Investing is one of those things you know you have to do, but probably get confused with, in the beginning. In reality, investing is all about finding the right fit between your personality and your investment vehicle. Let’s start with what you can invest in with RM1,000.
First off – pay off existing 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 don’t, whatever profit you derive from your investment goes straight into paying off the interest on these loans instead of padding your pocket.
As a rule of thumb, education loans and mortgages can be considered good debts. The rest, especially if you are charged around 8% or more in interest, is bad debt.
Invest with RM,1000: Safe mode
Safe investments give relatively low profits, but at least you get profits.
“Safe” here obviously depends on some factors:
• Malays/Bumiputeras: invest in Amanah Saham Bumiputra as it consistently yields between 7.xx – 8.xx% in returns.
• Fixed deposit: It’s not as much, but your money will at least keep up with inflation. Banks make it confusing to pick the best one, but do not take anything less than 3% (some offer 4.x%).
Ask about extra fees you may have to pay (i.e. if you make a withdrawal before the fund matures).
• High-interest savings accounts: DividendMagic recommends the Maybank GIA-i account which offers 3.45% (at the time of writing).
• ASM (Amanah Saham Malaysia), ASW and ASG: These are probably the best safe options although the options for non-Bumis are somewhat limited and not as attractive.
• PRS (Private Retirement Scheme): If you are under 30, you can get RM1,000 with a RM1,000 contribution.
• EPF (Employees Provident Fund): If you work, you (should) already have invested in this. Do not reduce your EPF contribution.
• Insurance: Not strictly an investment, but get a medical card and PA insurance, and consider adding other types of insurance soon.
Invest with RM1,000: Medium mode
• Unit trusts: Usually monthly. EPF savings can be used too. This is considered a medium level investment because it requires a higher understanding before jumping in, so don’t pick one blindly.
• REITs (Real Estate Investment Trusts): Buy property “stocks” and get returns. Some knowledge in which areas do well required.
• Gold: Considered a safe-ish option because it has a good track record overall. Popular as a long-term investment.
Invest with RM1,000: Hard mode
• Property: Not impossible, but highly stressful. This involves obtaining a 100% (or more) bank loan, then immediately renting the property out for more that your monthly loan repayment. You will probably need backup money for many things, from making the house tenant-able, to paying random property fees. Websites that are a good resource for first-time property buyers are Ariff Shah and Kopi and Property.
• Currencies: This can be fiat currencies (MYR, USD, GBP etc) and cryptocurrencies. Two ways to do this:
(1) Buy currencies at a low price then wait for it to go up (IF it goes 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, and there’s a high chance of getting into further debt. Not recommended at all.
• Stocks: Buy shares in companies and hold it, and hopefully it’ll go higher and you will get good dividends. Stocks is not for everyone. Ideally, you must know how to read company reports and understand the terminology used. The best stocks for beginners are what they call blue-chip stocks aka shares in strong companies with a good track record.
• Equity Crowdfunding (ECF): You give money to startups you like in return for equity (something like shares or a 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 folds, you won’t get your money back. Before you commit, check out ECF platforms and browse through the startups they offer. See their business models, ask whatever you want about the company, and then make a decision. While most are early-stage startups, there are also some established businesses available.
Here are all the available equity crowdfunding platforms available in Malaysia now:
– PitchIN: Focuses on tech startups, links with incubator WatchTower & Friends. Open for startups in ideation stage
– FundedByMe Malaysia: Good if your business wants to attract international investors, not just Malaysians
– Ata Plus: Blockchain-enhanced ECF platform
– Eureeca: Good if your business wants to attract international investors, not just Malaysians
– CrowdPlus.Asia: Accepts established businesses across different sectors looking for growth
– Crowdo: Connects Asia’s startups to global markets
• P2P Lending: Another new type of investment available in Malaysia, where you can loan money to businesses (personal reasons not allowed) in return for an agreed interest rate. No banks are involved for this type of lending; it’s a unique fintech offering.
It’s risky because there’s always the chance that the borrower will default aka not pay back the loan. They say you should avoid lending to just one company to reduce loss.
Here are all the available P2P lending platforms in Malaysia now:
– B2B FinPal
– Ethis Kapital/Kapital Boost: The only one that is Syariah-compliant
– undedByMe Malaysia: Good if your business wants to attract international investors, not just Malaysians
– ManagePay Services: No website yet
– Modalku Ventures/Funding Societies
‘Invest’ with RM1000: You may get nothing in return, even your initial investment
• Investment scams: Too many people fall for investment scams. These are investments that promise very high returns on investment but end up cheating you because you won’t get your money back.
• Collectibles: Some items can be sold for a higher price, yes, but you must know the ins and outs of that particular industry. Figurines, rare cards, whatever. Don’t simply buy these, then hope it can be sold. Then that’s just gambling.
• Own business: Lots of work goes in, in order for it to succeed. We like to hear rags to riches stories, but statistically speaking, nine out of 10 businesses fail in the first year.
Pick your risk profile – do you want to play safe but get low returns, or play risky and get high returns? Perhaps one of each, just to balance it out?
If you are new to investments, 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? Follow your personality. 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 about already.
The best investors are long-term investors. So if you have a “get rich quick” mindset but are an investing novice, you’ll probably lose money fast.
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.