5 Safe Investments to Building Wealth in HK
How to combat inflation? One way is to invest in safe investments which may offer modest returns, even during difficult times. There are a number of ways to allocate your cash and grow it steadily. Check out these 5 investments that offer exactly just that:
Top 5 Safe Investments to Building Wealth
1. High Yield Savings account
If you do not want to take any risks, you can consider a safe investment with relatively high returns such as setting up a high-yield savings account like Citi Plus Account to enjoy high interest rates. For example, holders of Citi Plus Account can enjoy up to 1.8% p.a. on the first HK$300,000 balance.
However, the downside is that interest rates are generally low across the board for saving accounts, and may not always keep up with inflation, meaning that your money could lose purchasing power. Also, your money is locked up for some set period of time. If you need to withdraw your money earlier, you may end up paying a penalty fee, and your interest rate will be reduced. To mitigate this risk, you should ideally have an emergency savings fund worth 3 to 6 months of your living costs to cover unexpected costs, without needing to withdraw from your investment.
2. Bonds/ Certificates of Deposits
While it's safe to save some cash for emergencies in your savings account, investing in safe investments such as bonds or certificates of deposits (CDs) issued by governments or well-known corporations when they want to raise funds for their operations or a special project is also a really safe investment. There is a really low default risk for investment-grade bonds, but investing junk bonds poses a greater risk, which we would not recommend for safe investments. Having investment-grade bonds in your portfolio can offer you a relatively high and predictable income, as it is generated by interest throughout their life such as six months, one year, or five years.
Moreover, you could potentially enjoy capital gains when buying and selling bonds/CDs. Also, your principal is protected at maturity provided that the issuer does not go default. Therefore, it’s important to select high credit quality financial institutions to keep your investment safe. You can also buy bonds through a mutual fund.
3. Saving Insurance Plan
To grow your money steadily, you can consider taking out a savings insurance plan. For example, you may purchase a 20-year or 30-year term life policy. These policies function like the other types of insurance policies and you can pay a premium monthly or yearly. For one thing, you can accumulate your wealth with the guaranteed cash value and for another, you can also boost your potential return through a non-guaranteed terminal bonus.
Similar to fixed term deposits, you will lose most of the cash value if you surrender earlier, which is not recommended. If you are not ready to commit for 20 or more years, this safe investment may not be suitable for you.
4. Gold
Gold can be a safe haven as it is protected against inflation over the long term. According to Forbes, even during the most recent bear market, the gold index dropped by a mere 2% even though equities dropped by 33%. It shows that it is a safe investment. However, similar to stocks, it can experience drastic price swings in the short run. You can also invest in Gold ETFs (as opposed to holding physical gold) to avoid the costs and inconvenience of markups, storage costs, and security risks.
5. Real Estate
If you have a large upfront investment, you can consider investing in real estates. Real estate investments can add diversification to your portfolio and be an additional income stream. It may be appreciated in the long run and you can earn rental income each month.
However, it also comes with additional costs other safe investments do not require, such as maintenance fees and management fees, etc. If you do not have enough funds to buy physical real estate, you can also consider buying REITs (real estate investment trusts). REITs usually pay investors high dividends, which makes them a common investment in retirement.
Start investing
A lot of safe investments recommended above are required to purchase through brokerage firms. Therefore, you will need a brokerage account. If you don't already have one, it only takes 10-15 minutes to do so and many companies require no initial investment.
Best Online Brokerage in Hong Kong 2024
Interactive Brokers
- Dividend Collection Fee - US Stocks
- 0 %
- Minimum trading commission - USD
- US$0.35
- Account Opening Min. Funding
- HK$10,000
・Transparent and low rates; investors could choose between fixed rate commission pricing and tiered pricing
・US$0.0035 Min. Commission Fee US Stocks
・0.015% Min. Commission Fee HK Stocks
Tiger Brokers
- Min. Commission Fee US Stocks
- US$0
- Commission Fee HK Stocks
- HK$0
- Account Opening Min. Funding
- HK$10,000
New customers who complete the specified account opening conditions and submit the reward claim form via MoneySmart, can receive up to the rewards as below.
Exclusive rewards: JBL Wind 3 Portable FM Bluetooth Speaker (Value: HK$599) / HK$500 Apple Store Gift Card / HK$500 PARKnSHOP supermarket vouchers (first deposit of HK$10,000 or US$1,300 above)
Valuable Capital Brokerage Account
- Min. Commission Fee US Stocks
- US$0.99
- Commission Fee HK Stocks
- HK$0
- Account Opening Min. Funding
- HK$10,000
From now until 30 Nov 2024, new users who successfully open account via MoneySmart with promo code「32BR」, fulfilling specific requirements and submit the reward claim can get rewards below (either 1)
MoneySmart is offering you an extra 12 months of Deliveroo Plus Silver membership and voucher (valued at HK$726) for free in November!
【Reward 1️⃣】Successfully open account and deposit ≥ HK$10,000 and retain for 60 days to get :
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Open accounts and complete 20 trades during retaining period, can get extra:
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Futu Securities Account
- Min. Commission Fee US Stocks
- US$0.99
- Commission Fee HK Stocks
- HK$0
- Account Opening Min. Funding
- HK$10,000
From now until 30 Nov 2024, new users who successfully open account via MoneySmart with promo code「MS24」within 7 days, fulfilling specific requirements and submit the reward claim can get the rewards below. (Either 1)
⠀⠀
Reward 1️⃣: Successfully open account and first deposit HK$80,000 or above and retain for 60 days to get the exclusive rewards:
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⠀⠀
Account opening tutorial: Download and start using Futubull app > Click "ME" and enter "Promotion" Click "Redemptions"> Enter the MoneySmart redemptions code - "MS24", and deposit funds within 7 days
Webull Securities Account
- Commission Fee US Stocks
- US$0
- Commission Fee HK Stocks
- HK$0
- Account Opening Min. Funding
- HK$10,000
【Limited-time offer, best reward in TOWN🔥 !】（Extra HK$300 voucher, the last chance for 2024!)
⠀⠀
From now until 29 November, new customers who successfully open an account through MoneySmart and submit reward claim can enjoy up to HK$5,014 exclusive rewards! Apply within this month to enjoy a limited-time bonus of HK$300 in vouchers. MoneySmart will also give you an additional 12 months of Deliveroo Plus Silver membership and voucher (valued at HK$726).
⠀⠀
【$80K Asset Reward 】: Upon successfully opening an account through MoneySmart, make first deposit of ≥HK$80,000 maintain the funds for 60 days:
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⠀⠀
Upon successfully opening an account through MoneySmart and making first deposit ≤HK$79,999 and maintain the funds for 60 days, can get up to HK$1,326:
・HK$600 PARKnSHOP supermarket vouchers
Huatai International Securities-Zhangle Global
- Min. Commission Fee US Stocks
- US$0
- Commission Fee HK Stocks
- HK$0
- Account Opening Min. Funding
- HK$10,000
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Borrowing to Invest
Taking a loan to invest is not always a bad idea. If the return on investment is greater than the cost of the loan, it makes sense to take out low-interest loans such as Citi Speedy Cash Loan, DBS Personal Installment Loan or GoFlexi Bank Personal Loan as you will end up generating income even when you finish paying off the debt. For example, Certificates of deposit (CD) and bonds fit into this category. The interest rates of these loans can be as low as 1.27%.
Best Low-interest Loans in HK
