“Save up on fine days for the rainy days.” I was often reminded of the Hakkanese maxim since I was young.
These words of wisdom are not only shared among my ancestry - it is a canon of personal finance for the Chinese as a whole. Can we acquire any insight from this motto?
“Fine days” can just go away
Most of us in Hong Kong acquire from the family the sense of staying alert for future uncertainties and planning our long-term finances before things happen. It helps us sail smoothly through ups and downs in life.
While many young Hong Kongers are already embedded with the gene, they would still choose to spend the money as soon as they start working and have income. They tend to take advantage of their age to choose longer-term wealth management products that allow lower, fixed-term contributions.
It is an excellent first step to accumulate grain for guarding against a poor harvest. However, such investments span over decades which weigh on flexibility. I had only witnessed too many young people lack the patience to see these financial plans come to maturity to enjoy fruitful results.
The problem is that the world is changing too quickly. And when it does, you have to adapt to it. The pandemic we are having now is already turning the world upside down. No one can foretell when “fine days” come or how many ahead there are. The Omnicron just blew away those relatively stable “fine days” in the past several months. Going forward, how can you be sure whether you have any more time to “save up?”
Hong Kong-style wealth management: work hard while you can
The origin of “Save up on fine days for the rainy days” can hardly be exacted, yet the proverb remains unambiguously valid today.
For Hong Kong, though, I would like to upgrade it to: “work hard on fine days for the rainy days.” And I just explained the reason: the world is changing too quickly! Those in middle age should have a more profound understanding of this.
With growing experience, you may realise it is more complex than you expect to get hold of changes in the macro-environment, let alone the potential impact and volatility of the economy triggered by political and international situations. In addition, it may not be possible to plan for all expenses of yourself and the family perfectly.
As such, it would be wise to make short term financial contributions, especially on the “fine days.” Let pleasure come after toil so that you enjoy greater freedom towards the later stage of life and finance. This tactic can prevent losses because of not being able to sustain your obligations at some points in time. Owing to the compound interest effect, a significant, short-term contribution early on can generate similar wealth to financial plans that feature longer-term but smaller regular payments.
That is why I recommend “work hard on a fine day for the rainy days.” While you can, place more of your surplus into short-term wealth plans and allocate globally with the help of a capable financial institution. As your investment bears fruit, the benefit is yours and even your next generation.
Lastly, whether the Hakkanese wealth advice, “get the equipment fixed before it rains” from Zhu Bailu’s Familial Dictum, or “prepare for danger in comfort” from Zuo Zhuan, all these ancient teachings are far from outdated. Act early so that you can navigate through the storm and steadily move forward.
The above content is reviewed by Mr Daniel Lau - Head of Investment Proposition of AXA Hong Kong and Macau
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