12 Types of Investment Available in Malaysia and The People Who Have Them

If you were to check out personal finance and investment commentaries – from blogs, forums, websites – you’ll see that different people have their preferred investment vehicles (types) based on their personality.

It’s very interesting, because after a while you start seeing a pattern: people who prefer investment X tend to be Y. It’s super fascinating.

Look at this from a behavioural point of view. Many personal finance and investment experts like to say ‘select an investment that works for you’, but what does that mean exactly? How do you choose from many different types of investment available in Malaysia?

Well, one way to kind of eliminate investments that ‘does not work for you’ is by reading on below.

What I’ve done is basically compile different types of investment available in Malaysia and give you the defining traits of each type of investor. There might be people who don’t fit all the traits, but I think in general it’s pretty accurate.

Related: What to invest with RM1000

#1 Property

Defining traits of people who invest in this investment vehicle:

• Likes to look at properties and might even do this unconsciously. Also looks at finishing, distance to amenities (schools, petrol stations, banks, grocery shops etc) and linkages to public transport and major highways.
• Usually look for indicators like rental demand or appreciation rate of a location before making their purchase.
• Follows news from major developers. Knows who are the bad developers so they can avoid buying their properties (to avoid buying properties that never get completed).
• Tend to be better at spatial intelligence. They know the direction to KL no matter where they are. They tend to know shortcuts that even Waze don’t know.
• If they don’t have capital (money) to buy property and/or don’t want to deal with tenants, they might opt for REITs.

Related: 5 Things I Learned About REITs in Malaysia (From a Bursa Malaysia-Sponsored Workshop)

#2 Unit trust/Mutual funds/ETFs

Defining traits of people who invest in this investment vehicle:

• Prefer someone else/another company to handle their money on their behalf. May or may not know how the money is being invested, but ultimately don’t care as long as the average profit is alright.
• Prefers long-term, stable and safer approach to investing. This money is earmarked for retirement, not for next year’s holiday.
• Some get their unit trust investment through their investment-linked insurance products.
• Usually, the particular unit trust/mutual fund investment is picked based on a recommendation from agents or friends. For example, ‘I got this one because my agent said at my age I should concentrate on growth fund’.
• If they are familiar with macroeconomics, they will make very specific picks. For example, ‘I want to invest in developing countries in Asia Pacific’ or ‘I want the fund to include precious metals’ or ‘I want to invest in real estate in Asia’.
• Might not know how much their fund manager charge them for management fee. Go check – it usually ranges from 1% up to 5%. The lower the better. The lowest is the Amanah Saham stuff, next is ETFs offered by Stashaway at 0.2-0.8% in fees. Bonus: You get 50% off management fees for the first RM100k invested in the first 6 months through this link: https://bit.ly/2JNs4pU

#3 Stocks (Blue Chip)

Defining traits of people who invest in this investment vehicle:

• Finds high-level company drama interesting. Follows major announcements of big companies via Business newspapers and/or websites and/or social media.
• Probably works as a white collar worker. Maybe in an MNC (multinational corporation).
• Are actual fans of the companies. That’s probably why they decide to buy their stocks.
• Since they own a part of the company, they tend to be very opinionated about the company’s business strategy.

#4 Equity Crowdfunding (ECF)

(Someone who gives money to new businesses, usually early-phase startups).

Defining traits of people who invest in this investment vehicle:

• Generally divided into 3 categories: retail investor (individual), angel investor (individual) and businesses. Considered a high-risk investment, kind of all-or-nothing (may lose all investment money).
• Might be philanthropic as they only invest in businesses that they believe in and reflects their values.
• Probably goes to a lot of networking events – ECF investors usually hear of these startups via word-of-mouth recommendation.
• Has secret daydreams about choosing startups that eventually become unicorns

#5 Fixed Deposits (FDs)

Defining traits of people who invest in this investment vehicle:

• Likes surety, prefers small profit over no profit. Compares rates from banks and takes advantage of special offers.
• May use it as a way to lock their savings somewhere they can’t touch it.
• Attractive to non-Bumis (as this is the best safe alternative to ASB).

#6 Gold/Silver

Defining traits of people who invest in this investment vehicle:

• A bit old school. Prefers the ‘tried and tested’ route. Knows that gold (and to a lesser extent, silver) can be used to hedge against fiat.
• Might hold gold coins (or bars if they’re ballin’). If they’re paranoid about keeping it at home (risk of being stolen), they’ll pay for safekeeping services.
• If not, they’ll buy ‘e-gold’ issued by banks or private companies. The margin is not the best but at least it’s safe.
• Some consider their gold jewellery as an ‘investment they can wear’. They’re not wrong, technically speaking.

Related: How to Buy Gold in Malaysia, as an Investment

#7 Art/Antiques/Jewellery

Defining traits of people who invest in this investment vehicle:

• Tend to have a lot of money. Their art/antiques/jewellery investment is their ‘fun’ investment.
• Surrounds themselves and their home with art. Tend to appreciate good interior decorating.
• Familiar with names like Sotheby’s and Christie’s.
• Probably a history buff. Might take a liking to a particular time period for a particular nation (for example, Ming Dynasty). Collects items from this era for fun.
• If not a history buff, then they are probably the other extreme – modern/contemporary art buff.

#8 Fiat Currencies

(Fiat = Government-issued money, like RM or USD)

Defining traits of people who invest in this investment vehicle:

• Follows world news. Religiously. Cares about new laws, policies and regulations, especially regarding trade and finance. Knows and understands the Brexit and Venezuela situation.
• May do forex trading. May dabble/took a course in technical analysis.
• Probably tried a few trading platforms before sticking with one they liked.
• Might have learnt the importance of stop loss the hard way (or heard horror stories about it).
• Aside from fiat, might also dabble in commodities.

#9 Hedge funds

(Strategy-focused high-risk, high-reward investments)

Defining traits of people who invest in this investment vehicle:

• Idolises George Soros. If not idolise, then greatly respect him.
• Very rich. Probably a HNW or UHNW individual (high net worth or ultra high net worth). Has a fund manager. Maybe too busy for DIY investing.
• Believes in and have no problem with borrowing money to make money (leveraging).
• Hedge funds are not that common in Malaysia, so these people probably mingle more with the international folk and get advise/tips from them.

#10 Cryptocurrencies

Defining traits of people who invest in this investment vehicle:

• Maybe likes the internet a bit too much.
• Fascinated by the technology behind it (blockchain). Sometimes compares some cryptocurrencies to penny stocks for its ‘unlimited potential’.
• Takes (or should take) digital security seriously. Have heard the phrase ‘not your keys, not your coins’ way too many times.
• Knows its a high-risk investment. (By right) They should be able to take the hit from price volatility/swings.

Related: FAQ: Everything You Should Know about Bitcoin in Malaysia, as a Newbie & FAQ: How to Invest in Cryptocurrencies in Malaysia (Aside from Bitcoin)

#11 P2P financing platforms

Defining traits of people who invest in this investment vehicle:

• Not a particularly sexy type of investment. Kinda boring. There’s no real interaction beyond ‘hey this company needs to borrow money and they can pay back x% by [date]. You in or not?’
• Tech-savvy and familiar with fintech landscape.
• Knows what is supply chain financing and invoice financing.
• Favoured by people who like short-term investments.

Related: I Asked Hard Questions to the CEO of Funding Societies Malaysia

#12 Skim-Cepat-Kaya/ Get Rich Quick Schemes

Defining traits of people who invest in this investment vehicle:

• Thinks they found a ‘hidden gem’ investment that is both (1) high profit and (2) easy.
• When they were approached by friends/family/advertisement, they were attracted by these words: ‘Guaranteed Profit!!‘, ‘Passive Income’, ‘Easy Money’, ‘Fast Paying’, ‘Start with $xx, earn $xxxxx’.
• If the investment gives profit, they tend to give positive word of mouth about it to friends and families and encourage them to join too. Why not? Can earn referral profit for them while ‘helping’ others grow rich. It’s win-win.
• More prevalent in tight-knit communities, especially if it was promoted by community leaders (teachers and ustads).
• If they get into the ‘programme’ fast, they might make money. If they joined an oversaturated one, they will probably lose their money.
• Kind of stubborn and loyal to the cult, up until they lose all their money.

Related: How to spot investment that are actually investment scams

Conclusion

Many, if not most investors don’t just invest in one type of investment. Taking a few is common (and the smart thing to do). The safest strategy is to put more money into the safer types of investments than the riskier types of investments.

In this list, I would say Fixed Deposit is the safest type of investment, followed by mutual funds and unit trusts (depends on which ones), then blue chip stocks (depends on which ones).

By this point in the article, I hope you found at least one type of investment that ‘fits your personality’, so to speak. Some investing vehicles work for some, but not the rest – we’re all comfortable with different things. For me, I like passive investing. Check out my passive income guide (and what I personally invest in).

Liked this article? Do you identify with any of the characteristics? Let me know in the comments 🙂

Further reading: 6 Things to Know When You’re Investing for the First Time