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2 Ways to Boost Your Savings Power

A recent survey conducted by the Hong Kong Deposit Protection Board revealed that, on average, Hong Kong people need HKD 725,000 in their bank account to have a sense of financial security, while full-time housewives need HKD 500,000. Assuming this figure is relevant and reliable: How can we actually amass this much cash in the bank? We have a couple of suggestions to help you get started.

According to the survey, bank deposits remained the most common means of savings, used by 73% of respondents, while investments came second, with 63% of respondents using them. Of course, we have to spare some of our monthly income into some risk-free way of savings, and bank deposits seem easiest. On average, Hongkongers with a habit of saving put in around HKD 7,000 into their bank account per month.

To save as much as possible, I recommend transferring however much you want to save into your bank account right after you receive your salary. The Motley Fool refers to this as “paying yourself first.” Making savings your first priority after you get paid reduces your chances of overspending during the following month, while ensuring that you have enough savings for other purposes. For example, you could arrange a regular transfer from your current account to your saving account; then leave the savings account untouched, and rely on the balance in your current account for daily spending.

To further increase your savings, consider arranging a time deposit with at least some portion of your savings. Given the current trend toward rising interest rates, banks are paying more for deposits in the bank – some as much as 2% p.a. for 12-month fixed deposits, which is higher than some dividend stocks! Since rates are expected to rise even further, I’d suggest trying to arrange shorter-tenured time deposits of three or six months, in order to take full advantage of future rate hikes.

To build our savings, we can only make friends with time, and gain interest through time deposits. To learn more about investing your money wisely to further add to your wealth, consult the other articles on our site.

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Disclosure: Johnny Chan does not own shares of any companies mentioned. Motley Fool Hong Kong is not licensed by the Hong Kong Securities and Futures Commission to carry out any regulated activities under the Securities and Futures Ordinance.