HSBC FinFit Study: Financial discipline is key to become downturn winners
A recent study by HSBC finds that Hong Kong people struggled to maintain healthy money habits amid the pandemic in 2022, resulting in a slight drop in financial fitness. Yet, 59 per cent of the surveyed respondents achieved at least 2 per cent return from their liquid assets, against local inflation rate of 1.9 per cent and a 15.5 per cent fall in Hang Seng Index last year. Among these downturn winners, 86 per cent are classified moderately fit or above, indicating a potential correlation between their financial fitness and wealth return.
In HSBC’s fourth FinFit study, Hong Kong people scored 64 out of 100 in 2022, down from 65 last year and on a downward trajectory since the inception of the study in 2020 when their score reached 67.
The pandemic continued to take a toll on people’s living, while undermining their ability to sustain healthy investment and saving habits. Only 54 per cent of respondents have investments, such as stock, fund and bond, down 25 percentage points from a year earlier. The proportion of respondents with a saving habit also dropped to 57 per cent from 61 per cent previously.
Fewer Hong Kong people, especially those with a FinFit score of under 50, practiced mindful spending. Only 37 per cent of these respondents monitored their monthly expenses, down 9 percentage points from a year earlier. Less attention was also paid on their financial future last year, where only 64 per cent of all the surveyed respondents did review their financial plan and 48 per cent put in place their retirement plan, down 5 percentage points and 6 percentage points from previously.
Maggie Ng, Head of Wealth and Personal Banking, HSBC, Hong Kong, said: “No one is safe from market uncertainties, but those with good financial habits and well diversified portfolios weather through downturns much better. It is never difficult to develop financial discipline. By starting with a budget, setting your money goals and saving for the unexpected, anyone can remain resilient even in unfavorable situations.”
Based on the survey, financial discipline may have a bearing on investment return. Accordingly, those with a FinFit score of 80 or above tend to display the following characteristics against their weaker counterparts:
- More active in diversified investment (including exposure to alternative assets), with an average holding of 4.7 types of investment and insurance products, comparing to 1.6 types among those with a score below 50
- 76 per cent would seek financial guidance from the professionals vs only 20 per cent for the unfit, and are less reliant on social circles, such as family or friends (35 per cent vs 70 per cent for those scored below 50)
- 98 per cent of them monitored their spending regularly, comparing to 37 per cent for those scored below 50
- 88 per cent have stayed within the budget, vs 26 per cent for counterparts with a score below 50