#DearGenZ: Here Are 7 Dummy-Proof Ways You Can Start Investing Your Money

CompareHero.my Team

CompareHero.my Team

Last updated 10 November, 2021

Dear Gen Z’s, it’s never too early to secure your financial future. The earlier you start investing, the more time your money has to grow. If you're not sure how and where to start investing in, then here are 7 easy investment tips that you should know. Read more to find out!

When you are young, investing doesn't sound like the most interesting topic to talk about. It seems unaffordable, complex, there’s too many financial jargons like bull or bear, and don’t even get us started on the crazy figures that you need to keep track of. But is that really the case? Not exactly.

On the contrary, it’s essential that you start investing at a young age because it gives you a longer time horizon (aka: duration to invest), and because the returns from investing generally magnifies over time. There’s a saying that time is an investor’s best friend, and it really is.

Of course, we are not talking about beating or timing the market, but growing together with it. With enough time, resources and skills, logically, your wealth would grow exponentially.

There are also many good reasons to invest young. Besides building a nest for your future, the return that you can make from investing could also supplement your current income and help you save up for your first house or car.

But with so many investing options in the market, which should you choose, especially if you are not that well versed in the realm of investing?

Here are some dummy-proof (aka easy to understand and implement) ways Generations Z’s can start investing.

1. Start by being more disciplined with your savings

Savings is like the financial equivalent of having bicycle training wheels. Without mastering the basics, you wouldn’t properly know how to invest.

There are countless reasons why savings is important but among the obvious few factors are: it helps shield you against any unwanted situations like the case of a financial emergency, let’s you avoid or pay off any debt, reduces your financial stress, and helps bring you on course for financial freedom.

So unless you come from a wealthy family or have inherited a large amount of wealth, having savings and living within your means is almost a prerequisite to investing and building wealth.

Read also: Use These 7 Cash Tricks to Grow Your Savings

2. Start investing with as little as RM10 with robo-advisors

A by-product of fintech disruption, robo advisors have not only innovated the process of investing, they’ve also made it more accessible to the masses, meaning anyone can invest with as little as RM10.

If you’re not sure what robo advisors are, they are essentially platforms that use algorithms-based artificial-intelligence to create, diversify and rebalance an investor’s portfolio, largely through exchange-traded funds (ETFs). They are easily accessible via iPhone or Android Smartphones, so you don’t need some fancy gizmo to be able to use a robo-advisor.

But what makes them such an attractive platform for investing is the fact that they’ve helped democratise the concept of investing - thanks to its accessibility, robo advisors require lower minimum investments, and have cheaper fees. This makes it an attractive option for younger and newer investors who are just about to build up their wealth.

For some context, traditional investors usually come with high fee structures ranging from RM1,000 to RM20,000 a year depending on asset size, while robo-advisors, on the other hand, are way cheaper with an annual management fee that costs less than 1%.

Micro-investing app Raiz, for example, optimises users’ virtual spare change by rounding up everyday purchases (even from the smallest figures) to proactively investing it into ASNB’s variable price funds based on personalised investment portfolio.

3. Try your hand at fixed deposits

Considered one of the safest types of investments in Malaysia, it doesn’t take much to invest in fixed deposits.

The logic behind it is also relatively easy to understand. All you gotta do is put your money in a bank for a fixed period, and it will then generate returns for the user. So you’re basically earning money based on the interest accumulated from storing your money in your bank accounts. In other words, all you gotta do is save your money in a bank account.

On top of that, what makes it a safe type of investment is that banks literally guarantee the returns. Heck, even the government will compensate you in the unlikely event that banks go bankrupt (we hope not!). Fixed deposits typically have a return of 3-4% per year.

Be aware that there are two main types of fixed deposits:

  • Conventional Fixed Deposit - it is mandatory that they pay you a predetermined interest rate, regardless of any factors that may affect the bank’s performance.
  • Islamic Fixed Deposit - Their returns depend on the bank’s performance.

If you are interested, just ask your local banks as most have e-fixed deposits at their online banking portals. For the latest FD promos, you can check this site out.

4. Depending on unit trusts

Though the risk ranges from low to high, almost anyone can have a unit trust account. This portfolio typically consists of different assets including bonds, shares, real estate, and more. From there, it’s further broken down, and you’ll get a smaller portion in the form of “units,” alongside other investors.

Everyone’s money will be pooled together to make an investment, and then money that is earned from an investment (aka the return) will be given back to everyone based on each person’s contribution. This income distribution comes in the form of capital gains, dividends, or shares.

What makes unit trust a dummy-proof method is that they are professionally managed by fund managers, so you’re not required to do a lot of the leg work. The only downside to this is that it comes with fees, and some can be quite high.  The four main types of unit trusts are equity fund, balanced fund, fixed income and money market fund.

5. Amanah Saham Bumiputera (ASB) account

Conservative assets like unit trusts under Amanah Saham Nasional Berhad (ASNB) are good to consider because they have historically demonstrated good returns.

In fact, last year, Amanah Saham Bumiputera (ASB), one of the unit trusts under ASNB generated an income distribution of five sen a unit and a bonus of 0.5 sen amid a challenging market environment.

One of the safest investment vehicles, ASB aims to provide an alternative savings vehicle for Malaysian Bumiputeras by generating long term, consistent and competitive returns for investors. The cool thing about this is that you don’t have to pay any fees to invest, and you also don’t need to pay any charges when withdrawing money.

We wanted to point out that though ASB is limited to bumiputeras, non-bumis could invest in ASNB via the Amanah Saham Malaysia schemes, though limited.

Read also: What Should You Invest in During a Recession? An Expert Weighs In​

6. Tabung Haji if you are Muslim

The Tabung Haji Fund is a great way for Malaysian Muslims to invest their money.

Though the primary objective of the fund is to help Malaysian Muslims save for the Hajj and Pilgrimage, it also comes with good yearly dividends (4-8%). Oh, and of course, it’s 100% Shariah compliant.

Need we say more? If you are a young Malaysian Muslim, you should take advantage of this investment.

You can open an account by visiting a TH branch, Bank Islam, Bank Rakyat, or TH’s mobile counters.

7. Investment-linked Insurance Plan (ILP)

You are killing two birds with one stone when you sign up for an ILP - you get both an insurance protection plan and have the added benefit of it also being an investment. There are two types of plans when investing in an ILP - a single-premium and a regular-premium plan.

You may wonder how could an insurance plan also function as a form of investment? The way it works is a portion of the premiums will be invested, while the rest remains as your usual coverage premium. And ILPs usually invest into unit trust funds, so the returns will depend on the fund’s performance rather than the insurance.

The affordability of ILPs depends on the type of premium: a single-premium will require a one-off payment for covering the entire coverage period, while a regular-premium allows you to pay in intervals throughout the year.

So do dummy-proof methods equate to being risk-free?

The short answer is no. The types of investments we’ve highlighted are some of the simplest ways we believe you could grow your money when you’re young.

But with that said, simplicity doesn't mean you can escape risk when it comes to investing because at any time, a company you invest in could experience instability or go insolvent.

Ultimately, the success of an investment will depend on your risk appetite, a fundamental in your investment decision-making, rather than the actual type of investment itself. Another trick to consider is to diversify your portfolio.

All in all we hope you found this article helpful!

Related: 8 Financial Planning Tips For Malaysian Gen Zs​

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