Investing is one of those things that you know you have to do, but probably get confused with, in the beginning.
To me, investing is all about finding the right fit between your personality and your investment vehicle. Let’s start with what you can invest with RM1000. This guide is Millennial-friendly.
First off – Pay off debt
Before you start investing, take note of what you owe first. Credit cards, bank loans, and other high-interest loans MUST be paid off first.
Why? Because if you skip this step, whatever profit you get from your investments goes straight into paying off those interest instead of padding your pocket. No point investing if like that.
As a rule of thumb, education loan and mortgage can be considered good debt. The rest, especially if they charge around 8% or more in interest is bad debt.
No bad debt? Good. Go on to the next line.
Invest with RM1000: Safe mode
Safe investments give relatively low profits, but AT LEAST THEY GIVE YOU PROFITS.
‘Safe’ here obviously depend on some factors:
Malays/Bumiputeras – You have your freaking genetic lottery. Get ASB (Amanah Saham Bumiputra). They consistently give between 7.xx-8.xx% returns. Done. So many resources on this so don’t ask me how, you know how to use Google right.
My other friends who unfortunately have to live under this unfair Malay supremacy rule –
Fixed deposit: It’s not as much, but your money will at least keep up with inflation. The banks make it confusing to pick the best one. Lots of offers and jargon here jargon there.
Don’t take anything less than 3% (there are even 4.x% ones). Ask about extra fees you may have to pay (ie if you take out before the fund matures, must pay or not?). GenXGenYGenZ has this page listing all FD rates (not sure if regularly updated). Look also at RinggitPlus and iMoney comparisons.
Alternative: High-interest savings account: DividendMagic recommends Maybank GIA-i account which offers 3.45% (as of time of writing). You can make use of comparison sites too, like this RinggitPlus and iMoney one.
ASM (Amanah Saham Malaysia) and similar: You have your ASM, ASW, ASG and whatever. They are probably the best safe option, but I’m aware options for non-Bumis are limited and not as attractive 🙁
PRS (Private Retirement Scheme): It’s like secondary, optional EPF. I contribute ~RM3k per year to my PRS to take advantage of tax relief.
EPF (Employees Provident Fund): If you work, you (should) already invest in this. DO NOT REDUCE YOUR EPF CONTRIBUTION!
Roboadvisory platforms: I *love* this option because they help you find out whether you’re a Very Conservative or Very Aggressive or somewhere in between investor, then give you a suitable fund. Related: Guide: How and Where to Invest in ETFs in Malaysia
Insurance: Not strictly an investment, yes, but I argue the best offense is useless without a good defense. It’s like putting all attack-type players in your party with no healers – bad idea. I personally have a medical card and PA insurance, and thinking of adding other types of insurance soon. Read my insurance article.
Invest with RM1000: Medium level
Unit trusts: Usually pay monthly. Can also take from EPF money. I bumped this to medium because they require a higher understanding before jumping in, so you don’t simply pick one blindly. Disclaimer: I know very little about unit trusts. Lots of agents can tell you more about this. CompareHero has a nice, 3-part guide to investing in unit trust.
REITs (Real Estate Investment Trusts): Buy property ‘stocks’ and get returns. Some knowledge in which areas do well
Gold: Considered a safe-ish option, has a good track record overall. Popular as a long-term investment. See my guide at How to Buy Gold in Malaysia, as an Investment
Invest with RM1000: Hard level
Property: Die ah. Not impossible, but highly stressful. This combines getting 100% (or more) in bank loan then immediately renting it out to people for more that your monthly payment.
You probably need backup money for many things, from making the house tenant-able, to paying some random property fee dunno come from where.
Currencies: This can be fiat currencies (MYR, USD, GBP etc) and cryptocurrencies.
Two ways to do this – (1) buy currencies at low price then wait for it to come (IF it comes up). For example, if you bought USD when it was RM3.50, you get to sell it for RM4.xx (whatever the exchange rate is now).
(2) Play forex. Highly technical, high chance of effing it up and getting into further debt. Highly not recommended.
Stocks: Buy shares of companies and hold it, and hopefully it’ll go higher and you get good dividends. Stocks is not for everybody. Ideally, you must know how to read company reports and navigate yourself through many, many jargons.
The best stocks for beginners are what they call blue-chip stocks, aka shares in strong companies with a good track record. Disclaimer: I know almost nothing about stocks. Read DividendMagic’s blog – I swoon over his reports.
Equity Crowdfunding (ECF): You give money to startups you like in return for equity (something like shares or your stake in the company). This is a fairly new type of investment available in Malaysia, and suitable for people who believe in a particular business model and/or the founder(s)’ chance for success.
The downside is if the company end up folding, you won’t get your money back.
To do this, go check out ECF platforms and browse through the startups they offer. See their business model, ask whatever you want about the company, and make your decision from there. Most are early-stage startups, but there are also some established businesses available.
P2P Financing: Another new type of investment available in Malaysia, where you can loan money to businesses (personal reasons not allowed) in return for an agreed profit. Personally, I use Funding Societies (note: referral link. I like the auto-invest bot. Use the link so both of us get RM30 extra)
If you’re interested to raise money for your business, check my All The Ways to Raise Money for Business in Malaysia, Compiled article.
‘Invest’ with RM1000: You may get nothing in return, even your initial money
Investment scams: Too many people fall in investment scams. These are things that promise high, high returns on investment but end up cheat you and you won’t get your money back. I wrote about avoiding investment scams. Read here.
Collectibles: Some items can be sold for a higher price, yes, but you must know the ins and outs of that whole industry. Figurines, rare cards, whatever. Don’t simply buy then hope it can be sold. Then that’s just gambling. I personally stay away from collectibles because I know shit about it.
Own business: Lots of work must be put in it in order to succeed. We like to hear about rags to riches success stories, but statistically speaking something like 9 out of 10 businesses failed in the first year (I have a failed business, too).
Pick your risk profile – do you want to be safe but get low returns, or risky but high returns? Perhaps one of each, just to balance it out? If you are just starting out, perhaps start with the safer ones first (the key is to START), then learn as you go along.
Which one to pick from the above? Honestly, follow your personality. I don’t care about properties, so I don’t even bother with REITs and property.
Rather than pick the ones you want, delete the ones you don’t want. Or pick the ones you enjoy reading about and know a lot already. Stocks appeal to people who like keeping up with news about big companies. I absolutely love digital currencies, so that’s my poison.
Try reading my 12 Types of Investment Available in Malaysia and The People Who Have Them article for clues on which type of investor are you. Also read the 6 Things to Know When You’re Investing for the First Time article.
The best investors are long-term investors. Aka if you have a ‘get rich quick’ mindset and an investing novice, you’ll probably lose your money. Fact.
Questions? Give em here or comment via FB, Twitter, etc 🙂