A sound MPF investment attitude (II): invest long, don’t time the market

This article is a rewrite of a report from August 2012.

MPF exists to fund retirement; its design centres on long-term investing and discourages frequent fund-switching on short-term price moves. An AXA insurance executive wrote then on cultivating the right attitude — this is the second instalment.

How long is the MPF investment horizon?

Up to 40 years. The law allowed early withdrawal before 65 in only five specific cases: early retirement at 60 with permanent cessation of employment, permanent departure from Hong Kong, death, total incapacity, and accounts under HK$5,000 with no contributions in the past year and no intent to rejoin the workforce. For a worker starting at 21, the horizon could stretch 40 years.

Why not time the market or trade frequently?

Because speculation doesn’t suit a long-term system. Many investors chase short-term opportunities, but making swift, sound calls in fast markets is hard. Rushed decisions go wrong easily; frequent switching also leaves you overexposed to risk.

And don’t steer by the stock market alone. MPF invests through funds — even equity funds rarely move in step with headline indices, since diversification means no single-stock or single-region bets.

When should you review your portfolio?

By life stage, every six to twelve months. Start from your age, finances and milestones, assess risk tolerance, and set the period’s goals: the young can be bolder, mid-career should lean steady, and near-retirees should lock in gains at medium to medium-low risk.

Regular reviews keep the portfolio from drifting off your objectives, sharpen your grasp of its status, and build investment discipline.