Many a little makes a mickle

"Scheme $6,000" launched by the HKSAR government has been definitely one of the hot topics recently. How would you spend this sum of money? Buy a new handset, enjoy a sumptuous meal or take a trip overseas? Or are you considering to make a head start on an investment and savings plan? Plan carefully and start now, find yourself the best wealth management solutions, and you are well on your way to wealth creation.

The HK$6,000 is indeed a good starting point for an investment and savings plan. Many financial plans with regular contributions are available in the market, such as club deposit, monthly stocks savings plan, monthly funds savings plan and life insurance plan with savings element, which offer you the option of making regular contributions with a reasonable minimum payment. Each of these plans has its own characteristics to suit individual needs. They also differ in their returns, risks and liquidity. Let's take a look at the features of these plans below. We hope this will help you in making your choices.

	Club deposit	Monthly stocks or funds investment plan	Life insurance plan with savings element
Nature	Deposit	Investment	Life Insurance
Basic features	- Fixed contribution amount on a regular basis - Receive principal and interest upon deposit maturity	- Automatic purchase of selected stocks or funds with a predefined amount of capital on a regular basis - Investment method same as the conventional stock or fund purchases	- Protection and savings combined in a plan - Policy holders may receive the guaranteed savings amount, e.g. guaranteed cash coupon and guaranteed cash value upon policy maturity - Fixed contribution amount of premium on a regular basis
Contribution mode	- Contribution amount starting from HK$500 per month - Applicable currencies: HKD, RMB and other major currencies - Choice of various contribution cycles	- Contribution amount starting from HK$1,000 per month - HKD or foreign currency savings account, or credit card can be the settlement account for the contribution	- Premiums vary according to risk factors based on life insured - Policy currencies: HKD or USD - Choice of various payment modes
Tenure	- 1-5 years	- Can terminate the plan or alter the plan details anytime	- Periods of contribution and coverage vary amongst different insurance plans
Returns	- Interests. The interest rate usually is in-between savings and time deposit rates - Currency value fluctuations in foreign exchange	- Price differences of stocks or funds - Stock/Fund dividend distributed	- Some plans offer guaranteed cash value, guaranteed dividends and non-guaranteed dividends
Advantages	- Relatively low initial deposit amount - Choice of multiple currencies - Lower risk - Fixed return, interest rate is fixed at the time of deposit placement	- Invest in your favourite stocks/funds with a relatively lower amount of capital - Leveraging on the “Dollar Cost Averaging” strategy in lowering the average cost of owning stocks/funds for the long-term - Accumulation of credit card bonus points if the contribution is made by credit card	- Provide life insurance protection and savings element at the same time
Things to note	- Lower liquidity - Need to contribute for the whole period - The principal and interest can only be collected upon deposit maturity	- Level of risks depends on the stocks/funds selected and the duration of holdings - May affect the liquidity under special circumstances, such as stocks/funds being suspended from trading - Prices of odd lot may be the same as or lower than that of a normal lot of shares upon selling	- Premiums might be subject to adjustment (e.g. medical insurance plans) - Relatively lower liquidity, policy holders may not be able to receive the full amount of premiums paid if policy is surrendered prematurely

The above information provides a basic understanding of how financial tools with regular contribution work in the market. Carefully choose a plan that fits you by taking into account of your goals, risk tolerance level, available capital each month and its liquidity.

Risk Disclosure

•	Foreign currencies / RMB products are subject to exchange rate fluctuations which may provide both opportunities and risks. The fluctuation in the exchange rate of foreign currencies / RMB may result in losses in the event that the customer converts the foreign currencies / RMB fund into Hong Kong dollar or other foreign currencies.
•	RMB is currently not fully freely convertible and conversion of RMB through banks is subject to a daily limit. Customer should allow time for exchange of RMB from / to another currency of a RMB amount exceeding the daily limit.
•	Certain mutual funds and unit trusts (“Investment Funds”) are structured products involving derivatives. Investments in Investment Funds involve risks. The price movement of Investment Funds may be volatile. The price of Investment Funds may go up as well as down, and may even become valueless. Therefore, you may not receive any return from your investment in Investment Funds, or may sustain losses in your investment. You may not be able to liquidate your investment immediately under certain market conditions. Before making any investment decisions, you should seek independent financial advice.
•	The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities.
•	The above risk disclosure cannot disclose all the risks involved. Before entering into any transaction or investment, you should also carefully consider whether the trading or the investment is suitable for you having regard to your own financial situation, investment objectives and experiences, risk acceptance and ability to understand the nature and risks of the relevant product. If you are in doubt or do not understand any of the following risk disclosures or the nature and risks involved in any transaction or investment, you should seek independent professional advice.
•	The investment decision is yours but you should not invest in any investment product unless the intermediary who sells such investment product to you has explained to you that such product is suitable for you having regard to your financial situation, investment experience and investment objectives. Investments involve risks (include investment in RMB), you should read carefully the relevant offering documents and risk disclosures of the relevant product for details.
•	This promotional material is for reference only. It does not constitute any offer, solicitation or recommendation to the purchase or sale of any investment products or services. This promotional material is issued by Bank of China (Hong Kong) Limited. The contents of this promotional material have not been reviewed by the Securities and Futures Commission of Hong Kong.