What no one tells you about investing in Malaysia

Here’s what you often hear about investing – it’s important; you should do it early; you shouldn’t put all your money in one basket (one type of investment vehicle).

Instead of dwelling on these, how about focusing on what people don’t tell you about investing in Malaysia?

1: It’s boring

After the initial excitement, all you can do is wait it out. But remember to review your investment occasionally, just in case it’s not going in the direction you were hoping for.

When this happens, what you have to 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 investments are risky, you might want to move some of your money to safer options.

2: There are investing styles

Generally, there are two main styles: passive investing or active investing.

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 pay off. Active investors spend a lot of time analysing documents, looking for tiny nuggets of information that most people miss, and hope that their “if x, then y” conclusions are correct.

One style is not better than the other, mainly because that depends on the individual’s skills and luck.

3: There are old and new types of investments

The old or established types of investments stand the test of time. These have history; “this is what my parents, grandparents and great-grandparents invested in” type of investments. These include stocks, gold and property.

Newer types of investments can be broken down into two categories: the ones that are completely new (cryptocurrencies, for example), and the ones that use technology to make investing in the established investments more user-friendly and efficient. Summed up in a word – fintech.

Here are some examples of fintech:

  • Robo-advisory figures out your profile and risk aversion, then recommends mutual funds suitable for you (still in the early stages in Malaysia).
  • P2P lending connects lenders to borrowers. Lenders get paid their capital plus interests when the borrower pays up by the end of the term.
  • Equity crowdfunding allows investors to buy into small businesses with the potential of becoming huge.
  • Cryptocurrencies is a completely new type of store of value. Note: super risky.

There are websites and apps that educate and/or make it extremely easy for one to buy traditional investments like gold (HelloGold), stocks (Asukabu) and mutual funds (Fundsupermart).

Not surprisingly, tech-savvy individuals are receptive to fintech companies.

4: Syariah and non-Syariah options

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 and many of its popular investment options are Syariah-compliant by default (i.e. ASB).

There are Islamic ETFs, Islamic REITs, Sukuk (bonds), stocks from Syariah-compliant public-listed companies – the list goes on.

5: How investing works

All types of investment generally fall into one of these categories:

  • Buy low, sell high (capital appreciation) i.e. currencies, properties, stocks, collectables.
  • Buy, keep, and get a bonus (dividend yield) i.e. mutual funds, unit trusts, fixed deposits, 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.

6: Your personality influences your investment preference

Your likes and dislikes, habits, behavioural tendencies – they all factor into your choice of investment vehicle.

If you are resource-conscious and defensive of your free time, you’re likely to be a passive investor – one who prefers to sit and wait.

One of the more dangerous behavioural types is the “instant gratification” type i.e. people who want high returns on their investments, fast.

7: Who to trust when it comes to investment advice

Only slightly more than a third of us (37%) seek 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 asked why professional advice is not sought, many Malaysians say they simply prefer to do it on their own.

According to the same publication, it’s not because Malaysians are proud, it’s more because they 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.”

8: You CAN invest in investment products offered in other countries

One can open Singapore and US investment accounts using some creative banking but there’s extra headache because exchange rates are involved.

This article first appeared in ringgitohringgit.com

Suraya is a corporate writer-for-hire and the blogger behind personal finance website Ringgit Oh Ringgit. She is more of a minimalist, less of a consumerist, a konon DIY enthusiast, a let’s-support-small-businesses-over-big-corporations kinda girl. Prior to her current role, she worked in various capacities within the non-profit industry.