What Are The Cons Of Investing In REITs In Malaysia?
- By CompareHero.my
- March 23, 2021
Having a Real Estate Investment Trust (REIT) in your portfolio is an attractive alternative investment option as it’s a great way to receive a steady stream of cash in the form of both capital gains and dividends. We’ve outlined this point in the first part of our two-part REIT series.
Contents
- What is REIT?
- 1. You still have to pay withholding tax
- 2. No real authority or involvement over the management aspects
- 3. No guaranteed returns
- Types of REITs – A list of all 18 Malaysian REITs which are listed on Bursa Malaysia
- The four Islamic or Shariah-compliant REITs (i-REITs) in Malaysia:
- How do I invest in a REIT?
What is REIT?
REIT is an investment vehicle that pools a group of investors’ money together in a collective investment scheme and invests it in a portfolio of diversified real estates assets such as shopping malls, offices, hotels or serviced apartments.
Since it was first introduced in Malaysia in 1989, REITs have allowed small-time investors to acquire and own a small portion of an otherwise expensive piece of real estate.
However, like any other type of investment, REITs carry their own set of risks. For instance, since REITs are traded like a stock, their share prices depend heavily on the broader stock market and the value of the property market.
Read on to find out what these risks are:
Not a fan of paying withholding tax? Maybe REITs are not for you.
1. You still have to pay withholding tax
Although there are some clear tax benefits to REITs, unitholders are still liable to tax on the distribution of income and so they are taxed in the year of assessment the distribution is received — not the financial year of the REITs.
The government currently imposes a 10% withholding tax on REIT dividends to local and non-resident individual investors; investors usually consist of Malaysians, foreigners, individuals, companies or collective investment vehicles.
Related: #InvestInsights: What Should You Invest in During a Recession? An Expert Weighs In
Since 2009, the tax for the REIT dividend is as follows:
| Entity | Status | Tax Type | Tax Rate (%) |
| Company | Resident | Corporate Tax | 25 |
| Non-Resident | Withholding Tax | 25 | |
| Foreign Institutional Investor | Withholding Tax | 10 | |
| Individual | Resident | Withholding Tax | 10 |
| Non-Resident | Withholding Tax | 10 |
You may not get to have a say in the day-to-day management of your REIT investment. The flip side: if you enjoy sitting back and letting the experts do the work for you, then REIT is a great fit!
Similar to a robo-advisor, an investor does not have full control over the management of their stock because the investment is fully managed by the REIT company.
Therefore, investors have no real say and are not involved in any decision-making regarding the property in question.
If you want to be able to have full control over your property investment, investing in traditional property gives you that liberty and freedom.
There’s no guarantee that you’ll get good returns with REIT. But to be fair, this concept applies to all forms of investments.
Related: 10 Things Successful Investors Don’t Do
3. No guaranteed returns
This applies to all investments, actually. Though investing in REITs provides consistent dividends, its actual returns still depend on the performance of the property market.
Due to the COVID-19 pandemic, many malls and offices may have had to shut down their premises due to reported cases or because of lockdown measures — this could lead to a potential decrease in shopper traffic and tenancy, which could then impact the price of a REIT.
Related: Here Are 7 Smart Ways To Invest And Grow RM10,000
Types of REITs – A list of all 18 Malaysian REITs which are listed on Bursa Malaysia
| Real Estate Investment Trust (REIT) | Portfolio | REITs Manager | Stock Short Name | Stock Code | Website |
| Amanah Harta Tanah PNB | Retail, Office | Pelaburan Hartanah Nasional Berhad (PHNB) | AHP | 4952 | http://www.ahp.com.my/ |
| Al-`Aqar Healthcare REIT | Hospital, Nursing College, Hotel | Damansara REIT Managers Sdn Bhd | ALAQAR | 5116 | http://www.alaqar.com.my/ |
| Al-Salam REIT | Commercial Retail, Office, Industrial Purposes | Damansara Reit Managers Sdn Bhd | ALSREIT | 5269 | http://www.alsalamreit.com.my/ |
| AmFirst REIT | Office, Retail, Hotel | Am ARA REIT Managers Sdn Bhd | AMFIRST | 5120 | http://www.alaqar.com.my/ |
| Amanah Raya REIT | Industrial, Office, Hotel, Institutions, Retail | AmanahRaya Investment Management Sdn Bhd | ARREIT | 5127 | http://amanahrayareit.com.my/ |
| Atrium REIT | Industrial, Warehouse, Office | Atrium REIT Managers Sdn Bhd | ATRIUM | 5130 | http://www.atriumreit.com.my/ |
| AXIS REIT | Office, Industrial | Axis REIT Managers Berhad | AXREIT | 5106 | http://www.axis-reit.com.my/ |
| Al-Hadharah Boustead REIT * | Oil Palm Plantations, Palm Oil Mills | Boustead REIT Managers Sdn Bhd | BSDREIT | 5124 | http://www.al-hadharahboustead/ |
| Capitaland Malaysia Mall Trust | Retail | CapitaMalls Malaysia REIT Management Sdn. Bhd | CMMT | 5180 | https://www.cmmt.com.my/ |
| Hektar REIT | Retail | Hektar Asset Management Sdn Bhd | HEKTAR | 5121 | http://www.hektarreit.com/ |
| IGB REIT | Retail | IGB REIT Management Sdn Bhd | IGBREIT | 5227 | http://www.igbreit.com/ |
| KLCC REIT | Retail, Office | KLCC REIT Management Sdn Bhd | KLCC | 5235SS | https://www.klcc.com.my/ |
| Pavilion REIT | Retail, Office | Pavilion REIT Management Sdn Bhd | PAVREIT | 5212 | http://www.pavilion-reit.com/ |
| Quill Capita Trust | Commercial, Carparks, Office, Industrial | Quill Capita Management Sdn Bhd | QCAPITA | 5123 | http://www.qct.com.my/ |
| Sunway REIT | Retail, Hotel, Office | Sunway REIT Management Sdn Bhd | SUNREIT | 5176 | http://www.sunwayreit.com/ |
| Tower REIT | Office | GLM REIT Management Sdn Bhd | TWRREIT | 5111 | http://www.tower-reit.com.my/ |
| UOA REIT | Office | UOA Asset Management Sdn Bhd | UOAREIT | 5110 | http://www.uoareit.com.my/ |
| YTL Hospitality REIT | Hotel | Pintar Projek Sdn Bhd | YTLREIT | 5109 | https://www.ytlhospitalityreit.com/ |
There are four Shariah-compliant REITs, these investments derive their income from business activities that are Shariah-compliant, and excludes business activities that are considered unethical such as dealings with alcohol, tobacco, gambling and non-halal food products. Source: Bursa Malaysia listing
The four Islamic or Shariah-compliant REITs (i-REITs) in Malaysia:
- Al-’Aqar Healthcare Reit (ALAQAR) – hospitals and hotels
- Al-Salam REIT (ALSREIT) – offices and factories
- AXIS REIT (AXREIT) – warehouses, offices and factories
- KLCC Property Holding (KLCC) – offices and shops
How do I invest in a REIT?
If you’ve invested in stocks before then you’ll find that navigating REITs are as easy too, especially because they are listed on our stock exchange, Bursa Malaysia
Interested in this topic? Follow our social media accounts @comparehero.my on Instagram and Facebook to get more investment tips!
Disclaimer: Neither CompareHero.my nor the content on it is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. The content on CompareHero.my is for general information purposes only and is not intended to be personalised investment advice or a solicitation for the purchase or sale of securities.
Compargo Malaysia Sdn. Bhd. and/or its affiliates cannot and do not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. CompareHero.my may receive compensation from the brands or services mentioned on this website.
Read More
5 Reasons Not To Lend Money To Your Friends
- By CompareHero.my
- March 22, 2021
When your friend wants to borrow some money, how do you handle the situation and where do you draw the line? Read on to know the reasons why lending money to your friend is a bad idea.
Contents
1. You’re not really helping
You know how the saying goes, “give a man a fish and you feed him for a day, teach a man to fish and you feed him for a lifetime.” By lending your friend money, in a way, you will be giving him or her a free pass, and doing so may not actually be in their best interest.
You may be condoning a bad habit which you didn’t know about such as gambling, or even something less serious but which most people are guilty of, living beyond their means. You may be doing more for your friend by being firm and saying no. Your friend will then be forced to find a permanent solution instead of being dependent by relying on you for money support.
2. You might never get it back
My mom once told me, “only lend the amount of money you are prepared to not get back”. Even though most of us have been brought up with the notion that, “when you borrow money, you pay it back”, but life is not always that simple and straight-forward. When it comes to lending money to people you know, chances are because of the relationship, people take repaying it lightly.
3. Money changes things
Money has a way of revealing the strange sides of people. You might find yourself parting with your money, but quite possibly also your friendship. Whether you like it or not, the dynamics of the friendship may change. This is because lending money to your friend may cause awkwardness.
The borrower (your friend) is now indebted to you, while you as the lender, may fear offending your friend so you avoid reminding or asking them about repayment. Reminding or even if you have to ask your friend to pay you back will make things uncomfortable and awkward.
Related: 5 Polite Ways to Ask for Your Money Back
4. They might ask for more
Your friend may have used the foot-in-the-door technique without you, or even them, realizing it. The foot-in-the-door is a psychological compliance tactic. It involves getting a person to first agree to a small request because later the person will be more likely to comply with a larger request.
Your friend may first lay the groundwork by asking to borrow a relatively small sum, such as RM100. But after you have agreed to lend them the smaller sum, you will be more likely to agree when your friend asks to borrow a larger sum of money the next time. When your friend has successfully borrowed money from you, chances are it may not stop. Your friend now sees you as a “reliable” friend to go to when they’re financially strapped.
5. You may need the money
None of us has the power to see what the future holds. As such, if lending money to your friend requires you to take money out of your emergency fund or savings, don’t do it.
Your savings and emergency savings are there to ensure financial stability for you and your dependents. What if you suddenly lose your job and you then need to rely on your savings? Under such circumstances, every bit of money will count. It’s best you keep your money for your own rainy days and instead provide friendly suggestions to your friend on how to better manage their finances.
Related: Budget 101: How to Create a Personal Cash Flow Statement
Read More
Berapa Jumlah Wang Perlu Anda Beri Pada Ibu Bapa?
- By CompareHero.my
Sebaik sahaja anda menerima gaji pertama, antara perkara yang anda ingin lakukan semestinya memperuntukkan sebahagian dari gaji tersebut untuk ibubapa anda. Kami menyediakan panduan untuk mengetahui jumlah yang anda boleh peruntukkan serta mengapa tindakan anda itu penting dan terpuji.
Mengapa anda perlu memberi wang kepada ibu bapa?
Bagi membesarkan kita dan adik-beradik yang lain, ibu bapa telah banyak berbelanja. Maka, selaku anak yang telah bekerja, inilah masanya untuk membalas jasa tersebut. Walaupun mereka mungkin telah mempunyai simpanan KWSP, wang anda berikan sedikit sebanya k boleh membantu.
Lagipun, tahukah anda simpanan KWSP belum tentu boleh menjamin persaraan yang selesa? Pada tahun 2020, data dari KWSP menunjukkan lebih daripada 54% penyumbang tidak mempunyai dana yang mencukupi untuk bertahan dari segi kewangan selepas bersara semasa berumur 55 tahun.
Selain itu, kajian telah menunjukkan jangka hayat manusia semakin meningkat, dengan sebuah penerbitan dari Institut Penyelidikan Khazanah (Khazanah Research Institute) berjudul “Population Aging: Can We “Live Long and Prosper”? turut menyatakan yang Malaysia juga terasa tempias trend peningkatan jangka hayat populasi ini.
Dijangka rakyat Malaysia akan hidup lebih lama, tetapi tanpa sumber pendapatan dan juga simpanan yang mencukupi. Maka, dengan memberikan sedikit wang untuk ibu bapa, anda boleh membantu meringankan beban mereka.
Belajar menjadi seorang pemurah
Memetik maksud sebuah hadis, “tangan yang diatas itu lebih baik dari tangan dibawah”. Tidak kira berapa pun jumlah wang yang anda berikan kepada ibu bapa anda, ianya boleh memupuk sikap ingin bersedekah dan juga mengurangkan rasa pentingkan diri sendiri. Selain itu, anda akan membuat ibu bapa anda bangga (walaupun kadangkala mereka tidak akan memaklumkannya kepada anda). Tindakan memberi wang ini menunjukkan anda telah menjadi seorang individu bertanggungjawab dan memiliki perancangan kewangan.
Pemberian lebih bermakna dari jumlah wang
Walaupun kebanyakan ibu bapa tidak mengharapkan anda berikan wang, ketahuilah yang mereka amat menghargainya. Bak kata pepatah, ‘it’s the little gesture that counts’. Walaupun jumlahnya kecil, tindakan ini menunjukkan anda prihatin tentang mereka. Malah, inilah masanya untuk anda menjadi anak yang membalas jasa.
Berapa jumlah wang patut anda beri?
Sebaiknya, wang yang anda berikan boleh bantu untuk menampung perbelanjaan harian dan bil perubatan ibu bapa anda. Tetapi, jika anda tidak mampu untuk berikan jumlah tersebut, seberapa yang anda berikan asalkan boleh meringankan beban mereka sudah mencukupi. Berikut ialah contoh cadangan jumlah pemberian untuk berikan anda anggaran:
- RM 150 untuk bil elektrik
- RM 300 untuk barang dapur
- RM 150 untuk insurans
Contoh anda boleh memberi sebanyak RM 500 sebulan, anda sudah menampung bayaran untuk bil elektrik dan juga barangan dapur. Dan jika anda hanya mampu memberi RM 200 sebulan, ini juga sudah boleh menampung bil elektrik atau insuran. Selain itu, dengan usia ibu bapa anda yang meningkat, perbelanjaan untuk perubatan serta pelan insuran yang bagus harus diutamakan.
Berkaitan: Perbezaan Insurans Hayat dan Insurans Perubatan
Katakanlah anda tidak mempunyai wang yang mencukupi untuk berikan kepada ibu bapa anda pada setiap bulan, jangan risau. Anda masih lagi boleh menyumbang untuk ibu bapa melalui cara berikut:
- Selalu pulang ke kampung untuk melawat mereka.
- Bantu mereka dalam kerja-kerja rumah
- Belikan barang keperluan dapur
- Bantu mereka ke pemeriksaan doctor
- Belanja makan sekali-sekala.
Jadi, apa salahnya sebagai contoh anda bawa mereka ke restoran kegemaran (atau sebagai contoh, tempat mereka bertemu janji dahulu!) sebagai ganti makan tengah hari atau makan malam. Walaupun perbezaan gaya kita dibesarkan bermaksud ibu bapa mungkin ataupun tidak kisah mengenai pemberian wang dari anak-anak; tetapi jangan lupa yang masih ada cara anda boleh membantu di usia emas mereka.
Read More
Everything You Need To Know About Emergency Fund
- By CompareHero.my
2020 has taught us the importance of having an emergency fund to keep ourselves financially covered during tough times. The pandemic has caused many Malaysians to lose their jobs, source of income and suffer pay cuts. With this kind of situation suddenly coming in, we are becoming more concerned when it comes to money matters.
Based on Bank Negara Malaysia’s (BNM) Capability and Inclusion Survey 2015, it was reported that 75% of Malaysians find it difficult to raise RM1,000 cash for emergency purposes. Additionally, 32% of Malaysians can only cover at most a week’s worth of expenses if they lose their source of income.
Saving up some money in a separate bank account every month can be overwhelming at first, but it can be beneficial for long-term unexpected events. Instead of applying for a loan, borrowing money or using your credit card, your emergency fund can help you cover all of the expenses without getting into debt.
An emergency fund is a good start to make your financial plan stronger in the long run. If you’re not sure where to start, here’s a quick guide to help you with it.
What is an emergency fund?
An emergency fund is money that you set aside to use only in times of financial distress. It works as a safety net so you don’t have to stress out how to survive financially during such unforeseen circumstances, such as unemployment, having unexpected medical bills to pay and urgent home repair or replacement.
It is made to ensure that you can still provide for yourself and your family without considering additional liabilities. Having an emergency fund will give you the comfort that you need in a situation when something unfortunate happens.
Related: 5 Must-Have Home Appliances That Save Time And Money
Why do you need an emergency fund?
An emergency fund allows you to meet unexpected financial challenges and keeps you from getting into debt.
Having an emergency fund allows you to survive for at least three months should you lose your job or source of income. You never know when you will end up in a situation that will require you to fork out an amount of money unexpectedly, and most importantly, you don’t want to be financially unprepared for that.
An emergency fund allows you to meet unexpected financial challenges and keeps you from going into debt when you need extra cash to cover emergency expenses as mentioned above.
When should you use your emergency fund?
The best way to figure out when you should use your emergency fund is to understand what is emergency and what is not emergency. Here are four instances where it makes and does not make sense to use your emergency fund:
Emergency:
- Job loss
- Unexpected medical bills
- Unexpected car repairs
- Unexpected house repairs
Not emergency:
- Vacation
- Home accessories
- Car modification for aesthetic purposes
- Buying unnecessary gadgets
How much emergency fund is enough?
It depends on your financial health and how much money you can set aside for your emergency fund, but most financial experts agree that an emergency fund should have at least three to six months’ worth of monthly expenses. To estimate the amount, you can add up how much you spend every month on crucial or basic living expenses, such as:
- Rent or mortgage
- Car loan
- Utilities (electric, WiFi, electric, other bills)
- Groceries
- Petrol
- Health care
- Insurance
Now that you know the amount of your monthly expenses, you can multiply it by three to six months, and that would be your emergency fund target amount.
Here’s an example to illustrate it better:
| Expense | Cost |
| Mortgage | RM1,000 |
| Utilities | RM400 |
| Insurance | RM100 |
| Car loan | RM700 |
| Groceries | RM500 |
| Petrol | RM400 |
| Total | RM3,100 |
Three months: Times your total expenses by three: RM3,100 x 3 = RM9,300
Six months: Times your total expenses by six: RM3,100 x 6 = RM18,600
You can set your emergency fund goal between RM9,300 and RM18,600.
The goal may be different for those who are married and single. Keep in mind that your emergency fund can be more than just basic living expenses; you need to consider other potential expenses that you have to commit to paying every month.
Putting away three to six months of income for your emergency fund may sound like a lot, but you can start it small; slowly but surely until you reach your goal.
Where to put your emergency fund in Malaysia?
It’s best to place your emergency fund in a separate bank account, not the same account that you use daily or where your income is transferred to. Your emergency fund needs to be easily accessible when you need it quickly, and at the same time, you don’t want it to be easily reached so you won’t be tempted to take out the fund unnecessarily.
It can be a savings account or a low-risk liquid account that earns interest. A place to avoid keeping your emergency fund is fixed deposit accounts as your fund will be locked. Below are the two best options you can consider:
1. High-yield savings accounts
High-yield savings accounts usually offer a higher annual percentage yield on deposits, which means that your money earns more interest over time. Besides that, these savings accounts may carry minimal fees compared to regular savings accounts.
Some of the high-yield savings accounts you can find in Malaysia that offer high-interest rates are UOB Stash, RHB Bonus Saver and Maybank M2U Saver.
2. Money market savings accounts
A money market account is a savings account that has checking features. It comes with checks or a debit card that allows only a limited number of transactions each month. Like high-yield savings accounts, money market accounts also offer higher interest rates than regular savings accounts.
However, the potential downside is that money market accounts may require a high minimum deposit to open. You need to find options with a minimum deposit requirement.
How to make your emergency fund last longer?
If you’ve lost your job and have some medical expenses or other bills to pay, this is when your emergency fund comes into place. However, it’s also important to look for ways to save your emergency savings for as long as possible. Here’s what you can do:
- Cut off other unnecessary expenses (if any)
- Sell items that are no longer in use
- Apply for unemployment benefits
- Look into the government’s financial assistance programs
- Get in touch with creditors for financial relief measures
- Start a side hustle to earn extra income
It can be challenging to start saving up to six months worth of your expenses, especially when you’ve never been a saver yourself. It’s important to do your own research before you decide where to keep your emergency fund, but be sure to save it in a place where the money can safely grow while you are not using it.
Saving up on your emergency fund, but looking for financial aid at the same time? Check out our personal loan page with a low-interest rate and fast approval!
Read More
6 Ways To Save On Air Conditioning Costs In Malaysia
- By CompareHero.my
- March 19, 2021
Weather extremes like hotter days and thunderstorms have been predicted to take place in Malaysia from May until September thanks to the southwest monsoon. So far, these predictions are correct. Being one of the many who does not agree with extremely hot conditions, I have my air conditioner on full blast and at its lowest temperature of 16 degrees.
Though this feels great while I cool off and seek refuge in the shelter, it’s painful on my electricity bill and I’m sure I’m not alone. If like me, you need to save on air conditioning costs, here are a few tips and tricks you can use to make your air-con a little more efficient.
1. Look out for its Energy Efficient Rating (EER)
Before we get into the tips, it’s firstly worthwhile noting if your air-con unit is actually energy efficient, or not. This is easily identified by the EER sticker attached to your unit, the more stars it has, the more efficient it is. You could consider replacing your air-con with a more efficient one to further reduce your electricity costs. Also, consider the horsepower of your unit in relation to the size of your room or living area. If it’s a smaller room, a lower horsepower will work just fine.
2. Regularly maintain your air-con unit
Clean your air conditioner’s filter regularly – at least once every 3 weeks – as it often gets clogged with dust and pollutants. This means you aren’t getting the full effect and it’s working harder to push cool air out. Get your unit serviced regularly to also avoid any leaks or faults that may cause greater damage.
3. Set your temperature between 24-25 degrees Celsius
You may not know this but the cooler you set your temperature, the more energy it uses. Setting it between 23-25 degrees Celsius has been known to be the sweet spot which allows you to enjoy savings on your electricity costs. If you do not feel the coolness, you may need to clean its filter, get it serviced, or are using an underpowered unit for the size of your room. Also, don’t forget to keep your windows closed when your air-con is on!
4. Use dry mode
Dry mode reduces the humidity levels in your room. A room that has higher humidity is also a room that is warmer. On Dry mode, most of the components don’t work as hard thereby using less energy/power to cool your room which translates to lower electricity costs. Though it won’t cool your room as effectively as Cool mode, it dehumidifies the air which will automatically reduce the temperature in the room.
5. Set a timer
This little trick is especially useful at night. We often sleep with the air-con on all night long, and we probably don’t need it on for that long. Set it to switch off after a few hours to be more energy efficient.
6. Keep direct sunlight out
Try to find ways to reduce as much direct sunlight getting into your room. With more sunlight/heat in your room, your air-con will be working harder to cool the air. Thick curtains, blinds or even tinting your windows are possible solutions you could explore. Alternatively, use the fan when the sun is shining directly into your room and only switch on the air-con once it has moved.
And of course, you could try using your fan for most of the day and only switch on your air-con when you absolutely need it.
To help you make greater savings, you can also pay for your utilities bills with a credit card, such as the Standard Chartered JustOne Platinum Mastercard that allows you to earn up to 15% cashback on your spending, including autobill.
