Hong Kong Savings: Best Places To Invest Your Money

If you're looking to invest your savings in Hong Kong, there are a few options to consider. Firstly, you could opt for a savings account, which offers a secure way to store your funds and earn interest. Some of the top savings accounts in Hong Kong include HSBC, Standard Chartered, Citi Plus, Bank of China, and DBS. These accounts differ in terms of minimum balance requirements, interest rates, and fees, so it's important to compare them before deciding. Another option is to invest in the stock market, such as through index funds that track the broader market. Additionally, consider long-term investments like stocks or funds, which offer higher returns but also carry a higher risk of losing money. It's essential to assess your financial goals and risk tolerance before deciding where to invest your savings.

Hong Kong savings accounts

There are several types of savings accounts available in Hong Kong, including:

• Hong Kong Dollar Savings Account: This account is denominated in Hong Kong dollars and offers features such as interest earnings, flexible transactions and withdrawals, and easy access to your funds.
• Foreign Currency Savings Account: These accounts allow you to manage multiple currencies, including RMB and foreign currencies, in a single account. Interest is calculated daily and deposited monthly. However, foreign currency investments are subject to exchange rate fluctuations, which may result in gains or losses.
• Renminbi Savings Account: This account allows you to deposit and withdraw renminbi, offering simple and flexible access to your savings. You can earn interest on your daily balance and take advantage of bonus interest if your total relationship balance is HKD 1,000,000 or above.
• Children's Savings Account: These accounts are designed to help children develop good saving habits and often come with features such as no fees or minimum balance requirements, earning interest on their balance, and flexible transactions.

When choosing a savings account in Hong Kong, it is important to consider factors such as minimum balance requirements, withdrawal policies, interest rates, fees, and deposit insurance. Additionally, if you are a non-permanent resident, you may want to look for accounts that cater to your specific needs, such as the HSBC Foreign Currency Savings Account.

Foreign currency savings accounts

One of the key benefits of foreign currency savings accounts is the ability to manage multiple currencies in a single account. For example, the Bank of China offers a Multi-Currency Savings Account that supports 16 currencies, including RMB, USD, GBP, JPY, and EUR. HSBC also offers a Foreign Currency Savings Account that allows you to manage up to 10 currencies. With these accounts, you can easily exchange currencies through the bank's branches, phone banking services, or online platforms.

It's important to consider the potential risks associated with foreign currency savings accounts. Currency investments are subject to exchange rate fluctuations, which can provide both opportunities and risks. If you convert your foreign currency into Hong Kong dollars or another currency at an unfavourable exchange rate, you may incur losses. Additionally, foreign currency savings accounts may have higher fees and lower interest rates than domestic currency savings accounts.

When choosing a foreign currency savings account, it's essential to compare the interest rates, fees, and currency options offered by different banks. For example, the DBS Multi-Currency Savings Account offers 14 currencies and provides a single electronic statement summarising all holdings and exchanges. HSBC's Foreign Currency Savings Account provides access to attractive interest rates and exchange rates between 10 major global currencies.

To open a foreign currency savings account, you will typically need to meet certain eligibility requirements, such as providing proof of residency and a valid mobile phone number. Some banks may also require a minimum initial deposit. It's always a good idea to review the bank's deposit insurance terms and conditions to understand the coverage provided in case of any unforeseen events.

Long-term savings investments

When considering long-term savings investments in Hong Kong, it is important to remember that these should generally include investments that offer higher returns, such as stocks or funds. While these can grow your savings faster, there is also a higher risk of losing money, so it is important to do a thorough risk assessment to determine the type of investment instruments that suit your needs.

One option for long-term savings investments is to invest in the stock market. This can be done by picking individual stocks or by investing in index funds, which are passive funds that maintain a basket of stocks designed to copy the broader market. For example, you can invest in the Hang Seng Index, the primary index fund in Hong Kong, through a Monthly Investment Plan offered by HSBC. It is worth noting that picking individual stocks that will be successful is notoriously difficult, even for professional money managers. Therefore, it may be wiser to simply track the market through index funds, as advised by the renowned stock-picker Warren Buffett.

Another option for long-term savings investments is to consider investment funds, which can be subscribed to online with 0% subscription fees. Investment Fund Savings Plans allow you to invest in funds monthly to enjoy the advantage of dollar-cost averaging. This strategy involves dividing your potential investments into equal portions and investing in the market at regular intervals, which can help to reduce the risk of entering the market at a high point.

Additionally, when considering long-term savings investments, it is important to look for accounts that offer favourable interest rates and the ability to take advantage of exchange rate movements between currencies. For example, the Bank of China offers a Foreign Currency Savings Account that allows you to manage various foreign currencies in a single consolidated account, earning interest that is calculated daily and deposited monthly.

Finally, it is worth noting that starting early when it comes to long-term savings investments can be beneficial due to the power of compound interest. The sooner you start saving, the sooner you can start benefiting from compound interest, which can significantly boost your savings over time.

Short-term savings investments

Savings Accounts

A savings account is a secure and accessible option for storing your short-term savings. You can choose from various banks in Hong Kong, including HSBC, Standard Chartered, Citi, Bank of China, and DBS. These accounts offer features such as interest earnings, ATM withdrawals, online banking, and more. Compare the minimum balance requirements, interest rates, and fees to find the best fit for your needs.

Foreign Currency Savings Accounts

If you frequently transact in multiple currencies, a foreign currency savings account could be a suitable short-term investment. The Bank of China offers a Foreign Currency Savings Account that allows you to manage various currencies in a single account. Interest is calculated daily and deposited monthly. However, be mindful of currency exchange rates and regulations to avoid unexpected losses.

Investment Fund Savings Plans

For a more structured approach, consider investment fund savings plans. DBS Hong Kong, for example, offers the opportunity to invest in funds monthly, leveraging dollar-cost averaging. This strategy helps you buy fewer shares when the market is expensive and more when it's cheaper, reducing the risk of entering the market at a high point.

Emergency Funds

It is generally recommended to set aside an emergency fund equivalent to three to six months' worth of living expenses. This fund should be easily accessible and provide peace of mind in case of unexpected financial crises. A savings account or term deposit is a suitable option for your emergency fund, offering security and interest earnings.

Remember, short-term savings investments are typically conservative, focusing on capital preservation rather than high returns. They are an essential part of your overall financial strategy, providing liquidity and stability.

Savings plans

Minimum Initial Deposit and Balance Requirements

Some banks require a minimum initial deposit to open an account, but this amount is usually not too high. However, the minimum balance requirement is more important. Some accounts require you to maintain a minimum balance to use the account, earn interest, or avoid fees. If your balance falls below the requirement, you may lose interest or be charged fees, so it's essential to choose an account with a minimum balance that you can comfortably meet.

Withdrawal Policies

Consider how often and how much you expect to withdraw funds, as this could impact your ability to maintain the minimum balance. Review the bank's withdrawal policies to ensure they align with your needs. Some banks may also impose limitations on withdrawal amounts or frequencies.

Currency Options

If you need to save in a different currency, look for a multi-currency savings account. However, these accounts may have higher fees and lower interest rates than domestic currency accounts. Be mindful of currency conversion fees and exchange rate fluctuations, which can affect your savings.

Interest Rates and Calculations

Interest rates on savings accounts are usually low, but it's still worth comparing options as small returns can add up over time. Check how often interest is calculated and paid, as some banks do it annually, quarterly, or daily but pay monthly. Also, look for high-yield savings accounts, which offer higher interest rates than traditional savings accounts.

Fees

Banks may charge various fees on savings accounts, such as monthly fees, foreign exchange fees, and out-of-network ATM fees. Understand all applicable fees before opening an account, and consider ways to minimise them, such as using your bank's ATM network or online banking. Some banks may waive certain fees if you keep a minimum balance or link your checking account to your savings account.

Security and Deposit Protection

One of the main reasons for choosing a bank is the security it offers. However, there is still a risk of the bank going bankrupt or facing fraud. To protect yourself, look for an account covered by the Deposit Protection Scheme (DPS), which guarantees compensation of up to HKD 500,000 (increased to HK$800,000 from 1 October 2024) in case of bank failure. All licensed banks in Hong Kong are members of the DPS.

• HSBC HKD Savings Account: This account offers flexibility for transactions and withdrawals, and you can start earning interest with just HKD 5,000. It is widely accessible and does not have minimum balance requirements or below-balance fees.
• Standard Chartered Sustainable Savings Account: This account is available in HKD, RMB, or USD, and allows you to contribute to sustainable development activities while earning interest. Standard chartered non-package customers can enjoy low monthly fees, which are waived if you maintain a balance of less than HKD 10,000 per month.
• Citi Plus Savings Account: This account offers wealth management features, including investment services and credit card applications. There is no minimum deposit or balance requirement, and you can earn a base interest rate of 1.05% pa with the potential for a step-up interest rate of 2.55% pa.
• Bank of China Foreign Currency Savings Account: This account allows you to manage multiple foreign currencies in a single account, including RMB. Interest is calculated daily and deposited monthly, and you can exchange currencies through various channels.
• DBS Multi-Currency Savings Account: This account offers flexibility and convenience for managing foreign currencies, with 14 currencies available. There are no additional fees for monthly statements, Autopay Services, and ATM use. However, there is a minimum opening requirement and balance of HKD 200,000, with a maintenance fee of HKD 100 charged if your average monthly balance falls below this amount.

Frequently asked questions