[2025 Must-read] Rethink your saving strategies – which wealth building method suits you best?

2025-01-20

8 Mins Read

What are wealth building tools | Why should you understand wealth building strategies early
Comparing wealth building strategies | How can savings insurance help you grow your wealth
How to choose savings insurance | WealthAhead Savings Plan

Soaring living costs, stagnant wages, and inflation outpacing income growth are challenges many Hong Kong residents face. With these pressures mounting, more people are diligently saving while actively exploring ways to grow their wealth. In recent years, the term ‘wealth growth’ has become increasingly popular. But what does it actually mean, and how can we successfully achieve it?

As we step into a new year, let’s explore practical ways to grow wealth for ourselves and our families, paving the way for a future with less anxiety and more ease.

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What are wealth building tools?

The right wealth building tools can generate returns over time without demanding excessive effort or time commitment. In other words, rather than working long hours every day, these methods allow your money to ‘work for you.’

Examples of wealth building tools include:

Investment income: Returns generated from investments, such as stock dividends or fund returns;
Real estate: Capital gains from identifying stable and high-potential investment opportunities in the property market, selling properties at higher values when prices increase;
Savings insurance: Capital gains accumulated through guaranteed cash values and non-guaranteed bonus in insurance products.

For instance, stocks or funds you invest in may pay dividends, allowing you to earn income without investing daily time and effort. Similarly, savings insurance is a lower-risk wealth building tool that helps grow capital while providing protection.

Why should you understand wealth building strategies early?

Under the pressure of inflation, money loses value over time. Therefore, beyond simply saving for the future, it is essential to manage your existing funds effectively and enhance the growth potential of your savings to combat ongoing inflation, maintaining or even increasing your purchasing power.

Wealth building methods, such as investing in stocks or savings insurance, often offer long-term potential for value appreciation. Over time, you can benefit from the power of compound interest, further strengthening your wealth growth. For instance, the bonuses from savings insurance gradually accumulate as the policy duration increases, helping to achieve wealth growth. These significant returns provide you with greater choices in the future, enabling you to fulfil dreams or enjoy a higher quality of life, such as travelling, learning new skills, starting a business, or pursuing aspirations. Additionally, they can help you achieve long-term financial goals, such as retirement funds, children's education expenses, and wealth inheritance.

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Comparing wealth building strategies: choosing the right financial approach for you

1. Risk tolerance

When it comes to saving and investing, risk and return are closely linked. High-risk strategies may offer higher returns but come with greater uncertainty. In contrast, low-risk strategies provide more predictable returns but with lower growth potential.

High-risk strategies: Options like stock and property investments often come with the potential for higher returns but also carry a greater risk of capital loss. For example, the stock market is influenced by macroeconomic factors, while the property market is affected by market cycles. These factors can lead to short-term capital shrinkage or decreased rental income. If you have a higher risk tolerance and significant capital to invest, stocks and property investments might be more suitable for you.
Low-risk strategies: Choices such as savings insurance, fixed deposits, or government bonds provide more predictable returns with lower volatility and risk. Among these, savings insurance offers long-term returns while safeguarding your capital, making it ideal for those with a lower risk tolerance who aim to accumulate assets steadily over time.

2. Returns and goals

When selecting a wealth building method, it’s essential to ask yourself, ‘What is the purpose of this money?’ The answer will guide your decision.

Short-term high returns: If your goal is to use the money for immediate needs or to chase substantial returns, stock and property investments may be more suitable. However, these options are more vulnerable to market fluctuations, which could impact your investment returns.
Long-term stable returns: If your aim is passive growth over time, perhaps for retirement or a children’s education fund, savings insurance may offer more stable and predictable returns. Such policies often provide guaranteed returns and may accumulate bonuses over time, depending on the policy term. With lower risk, savings insurance is particularly suitable for investors seeking stable wealth growth.

Actually, we do not choose a single wealth building method and diversifying risks is essential. The most important thing when making decisions is to find a balance between returns and risks.

3. Capital Requirements

Different saving and investment methods come with varying initial capital requirements.

High capital requirements: Property investments typically require significant upfront capital, along with ongoing maintenance and management costs. If your resources are limited, this type of investment might not be feasible for wealth building.
Lower capital requirements: Savings insurance and fixed deposits generally require less initial capital, making them accessible to a broader range of people. Even with a modest income, you can build wealth by regularly paying premiums or contributing to a savings plan.

4. Time commitment

Wealth building tools are not automatic wealth generators; some may require significant time for maintenance and management. For instance, real estate investors need to regularly carry out property repairs and manage buying and selling issues, while stock traders must closely monitor market conditions to adjust their strategies. In contrast, some wealth building tools demand less maintenance, such as savings insurance. With savings insurance, you simply need to pay premiums regularly, allowing you to focus more on your family and work.

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How can savings insurance help you grow your wealth?

What is savings insurance?

Looking to grow your wealth in the long term while enjoying life insurance protection? Savings insurance is a financial product that combines protection with savings features. It not only provides life protection but also serves as a tool to enhance wealth, allowing policyholders to gradually accumulate capital and returns. Its key components include:

Guaranteed cash value: This is the guaranteed value specified in the policy contract, typically increasing with each policy year. The guaranteed amount for each year is usually outlined within the policy.
Non-guaranteed bonuses: Often referred to as bonuses, these are distributable surpluses determined by the insurance company. However, their distribution and amount are not guaranteed, depending on factors such as the company's investment returns, claims, persistency, and expenses. Actual bonuses may exceed or fall short of initial projections depending on investment performance and future prospects. For example, if the company’s investments outperform expectations, bonuses may increase, and vice versa. The latest bonus amount is typically announced on the policy's anniversary date.

Advantages of savings insurance as a wealth building tool

1. A long-term, low-risk option

One of the primary benefits of savings insurance is its potential for steady returns. Throughout the policy term, the insurer employs flexible investment strategies across a broad range of asset classes, considering factors such as market conditions and fund surpluses. Investment strategies are adjusted as needed to ensure guaranteed benefits and maintain overall return potential, supporting the distribution of non-guaranteed bonuses.

Steady compound growth: Premiums and bonuses are reinvested and managed by professional teams to grow assets steadily over time. This ensures risk control while leveraging compound interest to achieve long-term wealth accumulation.
Risk management: Savings insurance is relatively low-risk, as insurers generally provide guaranteed cash values in savings life policies. Funds are often diversified across financial tools such as listed equities, corporate bonds, government bonds, real estate, and private equity investments, thus reducing risk and improving portfolio stability.

This makes savings insurance an ideal wealth building tool in the Hong Kong market, especially for individuals with a conservative financial approach. For instance, AXA’s newly launched WealthAhead Savings Plan offers both savings growth potential and life protection, featuring an ultra-short premium payment term of 2 years that helps you start growing your wealth sooner while achieving significant potential returns for your future goals.

【Limited offer】WealthAhead Savings Plan

Triple your savings, live life to the fullest. Enjoy 6.8% p.a. guaranteed preferential interest rate² for the first year on prepaid premiums.

2. Suitable for different life stages

Another significant advantage of savings insurance is its versatility for investors at different stages of life. Whether you’re a young adult starting your savings journey or a parent planning for your child’s future, you can select a plan that fits your financial needs and life aspirations.

Young professionals starting their financial journey

For young professionals, establishing financial planning early is crucial. While higher-yield investments may seem more attractive, the stability and compound growth of savings insurance can help secure wealth growth without taking on excessive risks, ensuring quality of life after retirement. AXA’s WealthAhead Savings Plan, for example, features a low premium payment threshold of just USD 10,000 per year and offers a choice of policy currencies, including USD, RMB, or HKD. This flexibility enables young professionals to manage their finances effectively and achieve their long-term goals step by step.

Parents building a future for their children

Parents naturally want the best for their children. With rising education costs, particularly for those considering overseas education, financial pressure can be significant. To ensure children have access to quality education and better opportunities in the future, having a clear savings goal and an effective plan is essential.

As children grow, the flexibility of savings insurance becomes increasingly valuable. For example, parents can withdraw part of the cash value from their policy to cover tuition fees while the remaining cash value continues to grow, supporting future needs. When parents pass on, the policy can serve as a tool for wealth transfer. AXA’s WealthAhead Savings Plan provides this flexibility by allowing policy value withdrawals after a certain period and offering unlimited changes of the insured and designation of a contingent owner, adapting to changing family needs.

How to choose savings insurance

When selecting a savings insurance plan, consider the following key factors:

Rating and reputation of the insurance company: Choose a financially strong and reputable insurance company to safeguard your assets.
Expected returns: Compare the expected returns of different policies and opt for a reliable company.
Policy flexibility: Select policies offering flexibility, such as the ability to change the insured, split the policy, or ensure effective wealth transfer.
Policy currency options: Look for policies with multiple currency options to accommodate evolving financial needs.
Policy term and premium payment term: Choose policy terms and payment terms that align with your financial goals and investment timeline. For instance, a two-year short-term payment plan eliminates the burden of long-term premium payments.

AXA’s WealthAhead Savings Plan features^ (Limited offer):

2-year premium payment term - projected total cash value equals 315% of the total premiums paid at the end of the 20th policy year¹
Enjoy 6.8% p.a. guaranteed preferential interest rate for the first year on prepaid premiums²
Divide your policy into multiple separate policies for added flexibility
Accelerate wealth building with high potential returns and exceptional liquidity
Lock-in gains without an aggregate limit
Change the insured as many times as needed for effective wealth succession
Continue your legacy planning with contingent policy ownership
Name a contingent insured for life protection and wealth planning
Flexible death benefit options for better family protection

^Subject to terms and conditions. For detailed terms, conditions and exclusions of the plan, please refer to the relevant product brochure and policy contract.

Start now: Achieve wealth growth with savings insurance!

Looking ahead to 2025 and beyond, with the ongoing global economic uncertainty and rising living costs, wealth growth will be crucial to securing financial stability. Whether you are preparing for retirement, increasing your life coverage, or achieving other financial goals, choosing the right wealth growth tool can help you stay composed in an ever-changing economic landscape.

In this process, savings insurance is undoubtedly an effective tool worth considering. It not only offers predictable returns but can also be optimised based on your needs and life stage. Therefore, regardless of which phase of life you are in, savings insurance can be a valuable method for growing your wealth. As the saying goes, ‘If you ignore your finances, they will ignore you.’ Start today by establishing the right financial plan and lay a solid foundation for your future!

1. It refers to the projected total cash value equals 315% of the total premiums paid at the end of the 20th policy year (which translates into a projected total Internal Rate of Return of 6.06% p.a.). The projected values are for reference only and based on certain assumptions, including but not limited to USD is selected as the policy currency, annual premium payment mode is chosen, all premiums are paid in full when due, no benefits have been paid, and no withdrawals or other policy options have been exercised. These projected values are not guaranteed and is projected based on the Company's current assumed bonus scale. The actual values may be higher or lower than these projected values.

2. The policy currency must be USD and a lump sum payment equal to twice the initial annual premium of the basic plan must be made upon policy application. Terms and conditions apply. For details and exclusions, please refer to the related promotion leaflet.

All product content mentioned above is subject to terms and conditions. For detailed terms, conditions and exclusions of the plan, please refer to the related product brochure and policy contract.

WealthAhead Savings Plan is underwritten by AXA China Region Insurance Company (Bermuda) Limited (Incorporated inBermuda with limited liability) (“AXA”).

No warranty or responsibility is assumed by AXA Hong Kong and our related or holding companies regarding non-infringement, security, accuracy, completeness, adequacy, reasonableness, fitness for a purpose or free from computer viruses in connection with the information and materials provided. AXA Hong Kong and our related companies and holding companies do not accept any liability for any loss, damage, cost or other expense, whether wholly or partially, directly or indirectly, arising from any error, inaccuracy or omission of the information and materials to the extent that such liability is not excluded by law.