The Beginner’s Guide To Investing In Malaysia

|Posted by | Banking, Investment, Lifestyle, Money Tips

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Have you always wanted to start investing but thought that you needed a large sum of money to start? Guess what, there’s actually no minimum amount needed for you to start investing! Learn how you can start investing and where you should invest!

What Is Investing?

Let’s begin with the fundamentals before we delve into how to invest. Although you may think of making an investment as something complicated, the concept is actually quite simple. What it really means, is to invest and make your money work for you by getting more money out of the initial amount.

However, in order to fully reap the benefits from your investment, one would need to understand the concept of compounding as well as understand the concept of delayed gratification. The compounding factor is a great friend to investors as it lets you see your money grow. As for delayed gratification, this means that most investments are long term and you will need to sit on your hands for a bit before you really see the rewards of your investment.

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Aside from that, there are also certain guidelines to follow in order to ensure your investment does not turn out as a flop, although all investment do involve some risk. The difference is the level of risk involved in different types of investment vehicles.

Before you dip your toes into the world of investment, read up on investment lessons you should learn from successful investors to give yourself a head start!

Now that you have a basic idea on what investment is all about, you may be excited to jump into the real action. Below are some investment suggestions suitable for beginners:

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Fixed Deposit

This can be considered among the safest ways to invest, and is an ideal option for first time investors and for those who do not feel comfortable taking on too much risk. Among the advantage of investing in fixed deposits aside from the low risk, it also gives you the potential of regular earnings. When you invest money into fixed deposit it will mean that you put a certain amount into a bank account for a specific duration.

The bank will then give you interest for the money you put into their fixed deposit accounts. This is a better option for those who keep their money in a savings account and only get interest returns that are lower than the inflation rate. Which means you lose out by keeping your money in a savings account, but a fixed deposit can make your money work for you at minimal risk and can help you beat inflation!

Although you will not get access to the initial amount you put in until a fixed period, some banks will let you collect the interest earned from fixed deposits. Although it should be noted that this will vary between monthly or yearly pay outs, depending on the period of your fixed deposit.

However, as you will not be taking on too much risk compared to other options of investment, the returns will also be significantly lower than other types of investment.

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Unit Trust

Unit trust is a type of collective investment where your money will be pooled with other investors. So unit trust is like investing in a group, and the pooled amount of money is known as fund’s assets. The funds will then be invested into a portfolio of diversified assets and managed by a fund manager. When you invest in unit trust, you will be buying units and depending on your budget, you can decide how many units you want to invest initially before you buy additionally units in the future.

Unit trust is also ideal for those new to investing as it gives them the opportunity to invest in a diversified portfolio which will then be professionally managed.

Stock Market  

Another option you can consider would be to invest in the stock market. If you want to invest in stock market in Malaysia, you would need to trade stocks on Bursa Malaysia.

But in order to invest in the stock market, you must be willing to learn as investing in the stock market will require some skills and research unless you engage a broker which will then incur you extra costs. In order to get started you will need to acquire some stocks before you begin trading. In Bursa Malaysia, the minimum number of shares or stocks you can buy or sell per transaction is 100 units. For example, if the share is price at RM1 per unit, you will need at least RM100.

If you are interested with current economic movements, investing in the stock market may be right up your alley too as the economy has an impact on shares. Before embarking on trading shares, make sure you are prepared for changes as the stock market is not for the weak hearted. But when done right, you will be reaping the rewards!

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What To Look Out For Before Investing

Excessive fees

For certain investments such as unit trust, there will be transaction fees involved. What you need to look out for are high investment fees and to stay away from it as it will then affect and minimize the return you get from your investment.

Agents

Some people opt to use services from agents who will do all the investing for you, and they will then have their share of what you make from the investment. As for the stock market, some people also choose to get a stock broker to do the work for them. All this will incur cost and you should compare and get the best deal as charges will vary.

Investment Scams

Like the saying, “if it sounds too good to be true, it probably is”, the same goes for investment. If you are promised high returns at a short amount of time for example, beware! Aside from that, be vigilant and keep yourself updated with investment scams, and learn how to spot an investment scam to keep yourself protected.

A golden rule to always remember when investing is “do not put all your eggs in the same basket” by diversifying. Ultimately, you will need to take into account how much risk you are comfortable with taking on, the amount of money you can afford to invest and your preference before you make a decision.

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Fara Joifin

About Fara Joifin

Fara is a Senior Content Writer at CompareHero.my. She gets excited when she scores a good deal and has an obsession with the Northern Lights.