Investment Services

Smart Tips on Making an Investment Decision

An investor should not rush into an investment but instead should be sure he/she understands the nature and risks of the investment and has the ability to bear potential losses before making an investment decision. Below are some smart tips:

  • Provide the necessary information accurately (e.g. investment objectives, investment experience and knowledge, financial situation, investment horizon) and complete customer risk profiling with your banks properly.
  • Focus not only on potential returns and past performance, but also on the product features and risks. Diversify your investments to avoid concentration risk.
  • Spend time to read the product documents such as prospectus to study the product’s features and risk thoroughly and do not rely solely on marketing materials and/or key facts statements which only provide highlights.
  • Ask questions and seek clarification from your banks if in doubt. Make sure you fully understand the features and risks of the investment products you are going to invest, as well as why and how those products are suitable for you (e.g. the risk-return profiles match your personal circumstances).
  • Know your rights and exercise them. For example, a less sophisticated investor is given a cooling-off period of at least two calendar days to consider the appropriateness of derivative products that are not listed on an exchange in Hong Kong and debentures with special features (extendable, exchangeable, convertible, and/or with non-viability loss absorption feature), and a vulnerable customer may choose to bring along a companion to witness the investment products sale process and/or have a second frontline staff to handle the sale of investment products.
  • Request banks to introduce alternative investment products which are also suitable for you so that you can have more choices to consider.
  • Make sure you understand the ramifications before signing any documents (e.g. the acknowledgement of proceeding with a risk-mismatched transaction).

Investor and Financial Education Council

The HKMA works closely with the Investor and Financial Education Council (IFEC) to promote financial literacy in Hong Kong. The IFEC launched a financial education platform, The Chin Family, which contains financial management information to help investors better understand investment products and financial markets so as to make informed decisions and protect themselves against risks, frauds and scams.

Education Drama Series (in Cantonese)
Last revision date : 26 August 2019