going into the market over time. That does not mean however that you should confine your investments to only one or two funds. There is nothing to prevent you from spreading your MIP across several funds; indeed, this may be sensible risk diversification.
Because of their systematic nature, MIPs have become popular as a means of planning for specific events, like retirement or your children's school fees. In fact MIPs may be appropriate for any kind of long-term contingency; other examples could include medical or parent care expenses.
The take-up of MIPs varies across Asia. In Korea millions of workers have installment plans which make up significant net flows into the stock market. In Australia, Malaysia and latterly Hong Kong, which have payroll-deducted pension schemes, contributions in effect behave like MIPs; whether self-selected or managed by a third party, they get funnelled into the market on a regular basis. Even if you do make payments into a pension scheme, the case for investing in an MIP still stands. For unlike the west, where the welfare state is well-established, Asia does not have deep coverage hence savings rates tend to be higher. But these are not always well used. An MIP helps nudge you in the direction of growing those savings in an affordable way.
Features of a monthly investment plan (MIP)
* The minimum initial investment and holding period may differ with each distributor.
A checklist
What should you consider when investing?
Some internal aspects to cover when establishing an investment plan:
Before you make any investment, it is always worth asking what your objectives are and whether they are suitable. A financial adviser can help. A good investment plan should consider both the external and internal aspects of investing, i.e. the different types of investment that are available and your attitude to risk. The biggest problem nearly every investor encounters is a mismatch between his return expectations and risk tolerance.
Risk and return are generally correlated, and the longer you hold an investment the more apparent this should become. Broadly speaking, equity funds are more volatile than bond funds, and single country funds more volatile than regional or global funds. Money market funds are safer than either, but they aim only for cash-plus returns.
With an MIP there is an argument for weighting your MIP more to higher risk asset classes because of the smoothing effect of dollar cost averaging, with your investments going into the market over time. That does not mean however that you should confine your investments to only one or two funds. There is nothing to prevent you from spreading your MIP across several funds; indeed, this may be sensible risk diversification.
Because of their systematic nature, MIPs have become popular as a means of planning for specific events, like retirement or your children's school fees. In fact MIPs may be appropriate for any kind of long-term contingency; other examples could include medical or parent care expenses.
The take-up of MIPs varies across Asia. In Korea millions of workers have installment plans which make up significant net flows into the stock market. In Australia, Malaysia and latterly Hong Kong, which have payroll-deducted pension schemes, contributions in effect behave like MIPs; whether self-selected or managed by a third party, they get funnelled into the market on a regular basis. Even if you do make payments into a pension scheme, the case for investing in an MIP still stands. For unlike the west, where the welfare state is well-established, Asia does not have deep coverage hence savings rates tend to be higher. But these are not always well used. An MIP helps nudge you in the direction of growing those savings in an affordable way.
Features of a monthly investment plan (MIP)
| • The monthly investment sum can be deducted by direct debit from your bank account |
| • Unit trusts are uniquely suitable for MIPs as they can be bought with fixed amounts, and at pre-determined intervals |
| • You can decide when to start, or end* your MIP |
| • Amounts are determined individually depending on your personal financial situation and goals |
| • MIPs bring discipline to your investing |
* The minimum initial investment and holding period may differ with each distributor.
A checklist
What should you consider when investing?
Some internal aspects to cover when establishing an investment plan:
| • What are your investment goals and needs? |
| • How old are you? |
| • How strong is your financial position? |
| • How high is your tolerance for short-term volatility? |
| • To what extent do you need to be able to convert your investments into cash at any time? |
| • When will you need the money you have invested? |
| • How much diversification should you seek? |
| • What sort of investment style are you looking for? |
http://www.aberdeen-asset.com.hk | client.services.hk@aberdeen-asset.com
The above is strictly for information purposes only and should not be considered an offer, or solicitation, to deal in any of the mentioned funds. Investment involves risk, emerging markets may have greater risk than developed markets. Subscriptions may only be made on the basis of the relevant offering documents, most recent annual financial statement and semi-annual financial statements if published thereafter. The value of investments and the income received from them (if any) may be volatile and could change substantially within a short period of time. Past performance is not a guide to future performance. The investment returns are denominated in the base currency of the fund. US dollar / HK dollar based investors are therefore exposed to fluctuations in the US dollar / HK dollar / base currency exchange rate.
BEFORE MAKING AN INVESTMENT, YOU SHOULD REFER TO THE RELEVANT OFFERING DOCUMENTS AND IN PARTICULAR TO THE INVESTMENT POLICIES AND THE RISK FACTORS. YOU SHOULD ENSURE THAT YOU FULLY UNDERSTAND THE RISKS ASSOCIATED WITH THE FUND AND SHOULD ALSO CONSIDER YOUR OWN INVESTMENT OBJECTIVE AND RISK TOLERANCE LEVEL. YOU ARE REMINDED THAT YOU ARE RESPONSIBLE FOR YOUR INVESTMENT DECISION AND SHOULD NOT INVEST UNLESS THE INTERMEDIARY WHO OFFERS OR SELLS THE FUND TO YOU HAS ADVISED THAT THE FUND IS SUITABLE FOR YOU AND HAS EXPLAINED WHY, INCLUDING HOW BUYING THE FUND WOULD BE CONSISTENT WITH YOUR INVESTMENT OBJECTIVE. IF IN DOUBT, PLEASE SEEK INDEPENDENT FINANCIAL AND PROFESSIONAL ADVICE.
This website contains information on Aberdeen International Fund Managers Limited ("AIFML") and the Luxembourg-domiciled mutual fund schemes which it manages. The information and products contained within this website are restricted to investors within Hong Kong. There are important legal and regulatory restrictions which apply to this website. These are laid out in the Disclaimer section which you are advised to read before proceeding. By proceeding, you are representing that you have understood and accepted the restrictions set out in the Disclaimer section.
Third party websites provided by hyperlinks on this website are completely beyond the control of AIFML. Accordingly, AIFML accepts no responsibility for the accuracy, completeness and legality of the contents of such third party website, or for any offers, services and products contained therein.
© Aberdeen International Fund Managers Limited
The above is strictly for information purposes only and should not be considered an offer, or solicitation, to deal in any of the mentioned funds. Investment involves risk, emerging markets may have greater risk than developed markets. Subscriptions may only be made on the basis of the relevant offering documents, most recent annual financial statement and semi-annual financial statements if published thereafter. The value of investments and the income received from them (if any) may be volatile and could change substantially within a short period of time. Past performance is not a guide to future performance. The investment returns are denominated in the base currency of the fund. US dollar / HK dollar based investors are therefore exposed to fluctuations in the US dollar / HK dollar / base currency exchange rate.
BEFORE MAKING AN INVESTMENT, YOU SHOULD REFER TO THE RELEVANT OFFERING DOCUMENTS AND IN PARTICULAR TO THE INVESTMENT POLICIES AND THE RISK FACTORS. YOU SHOULD ENSURE THAT YOU FULLY UNDERSTAND THE RISKS ASSOCIATED WITH THE FUND AND SHOULD ALSO CONSIDER YOUR OWN INVESTMENT OBJECTIVE AND RISK TOLERANCE LEVEL. YOU ARE REMINDED THAT YOU ARE RESPONSIBLE FOR YOUR INVESTMENT DECISION AND SHOULD NOT INVEST UNLESS THE INTERMEDIARY WHO OFFERS OR SELLS THE FUND TO YOU HAS ADVISED THAT THE FUND IS SUITABLE FOR YOU AND HAS EXPLAINED WHY, INCLUDING HOW BUYING THE FUND WOULD BE CONSISTENT WITH YOUR INVESTMENT OBJECTIVE. IF IN DOUBT, PLEASE SEEK INDEPENDENT FINANCIAL AND PROFESSIONAL ADVICE.
This website contains information on Aberdeen International Fund Managers Limited ("AIFML") and the Luxembourg-domiciled mutual fund schemes which it manages. The information and products contained within this website are restricted to investors within Hong Kong. There are important legal and regulatory restrictions which apply to this website. These are laid out in the Disclaimer section which you are advised to read before proceeding. By proceeding, you are representing that you have understood and accepted the restrictions set out in the Disclaimer section.
Third party websites provided by hyperlinks on this website are completely beyond the control of AIFML. Accordingly, AIFML accepts no responsibility for the accuracy, completeness and legality of the contents of such third party website, or for any offers, services and products contained therein.
© Aberdeen International Fund Managers Limited