Friday, 28 December 2012

Money Making Options In Malaysia

When I first started my working life, I was totally oblivious about long term investment. During that period, the salary I earned as an Engineer was considered meager while my parents ask me to save whatever I have in Fixed Deposit(FD) accounts.

Till now, the advice from my parents remain the same that is to save all I can in Fixed Deposit accounts. No doubt the fixed deposit account is the safest investment available with almost zero risk and promise of a fix annual return.With FD rates ranging from 3.0 ~ 3.5% per annum, every RM10,000 saved via FD promises a return of between RM300 ~ RM350 per year, guaranteed!

I remember fondly about a year into working life, I dabbled into the share market using a speculative method called contra. Never the less, it was a short lived experience as I find myself looking more often at share prices then concentrating on my work. It was ridiculous, time wasting, created unnecessary stress and was a constant distraction to me. Thankfully it was a short lived experience and I broke even on the profit and losses.

There were also some hiccups along the years where I was foolishly convinced into investing in a pyramid scheme that promises good returns. As always, the one's which normally lost money from pyramid schemes are the one's like me who entered during the end stages of the scheme.Never the less, I consider the money lost from it an education fee for me towards becomming a smart investor. 

Pyramid schemes or ponzi schemes, whatever you might call it still exist in Malaysia, always resurfacing in various forms and offering sub-standard products. Yet many Malaysians, blinded by greed as well as smooth talking agents continue to invest their hard earned money into it. The people who are actually making money are the one's who created these schemes and the people who sit at the top of the pyramid. Money made from foolish Malaysian who continue to pile up at the bottom of the pyramid.

As the saying goes, as we grow older, we become wiser. I don't claim myself as a wise investor as there is still so much more to learn and master. In truth I see myself as somewhat of an amateur investor, a little wiser then some who have zero knowledge on investment but stupid in comparison to season and experience investors. 

Now that aside, do allow this somewhat amateur investor share some knowledge on the available investment options in Malaysia.

1) Fixed Deposit (FD)
Like what I have stated earlier in this post, FD is the safest and most well known investment option available for Malaysian. With a promised return of 3.0 ~ 3.5% per annum, investors are guaranteed their returns annually. Apart from being the oldest form of investment in Malaysia, FD is pratically risk free!

2) Unit Trust (UT)
Unit Trust is defined as an organization which takes money from small investors and invests it in stocks and shares for them under a trust deed, the investment being in the form of shares (or units) in the trust. 

Simply said, unit trust is an avenue that provides small investors a chance to invest into shares, stocks or bonds. Like many of us who command a day to day job and a family to go back too, we might not have the luxury of spending time studying investment methods or analyzing the right shares to invest in, yet we would love our money to grow more then what can be offered by FD. 

Hence the existence of Unit Trust which provides investors with an opportunity to grow their money. By entrusting our money with Fund Managers (some experienced and some not), we allow the Fund Managers to decide what stocks and/or what investment vehicle that would bring us the highest possible returns.

With hundreds of Unit Trust Funds available, small investors are spoilt with choices of investment. Therefore before investing into Unit Trust, a few factors have to be considered such as:
1. The investment nature of a particular fund (Equity? Asia Market? Fixed Income? etc).
2. The risk factor for a particular fund. Higher risk funds tend to give higher returns and also higher losses.
3. The Fees and Charges incurred.
4. Historical performance of a fund.

In short, investing in Unit Trust is to entrust your money to a a team professional/full time investor and allowing them to decide the best possible investment with the highest return.

3) Shares 
The riskiest of all investment listed here apart from Item 5 if you consider that as a form of investment. Trading of shares are done over the Kuala Lumpur Stock Exchange. Each unit of shares signifies a small percentage of a company. By investing into shares of a particular company, you are then called a shareholder of that company. A profitable company would be reflected via increase in the share price of that company.

Investors make their profits from selling the shares they own to another who is interested in purchasing them at an agreed price. The entire buy-sell are done over various avenues from the old schooled phone call to the remisier or the latest personal online share trading platform.

The objective of share investment are normally to make a profit from the difference between the purchasing price and the selling price (Selling price > Purchasing price =  Profit). On the other hand, some investors purchase shares to enjoy the dividend given out by the company. Do take note that investing in shares are categorized as high risk due to its volatility. Factors such as Global Economic meltdown, Recessions, Elections, Terrorist attack, general shareholder sentiments, stock manipulation,  and many more factors could lead to a either a quick rise or a sharp drop in share prices.

The concept of REITS is almost similar to Unit Trust. REITS are actually shares which we can purchase over KLSE. Each shares denominates a small part of a property depending on what kind of REITS you purchase. If you purchase Pavillion REITS, that means you are have become owner of Pavillion, albeit a small small part of Pavillion. All profits obtained from Pavillion such as rental or rental increase is then distributed back to you depending on the number of Pavillion shares you own.

In short, purchasing in REITS is similar to investing in properties. We do not own the property directly, but we become a share holder of that property. Many investors are looking at REITS as it promises regular high returns on dividens. Furthermore investing in property is one of the preferred option of investment especially during slow/bad economy periods.

4) Gold & Silver
Another alternative investment that is available for investors is Gold & Silver. Categorized as precious metals, investors are purchasing and selling these commodities in order to make profit from the difference in price between purchase and sales. For example, the price for of Gold has appreciated a whopping 101.53% if you've purchased gold five years ago. That's an average of +20% return annually over the money you've invested.

There a many ways of purchasing these precious metal from buying the actual physical metal to trading paper gold/silver. Paper gold/silver is the latest trend among investors as you can purchase gold/silver from banks such as Maybank, CIMB and Public Bank without the hassle of actually having the actual gold in hand. By investing in paper gold/silver, there's no worry about losing your physical gold/silver due to theft/natural disaster/robbery/misplace as everything is recorded and tracked via a simple passbook.

5) 4D, Toto, Da Ma Cai, Lottery Tickets
I'm not advocating that you should invest your money into this. Its certainly not an investment option but do not be surprised to hear that many Malaysians consider this as an investment. Millions are spent by Malaysian into gambling with actual winners making up a very very very small percentage. Yet, in a game of chance, many Malaysians especially Chinese loves to make an occasional punt or two, hoping that luck might shine upon them.

Regardless of the many forms of investment, the decision to invest depends on the risk appetite of the investor. If you're not the risk taker type, FD would be the best option for you. For younger investors with higher risk threshold, many investment options are available for your picking. The above are just a general overview of the available options in Malaysia. Personally, I have investments in the first four  options with the bulk of my investment placed into the FD for security. Stability is currently my primary concern as there is bound to be instability due to the coming election and the uncertainty of the Global Economy.

In addition, I do intend to allocate additional funds into purchasing paper gold and paper silver as these are limited precious metals. Prices are bound to rise for gold and paper of the long run.

Heading into 2013, there's more challenges ahead and for the wise investors, the key point is to be cautious and prudent in investing your hard earned money.

Happy 2013 to all readers and Happy Investing


MY Investor


  1. Just dropping by and checking out your blog posts :D


  2. So itz better n safer to invest in golds.....

  3. John, it depends on the risk appetite of the investor. If you feel that you're confident about investing in gold done your research on the pros and cons, then by all means go ahead.


  4. Thank u so much mr amateur investor...lotsa information

  5. hi, i would like to ask your advice for amateur investors like those still in college. what investment options do we have that has low contribution?

  6. confused. Bit I will figure it out hopefully