Information Centre

Many people would do their “homework" or study game walkthroughs for setting a strategy before playing video games. Similarly, managing your MPF requires rational thinking and careful planning. In two parts, we will share six key MPF management strategies to help you easily plan your retirement reserves.

Strategy 1: Choosing an MPF scheme

Gamers often compare the skills of different characters to choose the one that best suits their playing style. Similarly, when choosing an MPF scheme, you should carefully consider your investment goals and risk tolerance. You should also compare different MPF schemes based on factors such as the services provided by MPF trustees, whether the available funds are aligned with your investment needs, and the fees for each scheme. This will help you choose the MPF scheme that best suits your personal situation.

Strategy 2: Selecting MPF funds

Investing in the MPF is like choosing the difficulty level in a game. It all depends on your personal risk tolerance and investment preferences. Generally, you might consider selecting more aggressive funds if you have many years until retirement (i.e. you have a longer investment horizon). But if you are approaching retirement, it may be more suitable to choose more conservative funds. For example, if you already have sufficient retirement reserves or investments elsewhere, after assessing your risk tolerance, you might opt for a more aggressive MPF investment approach to target potentially higher returns.

You should also make good use of the MPFA’s MPF Fund Platform to get detailed information about various MPF funds, including fund performance, management fees and composition, and fund risk levels and sizes, all of which can help you make informed investment decisions.

Strategy 3: Adjusting your portfolio

Just as each level of a game presents different challenges, managing your MPF, which is a long-term investment, requires adjustments as you go through different stages of life. In general, you should review your investment portfolio every six months to a year to ensure that it is aligned with your investment goals, desired asset allocation and risk tolerance. If it no longer meets your needs, you should adjust your investment portfolio accordingly. 

However, it’s important not to adjust your MPF investments based on short-term market fluctuation. Treating your MPF as short-term speculation could lead to  “buying high and selling low”, resulting in unnecessary losses.

For scheme members who have no time for, or are unfamiliar with, managing their MPF investments, the default investment strategy (DIS), commonly called “funds for lazy people”, may be an option. DIS uses a diversified investment approach by investing in global equity and bond markets, which coupled with its “automatic de-risking” feature, can effectively reduce risk. In addition, DIS is subject to fee caps, thus indirectly increasing net returns.

Stay tuned for the next part, where we’ll share more useful strategies for managing your MPF!