Many Hong Kong people would benefit from using a higher risk, stock-heavy strategy in saving for their retirement, according to Warren Lee, chief operating officer of AXA China Region Insurance. In addition to reaping the greater rewards that came from stocks versus bonds, a retirement portfolio heavily weighted in equities was more likely to provide for the increasing years many of us would spend in retirement compared with previous generations, he said. 'In Hong Kong and worldwide, people are living longer. They are retiring at 60 or 65 but they are living until their mid 80s or 90s, so they are living for 30 years in retirement.' Mr Lee said this increasing longevity casts doubt on the effectiveness of the once popular age-linked strategy whereby young investors were urged to go heavily into stocks while older savers were advised to be far more cautious. With so many years of retirement to finance these days, the higher returns of stocks might be needed to support the individual, he said. 'Maybe investors need the higher risk in their portfolios for a bit longer to get better returns over the longer term rather than putting it all in cash when they are 55. In a longer time frame, the higher risk/reward profile of equities will usually let you achieve your goals. 'Most countries have a funding gap between what their retired populations need to live comfortably and what they have by way of income, both in their own savings and from any government schemes. With longer lives and a swelling elderly population, this gap is widening. 'In Hong Kong in 1981, people over 65 made up 6.6 per cent of the population. By 2003, they made up 11.5 per cent, and [the number] is forecast to grow to 24 per cent by 2031.' Mr Lee said Hong Kong's Mandatory Provident Fund (MPF) was an excellent system and had greatly enhanced investor awareness, but he believed the 10 per cent combined contributions were insufficient to fund most people in retirement. 'MPF has really helped investor education about investment-linked products, so the market is getting comfortable with them.' There is a lot to gain from starting early and saving regularly to save for one's retirement, he said. 'We definitely believe in the time value of money in financial planning. That dollar you put in when you are 25 or 30 escalates over time. The earlier you put it in, the greater the value you get.' Regular saving also offers the benefit of dollar cost averaging, where stocks are bought during periods of market collapse as well as boom, resulting in a better overall cost of entry than any attempt at market timing. Investors consistently get it wrong when they try to time their entries and exits to markets, Mr Lee said. Diversification is important, but most people have a bias toward their home market and currency as they would ultimately use their money at home. 'To really maximise your return, you need a combination of returns from different markets. For example, the United States market makes up 35 per cent of the global market, so you cannot ignore it,' he said. With about 2,000 agents and 250 salaried advisers, AXA provides a wide range of retirement products from traditional life policies and investment-linked products to Occupational Retirement Schemes Ordinance and MPF retirement plans.