Building a nest egg to achieve financial security inevitably involves making a few hard decisions along the way. Take the fictional Wong family, for example, who have a three-year-old child, a joint monthly income of HK$95,000, combined savings of HK$200,000 and who own a stock fund worth HK$100,000.
The Wongs pay HK$20,000 per month in rent. They would like to buy their own property, send their child to a good private school and buy a car.
They also enjoy eating out at expensive restaurants, take regular holidays and appreciate drinking fine wines. The 35-year-old husband and 33-year-old wife are in good health but wonder if they need to buy health and life insurance.
Their parents, all in their 60s, are retired and in good health and their finances are in relatively good shape, but not great. The husband and wife worry they may have to substantially support the parents in old age.
Phil Neilson, a financial planning commentator and chief executive of Elite Capital Solutions Hong Kong, says for a middle-class family in Hong Kong, financial security usually means having accumulated net worth of between US$2 million and US$4 million.
His rationale is based on roughly US$1 million needed to buy a Hong Kong flat, US$500,000 for an offshore property and between US$1 million and US$2 million to invest. With a 5 per cent return, these funds would produce US$50,000 to US$100,000 of annual income in retirement.