Investing can be daunting and overwhelming to some, especially in Hong Kong where you need to invest in a minimum lot size for many stocks.
This can all be overcome with the right tools such as monthly stocks savings plans.
The plan requires an investor to contribute a fixed amount of money (e.g. HK$3,000) on a monthly basis to invest in the stock of their choice with no restrictions on the minimum number of shares. When the price per share is low you buy more, when it's high you buy less.
How to Start a Plan?
All you need to do is:
- Pick a broker or a bank
- Choose the stock or stocks you want to invest in
- Set a monthly fixed amount you want to contribute to the plan
One major benefit is the flexibility of buying any stock without worrying about the lot size. It also leverages on the “Dollar Cost Averaging" investment strategy which:
- Reduces the impact of volatility by spreading out your stock or fund purchases so you're not buying shares at a high point
- Forces you to save on a monthly basis
- Takes the emotion and time out of investing as you do not need to monitor the market
Monthly Stocks Plan In Action:
Things to note:
Before you start your monthly stocks savings plan, it is important to be aware that you:
- Have enough liquid savings (at least 3 months) at all times.
- Don’t pick a stock that is too volatile, ideally it should be blue-chip stocks, ETFs, etc
- Choose stocks that you feel comfortable investing in the long run
- Be mindful of the fees and charges when looking for providers as there are wide variations in the ways they price their services
Important information: Investment involves risks. This information is intended to be educational and is not tailored to the investment needs of any specific investor. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment or action. Past performance is no guarantee of future results. The value of investments and the income from them can go down as well as up, so you may not get back what you invest.