Investors turn to mutual funds
By Jimmy Ieong 

Banks' interest rates on fixed deposits have been lowered to approximately 1.25 percent, making many people look for other means to put their savings in which could generate higher interest for their investment. New investment plans of mutual funds and insurance have become attractive. 

Many people tend to buy mutual funds through banks or their personal insurance consultants. However, they often find it hard to acquire a full understanding of mutual funds from banks since customer service staff would not spend hours to explain carefully details of the mutual funds and insurance proposals. Bank staff have to serve many customers every day and they can only provide a brief introduction to customers. 

Therefore, people have turned to insurance consultants for advice on mutual fund packages and the combination of mutual funds with insurance. Many insurance companies recently have come up with various plans to attract customers. They try to tell people that it is now a good time to invest in insurance packages which are safe and have reliable returns. As the investment trend has changed, insurance companies have also introduced investment portfolios combining insurance plans with investments in mutual funds. The risks in such plans are lower than investing in securities as it is generally believed that mutual fund managers can diversify the investment in different securities based on their financial expertise. 

In such plans, people need to deposit a small amount of money each month for investment, and they can easily transfer their funds from one type to another very quickly and conveniently. It seems that the Hong Kong government also encourages people to buy mutual funds, as it is believed to be a fast way to build up savings for retirement. However, people are advised not to look on funds as short-term investments; mutual funds and insurance are for long-term investments. Returns are reasonable only after an extended period of time. 

Chan Mei Tan, who has invested in mutual funds and insurance, believes that putting money in the bank generates almost no interests, even in fixed deposits, the interest rate is only around 1 percent. However, he does not want to invest in the high-risk stock market. He thinks that buying insurance and mutual funds is a better investment nowadays. 

Lau Ut Keng started to consider investing in mutual funds when he noticed that they would bring in a better return than term deposits. However, at the beginning, he found it hard to understand fully the mutual fund investment. He also found that customer service officers at banks could not answer all his queries. Therefore he turned to his personal insurance consultant for advice.

Now he is buying mutual funds from an insurance company because he has found the packages it offers are quite flexible. He can switch his funds whenever he wants. He thinks the return is reasonable although it would take a long time for him to see the result.

It is suggested that people who are interested in insurance and mutual fund investment should consult insurance specialists to obtain detailed information and knowledge before they jump into the water. The more they have learned about insurance and mutual funds, the less risk they would have in their investment.