Capital preservation is the top priority for over-60s

There is a Chinese proverb that says, "An elder in the family is like having a treasure." This means that the elderly, with decades of life experience and broad knowledge, can find solutions to life's or work's tough problems based on their experience. However, today's investment market is unpredictable, and even seasoned investors may not be able to find solutions referring to experience. 

For the past thirty years, buying property in Hong Kong is a safe bet for accomplished investors. After the 1997 Asian financial crisis and the 2008 financial tsunami, the property market went through rapid recovery. The survivors of these two crises further solidified their belief in the immortality of property investment.  They believe it is to buy low and refinance whenever it is appreciated, and to buy more as follows. They repeat this process indefinitely; they could eventually become billionaires. 

For these experienced investors, the process of consistent refinancing was an essential means of scaling their wealth. While they had practiced using leverage, they usually did not go to extremes. However, this group of seasoned investors suddenly lost control in 2017. They refinanced all their company assets; some even took out a loan from investment banks with a 10% annual interest rate so that they could take part in a major acquisition to get a 75% stake in the Central Centre. This acquisition has now pushed several veteran investors to the brink of bankruptcy. 

In Hong Kong, most of these seasoned investors were over seventy years old, and while their second-generation heir was taking over the family business; they made a big mistake in handover period. As the first generation of these wealthy families had gradually relinquished power, they still played a dominant role in large-sale transactions. In contrast, the Li Ka-shing family, Hong Kong's richest man, has made no major investments in the past decade. Instead of active buyouts, his family has been continuously selling company assets. Nowadays, there is no doubt who the winner is.   

Whether you are a salaried employee or a company owner, you should try to avoid making bit-ticket transactions after the age of sixty, especially those heavy leveraged deals. Because at this age, a major investment mistake is irreversible. At the age of retirement, nothing is more important than preserving capital and keeping alive.