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Buy high and sell low? Why not to take a systematic approach to growth your wealth? | 3-min read

GoWealth4 Apr 2023
The performance of Hong Kong stocks has been unsatisfactory this year with the benchmark Hang Seng Index plunged 17% since the second quarter, landing below 19000 points. While some think it’s the time to buy the market bottom, some afraid the stock market will continue to fall. Investors are generally prone to irrational behaviour due to their human instincts and tend to buy while investor sentiment is strong and anxious when the market falls. Many ends up buy high and sell low and lost money.Bruno Lee1, who has extensive experience in the region’s financial market, has once said: “The world is unpredictable. Who would have thought of Covid-19 to sweep across the world since 2019? But no matter how shocking these events could be, there must be an end out of it, and you won’t see all companies going bankruptcies. People generally stay away from risks when the market performs extremely, but my decade-long experience in the financial market has taught me to invest gradually for future decent returns.”Indeed, assuming an investor has invested on a monthly basis, he would have accumulated impressive returns over the last decade. The most important thing is that investors must not worry about the timing of making a lump sum investment but average out the cost over time from regular contribution to sail through volatility.Assuming monthly investment of HKD 5,000 into S&P 500 Index since September 2012
  • Investment Principal: HKD5,000 x 120 months = HKD600,000
  • Final accumulated amount: HKD 1.108 million
  • Cumulative return: 84.8%
  • Annualized return during the period 11.2%
Note: The above investment return assumption is linked to the performance of the US S&P 500 index and is for reference only, you cannot invest in the S&P 500 directly. The above investment return assumption only considers the principal investment and does not take into account any fees and taxes. Past returns are not indicative of future performance. The above examples are for illustration only.What does our Fund House partner Blackrock say?The wild gyrations of the markets over the last years has reminded some of the great financial crisis of 2008. Before 2019, most didn’t know what a coronavirus was. Now it’s impacting our daily lives. Unexpected stuff happens, which is why being prepared is so important. It’s why we preach diversification and suggest building portfolios that include seemingly boring investments that don’t go anywhere, making us wonder why we own them. Now we know why.The terrific returns of the past eleven years have also come with very little volatility. The correction (an index down 10% from its peak) we officially reached two weeks ago was only the 6th such episode over the past eleven years. Prior to the current decline, the worst of the bunch (down ~20%) occurred at the end of 2018. The second worst (down 19%) occurred in 2011. In both cases, the market recovered and made new highs within five months. It shouldn’t chase you away from the stock market, especially if you have a long horizon.english_portfolio-consideration-chart.pngHow can GoWealth help?Through technology, GoWealth leverages on a solution, which was mostly used by institutional investors, to provide a list of portfolios with optimized asset allocation aiming at diversifying the customers’ investment more efficiently, reducing the impact to investment portfolio due to market volatility. In addition to that, constitution funds are all sourced from top global asset management firms such as, AllianzGI, Blackrock, Invesco, PIMCO and Janus Henderson.GoWealth’s simulation methodology has also considered your monthly investment amount2. Investment from different timeframe, has different return expectations. This method will help you avoid timing the marketing. Through the monthly investment function of GoWealth, you can stably capture market opportunities.Try the simple user interface of GoWealth now to set your first monthly investment plan!Footnote:
  1. Bruno Lee is the Group Advisor of WeLab. Bruno has various management positions in multiple large-scale multinational banks and financial institutions, in which he led the development of wealth management and asset management businesses across Asia.
  2. The algorithm in the GoWealth Digital Wealth Advisory Services relies on the portfolio simulation database containing 12,000 simulation paths for the model portfolios projected over the next 50 years (i.e. 600 months), which reflects our capital market forecast on various asset classes and the model portfolios in terms of risk, return and correlations. Such information and simulations are assumptions only. They do not reflect or project actual investment performance of the model portfolio or performance of any constituent funds therein. The recommendation is not a guarantee that you will achieve your goal.
Important NoticeThis document is for general information only. The information or opinion herein is not to be construed as professional investment advice or any offer, solicitation, recommendation, comment or any guarantee to the purchase or sale of any investment products or services. This document is for general evaluation only. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons.
The information or opinion presented has been developed internally and/or taken from sources (including but not limited to information providers and fund houses) believed to be reliable by WeLab Bank, but WeLab Bank makes no warranties or representation as to the accuracy, correctness, reliabilities or otherwise with respect to such information or opinion, and assume no responsibility for any omissions or errors in the content of this document. WeLab Bank does not take responsibility for nor does WeLab Bank endorse the information or opinion provided by any information provider or fund house.
Past performance is not indicative of future results. WeLab Bank makes no representation or warranty regarding future performance. Any forecast contained herein as to likely future movements in interest rates, foreign exchange rates or market prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in interest rates, foreign exchange rates or market prices or actual future events or occurrences (as the case may be).
You should not make any investment decision purely based on this document. Before making any investment decisions, you should consider your own financial situation, investment objectives and experiences, risk acceptance and ability to understand the nature and risks of the relevant product(s). WeLab Bank accepts no liability for any direct, special, indirect, consequential, incidental damages or other loss or damages of any kind arising from any use of or reliance on the information or opinion herein. You should seek advice from independent financial adviser if needed.
WeLab Bank is an authorised institution under Part IV of the Banking Ordinance and a registered institution under the Securities and Futures Ordinance (CE Number: BOJ558) to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities.
This document is issued by WeLab Bank. The contents of this document have not been reviewed by the Securities and Futures Commission in Hong Kong.
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