There’s a popular Chinese proverb that says: “The best time to plant a tree was 20 years ago. The second best time is now.”
The same can be said of investing – the earlier you invest, the more time you have to accrue returns. While many people are aware of this, they often hesitate because there’s a perception that it takes a significant amount of funds and knowledge to start investing. Luckily, there are plenty of options available nowadays to retail investors (i.e the everyday rakyat), so it doesn’t take much to get started! Here’s a few options that you can consider depending on your risk appetite:
Fixed deposit
Risk: Low
Returns: 2.x% to 4.x%
Experience Required: None, just deposit the money and let it grow!
Starting Amount: RM600 onwards
This is perhaps the safest way to start off your investment journey. It’s generally a low-risk option that will help your money keep its value by staving off inflation. It’s a great way to save up while earning consistent returns on those savings.
Getting Started: Banks in Malaysia will offer you anything from 2.x% to 4.x% depending on various promotions that are available, and it is advisable to compare what all of them are offering on sites like iMoney before putting in your hard-earned cash. After all, this is essentially giving banks your money and allowing them to grow it on your behalf. So look around and be sure to get the best possible deal for yourself because you’re trusting others to handle your money!
REITs
Risk: Medium
Returns: 5% to 7% on average
Experience Required: Some research on property markets and portfolios required before investing
Starting Amount: About RM100
Real Estate Investment Trust (REIT) is, to put it simply, like a combination of the stock market and properties. Essentially, you are investing in a portfolio of commercial properties (eg. shopping malls, warehouses, office buildings, hotels etc.) with returns paid out from the collected rent. REITs allows retail investors to get into the property game with a relatively small amount, but it also generally provides consistent dividends at a higher than average rate compared to a single rental property.
Getting Started: You should conduct some research to see what types of properties are in the portfolio of each REIT. Let’s say you’re eyeing up the Sunway REIT – you should consider the types of properties in their portfolio and how popular they are. Are their malls consistently packed? What about the occupancy rate of their condominiums? Reading glossy reports may paint a rosy picture, but if you know the actual numbers on the ground, you’ll certainly feel a lot more confident in your investment. Once you’re convinced of the potential success of the REIT, find a broker that offers such services to get started. You can read more about REITs and how they work here.
Stock market
Risk: Medium to high
Returns: Varies from year-to-year but historical stock market average return is 10%
Experience Required: Research on companies you plan to buy stocks in is needed in order to forecast potential success
Starting Amount: 1 lot (100 shares), price will vary
It doesn’t take a lot of skin to get into the stock market game, and most people will have some idea of what trading entails. However, it’s also one of the hardest investments to get right. There are multiple variables to consider when purchasing a company’s stock and you’ll need to do plenty of research to ensure you have a base understanding of its health, prospects and viability. With that being said, you can really hit it big if you get it right but bear in mind that it goes both ways!
Getting Started: As with all investments, you’ll want to do some thorough research on the stocks you want to invest into. For example, if you want a piece of Maybank, it’s a good idea to read their latest annual reports, track the historical Maybank share price and keep abreast of recent news involving the company. You’ll also have to decide if you want to invest in individual stocks or index funds that can spread your risk more. Be sure to check out comparison sites like iMoney to find out which platform best suits your needs.
Equity crowdfunding (ECF)
Risk: High
Returns: Usually starts from around 50% to more!
Experience Required: Research on the potential of issuers is needed to make a well-informed decision
Starting Amount: as minimal as RM500 per lot, most deals are around RM2,000 per lot
This is a fairly new concept in Malaysia, but it’s quickly becoming popular with retail investors as it can be an investment with a huge payoff despite the risks involved. Like all the other options above, you don’t need much to get started but the difference is that there is no timeline for you to get a return. It could be in a year, a decade or not at all in a worst-case scenario. Investors rely on the company growing steadily before being sold at a higher valuation than when they first invested, which is where returns come in.
Getting Started: Leet Capital is one of 10 recognised market operators in the ECF space according to the Securities Commission Malaysia. Currently, there is a reported RM80 billion funding shortfall for SMEs on such platforms in Malaysia alone, which indicates that the market is ripe for growth.
Disclaimer: Our articles are not and should not be construed as financial advice. You should conduct your own research carefully and be fully aware of all implications prior to making any investments.
