Here are some of the things you always hear about investing: it’s important, you should do it early, and you shouldn’t put all your money in just one basket (one type of investment vehicle).
I’m not going to focus on that here. This article is all about what people don’t tell you about investing in Malaysia. Or not enough, anyway.
Let’s start. If anything is inaccurate, let me know and I’ll edit.
#1 – It’s boring
After the initial excitement (depending on your character, tbh), all you have to do is wait. And review back occasionally, just in case it’s not going in the direction you’re hoping for.
When this happens, what you do is re-allocate your investment. Move the money around, see if other investment options make more sense to your situation. For example, if most of your investment is risky, you might want to move some of the money in there to safer options.
You can find out what’s generally considered low-risk, medium-risk and high-risk in this article: What can you invest with RM1000? A quick guide
So yeah, most of the time you do nothing.
#2 – There are investing styles
There are two main ones: passive and active investing. Active investors, if they’ve read this far, would have already disagreed with Point #1 lol.
Active investors act as their own portfolio managers and always look for ways to beat the market, and take bigger risks.
Depending on their abilities, some of those risks might pay off. They analyse documents and information a lot, look for tiny nuggets of information that most people miss, and hope that their ‘if x, then y’ conclusion is correct.
I won’t say which style is better than the other, because that really depends on the individual’s skills and luck, but I can say that I personally prefer passive investing because I have other shit to do than read those boring financial papers. Note: boring is subjective – if you enjoy it, good for you fam. Rock on.
For further reading on this topic, check out this Investopedia article.
You can read my article about passive investment options available in Malaysia here.
#3 – There are old and new types of investments
The old types of investment – okay maybe won’t call them old, let’s call them established instead – stood the test of time. They have history; ‘this is what my parents, grandparents and great-grandparents invested in’ kinda investments. They include stocks, gold, property, la di da.
Newer types of investments can be broken down in further two categories: the ones that are completely new (cryptocurrencies, for example), and the ones that use technology to make investing in the
old established investments more user-friendly and efficient. Summed up in a word; fintech.
Fintech covers a whole load of stuff, and we won’t go into detail here, but here how they are related to investing specifically:
- Robo-advisory figures out your profile and risk aversion, then recommends mutual funds suitable for you (in early stages in Malaysia)
- P2P lending connects lenders to borrowers. Lenders get paid their capital plus interest when the borrower pays up by the end of the term (if they don’t default ie run away with your money)
- Equity crowdfunding allows investors buy into small businesses with the potential of becoming huge
- Cryptocurrencies is a completely new type of store of value. Note: super risky
- Then there are websites and apps that educate and/or makes it super easy for you to buy traditional investments like gold (like HelloGold), stocks and mutual funds (Fundsupermart)
Not surprisingly, tech-savvy individuals are receptive to fintech companies.
#4 – There are Syariah and non-Syariah options
I think we take this for granted in Malaysia. There are platforms here that allow you to filter mutual funds by its Syariah status, or at least make it easy for you to find the information.
Malaysia is one of the top Islamic Finance capitals of the world – something we should be proud of! Many popular investment options come as Syariah-compliant as default (ie ASB).
There are Islamic ETFs, Islamic REITs, Sukuk (bonds), stocks from Syariah-compliant public-listed companies – list goes on. This iMoney article provides a good overview.
Sometimes and briefly, I get jealous of my non-Muslim friends over the wider options they have. But on the flip side, I don’t have to do as much research on the ones I can’t have, so that’s good I guess, less analysis paralysis. Plus, more pahala points for me.
#5 – How investing kinda sorta works
As far as I know, all types of investment generally fall into one of these categories
- Buy low, sell high (capital appreciation) – currencies, properties, stocks, collectables
- Buy and as long as you keep, you get bonus (dividend yield) – mutual funds, unit trust, FD, REITs, properties
Some types of investments may overlap. For example, properties can be both. If you buy low and sell high, that’s capital appreciation. If you buy and rent it out, that’s dividend yield. Stocks can be both, too.
It took me a long time to realise this :/
#6 – Your personality influences your investment preference a lot
Like, seriously. It does. Your likes and dislikes, your habits, your behavioural tendencies – they all factor into your choice of investment vehicle.
Like, I know that I’m
lazy resource-conscious and defensive of my free time. So my investment style is mostly passive. Sit and wait. While I enjoy life. I also like technology and the novelty it brings, not just to the finance world. So I like fintech products.
I covered this topic a bit more in full in the 12 Types of Investment Available in Malaysia and The People Who Have Them article.
One of the more dangerous behavioural types is the ‘instant gratification’ type. Ie people who want high returns on their investment, fast. It’s best to outgrow that one. If not your future very pain.
#7 – Who to trust when it comes to investment advice
Yo, Millennials, we’re a sceptical lot. We know – or learned the hard way – that some investment advice is bad. Only slightly more than third of us (37%) sought professional advice.
When we do, we ask for advice on savings and investments (56%), advice on mortgages or loans (41%), retirement planning (32%) and debt counselling (22%). Source: This Asian Institute of Finance publication about Malaysian Gen Y and Money
When we are asked why we don’t get professional advice, we say we prefer to do it on our own.
According to the same publication, it’s not because we’re sombong, it’s more that we distrust financial institutions and agencies.
The exact wording was ‘The level of distrust is alarming for financial institutions and agencies/associations and is consistent with the populous view of the sector post the financial crisis. Such an environment has led to a distrust of financial advisors.’
So okay, if we distrust financial institutions, who do we trust then? You wanna comment on this? Who do you trust? Give me specific organisations or names. I want to online-stalk them.
#8 – You CAN invest in investment products offered in other countries!
Tbh I’m not the best person to talk to about this. I just know that you can open Singaporean and American investment accounts using some creative banking. Have seen people do it on Lowyat – seems like there’s extra headache with exchange rates involved. If you have more info or links, do share!
Personally I’m not attracted to this option so much – many of them don’t have Syariah status. And I’m too lazy to do the research.
What are some other things about investing that you figured out on your own? Super curious about this. Please let me know! I love hearing people’s finance-related ‘aha’ moments.
As always, if you liked this article, share it around 🙂