Investing in Funds

There are many ways you can save money for the future: bank deposits, company shares, bonds, mutual funds, commodities like gold and silver, and buying properties.

But each of these carries its own set of risks, especially if you put all your money in one type of investment. For example, if you invest all your money over the years in just a few stocks, you may find the value of these stocks steadily going up and up. But just when it comes to your retirement and you want to sell, the market plunges and the value of your stock falls to a fraction of what you were hoping to get.

The other problem is that, for most people, we only have a small amount to put aside each month, so we don't have enough to create a substantial diversified investment portfolio, or to buy such things as an investment property.

MPF funds are intended to address these problems. MPF Funds are designed to take in small investment contributions from individuals each week, month or year. By pooling the contributions from thousands of individuals like you, they are able to generate much larger pools of money to invest. These funds have a number of advantages:

1. Critical mass and Cost-effectiveness - By pooling together small amounts of MPF savings from many individual scheme members, these funds can buy and hold a much larger portfolio of assets than individual scheme members could afford to buy on their own. A large portfolio can reach a size that allows it to access to a much wider choice of investments. This also means the fund is efficient to run in terms of its operating costs.
   
   
2. Diversification - Investment markets, such as the stock market, tend to go down as well as up. However, diversification-the spreading of your investment across a number of different assets-helps reduce investment risks. Better-performing assets can cancel out the losses from the under-performance of other assets. With diversification, you avoid the risk of putting all your eggs in one basket. MPF funds are required to meet minimum diversification requirements set out in the law.
   
   
3. Managed by professionals - Most people don't have the time to manage their own investments all the time. One of the benefits of these funds is that your investments can be constantly managed by a team of professional fund managers-something you wouldn't normally be able to afford on your own.