Bidding 2021 Farewell with A Review of Your Own Financial Performance

Another year has passed and it’s that time of the year again – everyone looking back on their personal achievements in the past year, whether they could hit their weight-loss goal or get a job promotion. And there is no better time than now for a year-end review of your own financial management performance!

To deliver a stunning financial performance, it takes a well-thought deployment of both proactive and conservative strategies from saving and investment.  In terms of saving, the basics include keeping your income-expense balance, listing out all your regular and necessary expenses while cutting down on the unnecessary ones. Don’t forget to set yourself certain saving goals and put aside part of your income as savings. Looking back on the past year, how did you perform on these basics?

Actively save to earn returns

While saving is usually considered a more passive strategy in managing your finance, it doesn’t always have to be the case. Apart from keeping your money in a piggy bank, or in the bank for interest returns, there are many products in the market that may offer pretty good returns for your savings.

On another hand, rather than treating your mandatory MPF contributions as “locked money”, you can also make good use of it by investing in different funds according to your risk tolerance, in order to maximize your returns. Depending on your financial situation, you may even make voluntary contributions to further your benefits.

For instance, MPF offers Tax Deductible Voluntary Contributions (TVC) and Special Voluntary Contributions (SVC) accounts consisting of constituent funds with various investment goals and risk/return profiles. Provided with options to make monthly or lump sum contributions, you can also enjoy payment flexibility to suit your needs.

Review the performance of your portfolio and adjust accordingly

Saving alone, however, may rather hardly sufficient to create wealth. That’s when an appropriate, active investment strategy comes in. In the past year of your investment journey, how was the performance? And why? Were you too aggressive, leading to some significant losses? Or were you too conservative, hindering you from capturing the most returns? Was your portfolio sufficiently diverse to hedge against external volatility and risks?

While a variety of stocks and financial derivatives are commonly known to offer more considerable returns, they are often associated with higher risks. The market also experienced increased volatility in the past year due to the pandemic, global economic downturn and geopolitical uncertainties. It may therefore be wise for investors with lower risk tolerance to limit themselves from these types of investment. Even for those with greater risk appetite, you can’t just go all-in either – your portfolio should still include some more defensive, comparatively lower risk items such as annuity and bonds for hedging purposes. Managing your MPF is no more different from that. Scheme members should review their portfolio allocations regularly and make adjustments when needed.

Looking forward to the future, have you set new goals for yourself, or have your original goals changed? Are there any changes in your financial ability, your personal or family conditions or external circumstances that may affect your risk tolerance? Remember to take all these factors into consideration and make corresponding adjustments in your investment strategy.

Hope we can all embrace the new year with the right investment mentality and strategy for a brilliant financial performance!

Investment involves risks. There is no assurance on investment returns. This information is provided for general purposes only. This material does not constitute an offer or solicitation or invitation or advice or recommendation to enter into any transactions. If you are in doubt as to whether a certain fund or product mentioned in this material is suitable for you, you should seek independent professional advice.