The concept of investment holding periods has profoundly changed in recent years due to increasing human longevity, according to HSBC investment experts Esty Dwek and Georgios Leontaris.
In many developed markets such as Monaco, Switzerland, Japan, South Korea, and Hong Kong, the strategy of gradually withdrawing from business life after age 60 is no longer suitable, as average lifespans approach the 90-year mark.
Esty Dwek, head of investment advisory for Europe, Middle East, and Africa at HSBC Private Banking, frequently encounters elderly clients who do not perceive themselves as old. "They feel they still have plenty of time to take on higher risks, continue running businesses, or even start new ventures multiple times", she said.
Financial markets, while experiencing downturns, tend to recover quickly. This trend has boosted investor confidence in increasing their risk tolerance, noted Georgios Leontaris, head of investment for Switzerland and Europe, Middle East, and Africa at HSBC Private Banking.
"They believe they have enough time to navigate market fluctuations and allow the market to generate value", he stated. Consequently, older investors are willing to trade short-term liquidity for long-term investments, confident they still have 20 or 30 years to benefit.
Many high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals even desire their investments to last for centuries. "They are not just thinking about their own lifespan but also about the 'longevity' of their assets", Esty Dwek explained.
Given the trend of increased longevity and evolving investment appetites, the two experts propose five core principles for financial planning across generations.
Define your investment horizon
First, determine the duration of your investment, its objectives, risk appetite, and who will be the heirs or beneficiaries. This broadens the planning perspective and helps build a portfolio that supports asset growth and generates income for multiple generations over decades.
A longer investment horizon also provides the added benefit of compound interest, where profits are reinvested to earn further returns. It also opens opportunities to engage in new sectors with future growth potential.
Build resilience and flexibility
Decades-long investing demands resilience to withstand market volatility and flexibility to adapt to individual and family changes over time.
Therefore, portfolios require regular review to update risk tolerance and rebalance asset allocations. This ensures the investment structure remains aligned with evolving horizons and objectives.
Effective portfolio management is also crucial for inheritance planning. Asset holders should maintain regular communication with their families to align on goals and mitigate potential future conflicts.
Prioritize diversification
A growing number of investors seek to optimize returns and reduce risk by diversifying their portfolios across geographies, industries, and asset classes.
Broad diversification combined with flexible asset allocation can help manage risk through various market cycles and significant economic shifts that may occur with extended lifespans.
According to Esty, a diversified portfolio with a long-term vision from the outset can largely operate independently, requiring only minor adjustments. This approach can lead to more stable returns, allowing older individuals more time for other pursuits.
 |
Elderly residents at Thi Nghe nursing home, TP HCM, 2024. Photo: *Quynh Tran* |
Returns are not everything
Investment strategies for those living longer often involve more criteria for success. This comprehensive approach includes overall well-being, healthy lifespan, and personal fulfillment.
Georgios Leontaris cited fields such as biotechnology and healthcare as examples that offer both personal and financial benefits.
Longevity can also be viewed more broadly. Esty Dwek noted that many younger investors connect their own lifespan to the planet's longevity. "They are pursuing investment strategies with sustainable and social elements", she said.
According to the expert, managing an investment portfolio for a century of life is not merely about ensuring capital endures over a long period. More importantly, it is about adapting to the changing needs of those who will access and use it.
This requires investment decisions that align with family values and expectations. Resilient, well-diversified, and future-focused portfolios will ensure assets not only serve one lifetime but also create value for many succeeding generations.
By Dy Tung
