“Lack of interest. Insufficient knowledge. Low financial literacy. Shortage of funds and capital.”
These are only a few of the many reasons why many Malaysians are deterred from going into investment opportunities, as quoted by our Youth and Sports Minister Khairy Jamaludin at the launch of the InvestSmart Fest 2017, held back in October 2017 at the Kuala Lumpur Convention Centre (KLCC).
Where there is a will, there will certainly be a way. Thus, in helping you find the right way for your investment journey, here we highlight 5 potential avenues for you to evaluate that might fit your investment personality and criteria.
#1 – Tabung Haji
Suitability: Malaysian Muslims of all ages
Hassle Level: Non-existent
Comfort Level: Ease of mind
Potential Returns: 3.25% – 9.5% based on past performance
Description: Tabung Haji is a government-linked investment company which is catered to facilitate Malaysian Muslims in fulfilling their fifth religious obligation of performing the Hajj pilgrimage. It serves as a fund for individuals to save money to perform Hajj, hence the name Tabung Haji.
Any Malaysian Muslims are able to open an account and start saving. Depositors are allowed to withdraw their savings anytime for any amount, up until RM2500 if the depositor has registered to go to Hajj.
Recommendation: While Tabung Haji is only available for the above group, it is certainly an investment not to be passed as 60% of the Malaysian population are eligible for this option.
#2 – Fixed Deposit
Suitability: Those with a little bit of a capital, preferably more than RM500
Hassle Level: Requires a little bit of discipline and patience
Comfort Level: Requires a little bit of convincing knowing you’re unable to use your money for a period of time
Potential Returns: Depending on the amount of deposit and the duration, generally around 2% – 5%
Description: Like how it is named, a Fixed Deposit is essentially a deposit you make in a bank for a fixed period in return for an percentage of dividend at the end of the period.
The dividend offered varies between banks, but generally they are more than what you can earn from a savings account.
Recommendation: If ever you’re looking to build savings discipline in return for respectable dividends, FD is the way forward. This option is suitable for those with disposable cash that they’re comfortable in locking it somewhere for a period of time.
#3 – Unit Trust
Suitability: For those that want to up their investing game
Hassle Level: If you’re looking to do this seriously (i.e.: not because “my friends are doing it”), then this requires some moderate level of research and consultations to find the suitable ‘fund manager’ and investment portfolio.
Comfort Level: A considerable risk is involved as your money is being actively invested in your preferred investment portfolio, which can either give you returns or worse, lose your capital.
Potential Returns: Depending on the performance of the investment.
Description: A ‘unit trust’ is essentially a group of monies from various people who have the same investment goal, who then appoints a professional fund manager to invest these monies in the portfolio of our choices.
Due to the high volume of participation as well as monies involved (RM335.51 billion as of Dec 31, 2013), a stricter eye and focused attention is being given to the 38-unit trust management companies in Malaysia by the Securities Commission. They oversee and regulate all matters related to unit trust schemes.
Because of that, unit trust is quite secured for the average Malaysian investor.
Recommendation: If you are becoming more serious in investing and wouldn’t mind spending a considerable amount of resources in researching the ideal fund manager and unit trust provider for you, then this would be a level-up in your investing game as the potential returns are better than previous options.
Read Also: What Exactly Is A Mutual Fund
#4 – Stock/Shares Market
Suitability: For those that are well-versed in financial statements, quite attuned to the latest news and developments of companies trading in the Malaysian stock exchange and understand their inter-relations
Hassle Level: Comparatively high. You have to open a brokerage account which requires scouting for the best brokerage company as well as the most attractive opening fees
Comfort Level: Even if you don’t put all your eggs in one basket, there will always that one annoying black cloud following you around reminding you that while Rome wasn’t built in a day, it can certainly be destroyed in one
Potential Returns: Depending on your timing, either extremely lucrative or extremely unfortunate if you sell your shares below the price you bought them for
Description: Investing stock market favours those that are fairly literate in financial statements and are passionate in following the latest happenings of the corporate world. They would then been exposed to the jargon and triggers that would constitute as ‘performance indicators’ for a company, which is vital in evaluating which stocks to invest in.
Recommendation: Unless you’re very passionate about the performances of companies and following their latest news, you might be better off keeping the stock market at a distance.
Suitability: For those people that just have a knack for reading the signs of a good piece of property as well as access to a large pool of capital
Hassle Level: Extremely high
Comfort Level: Extremely risky
Potential Returns: Highly lucrative when done correctly
Description: The math is simple: You buy a property and sell it off at a later date at a premium or rent it out for a respectable and consistent profit.
But when you take into account the great deal of hassle and stress it requires pre-acquisition (expensive deposit, administrative/legal fees, lengthy processing period, etc.), during acquisition (loan approval, following up with property agents, etc.) and post-acquisition (furnishing, finding tenants/buyers, maintenance, repair works, etc.), the whole ordeal of acquiring property can be seen as extremely tiresome if one doesn’t have the stamina for it.
Unless you’re doing this as a full-time commitment, it simply is not worth the trouble as this will eat up a lot of your energy, time, and stress on top of your full-time job.
Recommendation: Recommended for highly experienced, skillful, and passionate investors who have access to a large pool of capital and time. Not recommended for amateurs or beginner investors.
Conclusion? When there’s a will, there’s certainly a way.
With a wide berth of information and investment knowledge available on the internet and beyond, there’s no reason for anybody not to start leaning about the many investment options available to them. With enough knowledge and careful research, millennials should be able to grow in confidence and start investing in an area/areas where they are most comfortable with and potentially reap the rewards of the investment(s).
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