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Terms of Use
You must read the following information before proceeding. By accessing this website / application and any pages thereof, you acknowledge that you have read the following information and accept the terms and conditions set out below and agree to be bound by such terms and conditions. If you do not agree to such terms and conditions, please do not access this website / application or any pages thereof.
General
This website / application has been prepared by FIL Investment Management (Hong Kong) Limited and for informational purposes only. FIL Investment Management (Hong Kong) Limited, FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity International ("Fidelity"). The information on this website / application is intended for Hong Kong residents and is for reference only. None of the Fidelity products referred to on this website have been approved for sale or purchase by any authority outside Hong Kong. Persons resident in territories other than Hong Kong should consult their professional advisers as to whether they may subscribe for the products and services described in this website / application or whether they require any governmental or other consents or need to observe any formalities to enable them to do so. Certain Fidelity products sold in Asia may be established in Luxembourg. The information contained in this website / application does not constitute a distribution, an offer to buy or sell any securities or the solicitation of any offer to buy or sell any securities, engage the investment management services of Fidelity in any jurisdiction in which the distribution or offer is not authorized or would be contrary to local laws or regulations. Without limitation, the information in this website / application is not for distribution and does not constitute an offer to buy or sell any securities in the United States of America to or for the benefit of United States persons (being residents or citizens of the United States of America or partnerships or corporations organized under the laws of the United States of America). It is the responsibility of the persons who access this website / application to observe all applicable laws and regulations.
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Use of website
Unless otherwise specified, information contained in this website / application does not constitute investment advice or recommendations. Users are solely responsible for determining whether any investment, security or strategy, or any other product or service is appropriate or suitable for them based on their investment objectives and personal and financial situation unless otherwise agreed by FIL Investment Management (Hong Kong) Limited. Any person considering an investment should seek independent advice on the suitability or otherwise of the particular investment. While certain tools available on the website / application may provide general investment or financial analyses based upon your personalized input, such results are for your information purposes only and you should refer to the assumptions and limitations relevant to the use of such tools as set out in this website / application. Users should consult their independent professional advisers should they have any questions. The information contained in this website / application is only accurate on the date such information is published on this website / application.
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Internet Communication
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Languages
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50/20/5 a saving and spending rule of thumb
01 Sep 2023
Budget. Does anyone like that word? How about this instead — the 50/20/5 rule? It's our simple rule of thumb for saving and spending: allocating no more than 50% of take-home pay to essential expenses, 20% to retirement savings, and 5% to short-term savings.
1. Essential expenses: 50%
Some expenses simply aren't optional — you need to eat, and you need a place to live. Consider allocating no more than 50% of your monthly income to ‘must-have’ expenses.
Just because some expenses are essential doesn't mean they're not flexible. Small changes can add up. Buying groceries when they are on sale, and taking your lunch to work, considering a less expensive home or apartment are a few ways you may be able to save. Look at which essential expenses are most important, and which ones you may be able to cut back on.
2. Retirement savings: 20%
It's important to save for your future—no matter how young or old you are. Why? Because the Hong Kong pension schemes (Mandatory Provident Fund or Occupation Retirement Scheme Ordinance) are not going to provide all the resources to support the life you want in retirement.
Our Retirement Savings Guidelines1 suggest aiming to save at least 20% of your pre-tax income a year over the course of your working life. You could consider making additional voluntary contributions to your employee MPF account. Or you could open a Tax-Deductible Voluntary Contribution (TVC) account and make additional contributions there. TVCs are eligible for a tax deduction where you can enjoy tax savings up to HK$10,200 per year (The actual amount of savings is determined by a number of factors). To know more, please click here.
3. Short-term savings: 5%
You also need an emergency fund. An emergency, like an illness or job loss, is bad enough, but not being prepared financially can only make things worse. A good rule of thumb is to have six months of essential expenses readily available. How to get to 5%? Having this money automatically taken out of your current account, or soon after, pay day and put into a separate account just for short-term savings can help you reach this goal.
Our guidelines aren’t about micromanaging every penny but analysing current spending and saving based on our three categories can give you control and confidence.
1 Fidelity Retirement Savings Guidelines is based on four key metrics - savings milestones, savings rate, income replacement rate and probable sustainable withdrawal rate. Fidelity Retirement Savings Guidelines suggest that people in Hong Kong should save 12 times their annual income by the age of 65 and save at least 20% of pre-tax income in order to maintain their current lifestyle in retirement. The Fidelity Retirement Savings Guidelines are for reference only and certain assumptions are applied.
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