How can we effectively manage our finances during an economic recession?

In 2023, the world entered a period of turbulence, with the United States experiencing an economic recession and the Federal Reserve continuing to raise interest rates, while geopolitical conflicts were frequent¹. The global economy and capital markets were affected, and various assets performed differently. Faced with this complex economic and investment environment, how should we manage our finances? In a situation where major economies are slowing down and financial markets are adjusting, diversified investment becomes an important choice for wealth appreciation.

Under diversified investment, why choose investment-linked insurance scheme (ILAS)?

Besides bank savings, insurance, funds, stocks and bonds, etc. are common investment options in the market. Investors may base on your risk tolerance, investment objectives and market changes to choose the suitable investment portfolio (details below for reference only):

1. ILAS

• Suitable for following investors:
  
  - Possess professional financial management knowledges
  - Pursue long-term and diversified investments
  - Have life insurance protection needs
  - Consider wealth succession planning
  - Flexible payment options

• Diversification of investments
• Normal level of investment threshold
• No conversion fee
• High liquidity

2. Funds

• Suitable for following investors:
  
  - Possess professional financial management knowledges
  - Pursue long-term and diversified investments

• Diversification of investments
• Normal level of investment threshold
• Conversion fees are charged each time
• High liquidity

3. Stocks

• Suitable for following investors:
  
  - With relevant knowledge of individual companies
  - Ability to tolerate high volatility
  - Closely monitor the market

• Single investment
• Normal level of investment threshold
• Conversion fees charged on a regular basis
• Higher liquidity

4. Bonds

• Suitable for following investors:
  
  - Able to tolerate high volatility
  - Keep a close eye on the market

• Single investment
• Higher level of investment threshold
• Conversion fees are charged each time
• Low liquidity

Unlike typical investment products that focus on a single area, investment-linked insurance allows for diversified investments across categories such as stocks, bonds, and funds. By adopting medium to long-term investment approach, it helps to reduce risks while providing customers with the flexibility to adjust your investment portfolios and seize investment opportunities.

ILAS meets the needs of customers at different stages of life

1. Rookie at work aiming to accumulate capital

Recently, there has been a growing trend of younger individuals joining the realm of financial planning. ILAS can help workers make better use of limited funds to accumulate wealth for future families.

2. Prepare education funds for kids

Prices have skyrocketed, the cost of raising a child is as high as 6 million². The medium and long-term investment characteristics of ILAS help families accumulate education funds, ensuring children's future educational resources are not affected and have greater autonomy.

3. Proper wealth inheritance and retirement planning

Due to rapid advancements in living standards and healthcare, the average life expectancy has been steadily increasing, making financial arrangements for retirement more crucial. With the inflation, ensuring an equivalent quality of life during retirement, pursuing an ideal lifestyle, or even planning for wealth succession, early planning of your long-term retirement investments is a necessary step.

Advantages and precautions of ILAS

1. With a wide range of investment choices for asset investment, investors have the flexibility to invest in volatile market conditions;

2. Offers investment choices with cash dividend distributions to increase passive income but there is no guarantee of the amount and frequency of dividends, and the net value of the investment choice will also decrease when the fund corresponding to the investment choices distributes dividends to shareholders;

3. Free unlimited fund switching, some insurance products offer the ability to change the insured person or policyholder, which facilitate wealth succession.

You should consider the relevant risks before purchasing ILAS

1. Investing in the markets can be volatile. Before making any decisions, it's important to understand your own risk tolerance, the risks of your investment choices and the fees and charges of the investment plan. Professional advice may be necessary depending on your needs.

2. ILAS is suitable for long-term investors and if you surrender the policy prematurely or fail to pay premiums, it may result in higher surrender charges and a loss in account value.

3. Cash dividends should not be considered as guaranteed. When choosing an investment choice with cash dividends, you should pay attention to the source, amount and rate of dividends.

4. The value of the policy is affected by investment risks and market fluctuations, which may lead to fluctuations in death benefits and income. Various fees and charges will be levied by the insurance company for ILAS. In unfavorable market conditions, the overall return of ILAS may be lower than expected.

Financial planning should not remain unchanged. In different market conditions, it is important to choose products that are suitable for you in order to achieve financial goals effectively.

_Disclaimer

_{The information contained in this material is for informational purposes only and is not intended to constitute any recommendation or advice to any person. Readers should not make any decision based solely on the information contained herein. Before acting on any information in this material, readers should consider their personal situation and seek independent advice.}

_{The information contained in this material does not constitute an offer for the purchase or sale of any insurance products or services. No insurance product or service is deemed to be offered, marketed or solicited for sale in any jurisdiction in which such offer, marketing or solicitation would be unlawful under the laws of such jurisdiction.}

_{Zurich Insurance (Hong Kong) has based this material on information obtained from sources it believes to be reliable, but it does not warrant the correctness, adequacy and completeness of the information contained herein.}

_{The information contained in this material may not be reproduced either in whole, or in part, without prior written permission of Zurich Insurance (Hong Kong). In no event shall Zurich Insurance (Hong Kong) be liable for any damages or losses arising out of or in connection with the use, reliance on or distribution of the information contained in this material by any person.}

_Source

_{1. [2023 Financial Review] One chart shows the performance of various global assets (yahoo.com)}

_{2. It costs 6 million to raise a child | Sing Tao Daily (singtaousa.com)}