June 6, 2018
When it comes to money, most of us have our own opinions of it. In Malaysia, there tends to be a few characters to money talk with, some of which can be helpful, but some whose advice should be taken with a pinch of salt.
Here are the types of investors you may encounter in Malaysia.
There are two types of these investors. First is a hard working person who is really trying to get a big break, often by trading stock. The other is a retiree or someone who is financially well-off. They don’t really care too much about their job (it’s just for something to fill up their time).
Both of these types of investors are “street smart” when it comes to financing. They learn things by putting their money in places where they really shouldn’t have in the first place. And then, they identify what worked, and imitate it. They understand key concepts like value investing, or how to read a company’s fundamentals. But, they can’t explain it using the actual terminology (e.g. they know what a P/E ratio is and how it works, but they don’t know that the letters P/E stand for “Price to Ratio Earnings”).
Most of them tend to be traders rather than investors, and they usually have a higher risk appetite.
They can explain various indicators and ratios to you, even if they don’t know the exact terms. They can tell you what the ratios mean in an easy to understand way. Many of them may also have had real experiences with losing their money. So, they understand the emotional and psychological effects more than the academic types ever will.
Asking opinions for safe investing. This is because most of them have high risk appetites, so they may encourage you to take on more risk when investing.
These are the types of investors who are comfortable with taking risks. They also like to experiment and try out things which other people have not done or discovered yet. These are also the type of people who would listen to that cool band before their music even became mainstream.
These Avant-garde investors will talk about financial products that will make financial professionals ask, “since when has this been a thing?”. These types of investors would have jumped on the bandwagon of new investments before anyone else had even heard it of it. For example, they may have been the first few people you know who started investing into cryptocurrencies like Bitcoin. They are like the hipsters of the financial world.
People who like to learn and find out new ways to invest. Many of them also like to point out flaws in traditional investment products, so they will be good if you want an informed (although rather pessimistic) financial opinion.
This group of investors tend to like fads, which actually does happen in finance. Remember all the hoo-ha over Bitcoins? Most of these type of investors are interested in products which are different, but those products may not necessarily be good products. The danger is that the assets they swore by may be forgotten about next year.
These are the type of investors who are always posting Warren Buffet quotes on their Facebook or Instagram. They may also respond to questions by quoting him in their conversations. They also tend to subscribe to email responders from Investopedia, and may even be able to explain each component of the Capital Asset Pricing Model to you.
One of the quickest ways to identify these types of investors is that any money related issue they discuss with you will actually sound like they’re writing a Forbes article or for an economic column.
For example instead of saying: “I’m thinking if my mutual fund is worth the fees, I can’t tell because the market was really wacky late last year”, they would instead say, “I can’t identify Alpha due to at least three standard deviation events in Q3 / Q4 2016”.
Word of caution: you may find yourself scratching your head when talking finance with them.
If you want the latest updates on financial news because most of them read the Business Times religiously. If you have the time to listen and decipher what they are talking about, they can also explain many critical financial topics to you. For example, the relevance of R-Squared or the difference between physical replication and synthetic Exchange Traded Funds.
Advice on anything that will require a quick decision. They also cannot come up with an easy to understand conclusion on anything. These types of investors are usually more interested in theories than actually investing their money. They tend to spend their money on books and going to courses or seminars, instead of really investing in the market.
These type of investors usually have someone who handles their finances for them. Most of the time, they don’t even know what they’re investing in. All they know is that they have an investment, but they don’t want to have to think about it.
These investors don’t like having to “deal with all that money stuff”, and hate it when they have to sit down and talk numbers.
Ideal customers to sell financial products to. This is because most of these characters have no idea or care about commissions and management fees, all they care about is that they invest. But they don’t want to be bored with details.
Any type of financial advice. Most of them invest or buy financial products based on what a relative sold or told them to buy. It is rarely because they actually know and understand the performance of the financial products, so don’t take financial advice from these type of investors.
These are the kind of investors that don’t pay any attention to financial products which are not tangible. So to them, if it’s not physical gold, or property, or something that they can actually hold on to, they won’t trust it.
These are also constantly predicting the economy whether local or globally. Being the grouch, they are usually predicting if it is going to crash. However, since the market actually does crash every few years, theirs is actually an easy prediction. But still, being the grouch that they are, they will somehow exaggerate the impact of the next crash, perhaps saying things like our Ringgit will be so worthless we’ll probably have to downgrade to just eating rice with kicap.
Detailed explanation of tangible assets like gold. Many of these types of investors are also good at pointing out flaws in financial products, as they will look at all angles, being the worrywart that they are.
Your morale and if you are making long term plans. When they start going on about the disaster, just remember they’re not known as the grouch for no reason.