SC Wealth Select Principles – Standard Chartered HK

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5 guiding wealth principles

We use 5 guiding principles – Discipline, Diversification, Time in the market, Risk & return and Protection to manage, grow and protect your wealth. This ensures your investments remain robust and investment decisions are consistently applied to meet your goals.

Discipline

Diversification

Time in the market

Risk and return

Protection

Discipline

People, Person, Adult

Discipline

It removes emotions from investment decisions and ensures you maintain focus on your long-term investment and protection goals through regular investing, monitoring and portfolio rebalancing.

Stay focused on the long term as short term market moves are difficult to predict
Don’t react to emotions such as optimism and fear as they can lead to poor investment decisions at the worst times
Stay true to your goals to remove emotions and biases – create an investment plan

Putting it into action:

Instil discipline through an investment plan
Regularly review and rebalance your portfolio
Invest systematically and regularly
Maintain some cash for opportunities
Avoid distractions that results in emotional buying and selling

Diversification

Transportation, Truck, Vehicle

Diversification

Don’t put all your eggs in one basket. Diversification allocates your investments into a variety of asset classes, geographies and sectors, to build a portfolio with a variety of investments that have different expected risks and returns. This can reduce the risk in your portfolio and achieve more stability.

Manage and reduce risk through diversification – if one investment underperforms, this may be offset by other gains
Ensure your portfolio has a variety of asset classes and investments that have low correlation to each other

Building a diversified portfolio:

Start with a diverse Foundation Portfolio using our Tactical Asset Allocation as a guide, to deliver longer term returns over investment cycles
Personalise your Foundation Portfolio by adding short term Opportunistic ideas to enhance returns or diversify further

Time in the market

Nature, Outdoors, Sky

Time in the market

Time in the market generates more consistent returns. Investing for the long term, and not worrying about daily market fluctuations, helps ride out bumps and avoid missing the best performing days, which can impact your returns.

Provides more consistent returns that can ride out bumps along the way
Market sell-offs are hard to predict and timing your exit and re-entry is challenging

Avoid timing risk:

Apply ‘Dollar Cost Averaging’ by drip-feeding savings into investments regularly, and agreeing on your purchase frequency
This average entry price smooths the impact of market fluctuations and timing
If any of these investments fall in price, you can accelerate your purchases

Risk and return

Rock, Agaric, Fungus

Risk and return

The relationship between risk and return is important in making sound financial decisions. Understanding what risk you’re willing to take, and how best you can manage these risks, helps maximise returns on your portfolio.

Higher investment returns typically involve taking a greater level of risk
Weigh the amount of risk you are willing to take against the potential return to decide if it’s worth it

Managing risks:

Understand the risks in your portfolio and manage these risks on an ongoing basis
Ensure you have sufficient diversification to reduce risk and the chances of loss if your investment underperforms
Have regular portfolio reviews and rebalance to ensure your portfolio remains aligned to your risk tolerance and return expectations

Protection

Canopy, Umbrella, Adult

Protection

Don’t let the unexpected catch you unprepared. Protecting the value of what you have, and what you will generate in the future is important.

Even if you feel healthy or financially stable now, protection helps overcome times of financial uncertainty and mitigate the impact of unforeseen events
Your protection plan should also consider the value of your future earnings over your lifetime

A good protection plan:

Looks after you and your loved ones should you lose your income from illness, disability or accident
Provides protection against life’s uncertainties
Brings peace of mind
Brings certainty and discipline to financial planning

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