“I want to start investing,” you said, “But I don’t know where or how to start”.
“Read this guide and I’ll show you how to invest with RM1000 to start with.”
Investing is one of those things that you know you have to do, but probably get confused with, in the beginning regardless of your age.
To me, investing is all about finding the right fit between your personality and your investment strategy. Let’s start with what you can invest with RM1000. This guide is Millennial-friendly.
First off – Restructure your debt
Before you start investing, take note of what you owe first. Because if you skip this step, whatever profit you get from your investments goes straight into paying off those interest instead of padding your pocket. No point investing if like that.
As a rule of thumb, education loan and mortgage can be considered good debt. The rest, especially if they charge around 8% or more in interest is bad debt.
If no bad debt? Good. Go on to the next line.
Invest with RM1000: Safe mode (Low Risk)
Safe investments give relatively low profits, but AT LEAST THEY GIVE YOU PROFITS. ‘Safe’ here obviously depend on some factors:
Malays/Bumiputeras – You have your freaking genetic lottery. Get ASB (Amanah Saham Bumiputra). They give up to 7% returns.
For other friends who are non Bumiputeras– Fixed deposit: It’s not as much, but your money will at least keep up with inflation. The banks make it confusing to pick the best one. Lots of offers and jargon here jargon there. Don’t take anything less than 3%. Ask about extra fees you may have to pay if you take out before the fund matures.
High-interest savings account
ASM (Amanah Saham Malaysia) and similar. They are probably the best safe option, but I’m aware options for non-Bumis are limited and not as attractive.
PRS (Private Retirement Scheme): If you are under 30, you can get RM1000 with a RM1000 or above contribution.
EPF (Employees Provident Fund): If you work, you (should) already invest in this. DO NOT REDUCE YOUR EPF CONTRIBUTION even if you have the choice!
Invest with RM1000: Medium level (Medium Risk)
Unit trusts also mean mutual funds: Are diversified financial tools. You can take from your EPF contribution to switch to private management (terms and condition apply) . This medium require a higher understanding before jumping in. If you simply pick one blindly without strategy, the chance of you not achieving your financial goal is relatively high.
REITs (Real Estate Investment Trusts): Are also diversified financial tools.Buy property ‘stocks’ and get returns. Some knowledge in which areas do well preferred required.
Gold: Considered a safe-ish option, has a good track record overall. Popular as a long-term investment.
Invest with RM1000: Hard level (High risk)
Currencies: This can be fiat currencies (MYR, USD, GBP etc) and cryptocurrencies. Two ways to do this –
- Buy currencies at low price then wait for it to rise (IF it comes up). For example, if you bought USD when it was RM3.50, you get to sell it for RM4.xx (whatever the exchange rate is now). Applies more advance trading skills.
- Play forex. Highly technical, high chance of effing it up and getting into further debt. Highly not recommended. Many might not know that forex trading is illegal in Malaysia and no protection provided from the authoritative.
Stocks: Buy shares of companies and hold it, and hopefully it’ll go higher and you get good dividends. Stocks is not for everybody. Ideally, you must know how the company and navigate yourself through many, many jargons. The best stocks for beginners are what they call blue-chip stocks, aka shares in strong companies with a good track record.
–NEW–
Equity Crowdfunding (ECF): You give money to startups you like in return for equity (something like shares or your stake in the company). This is a fairly new type of investment available in Malaysia, and suitable for people who believe in a particular business model and/or the founder(s)’ chance for success. The downside is if the company end up folding, you won’t get your money back. To do this, go check out ECF platforms and browse through the startups they offer. See their business model, ask whatever you want about the company, and make your decision from there. Most are early-stage startups, but there are also some established businesses available.
Here are some available equity crowdfunding platforms available in Malaysia now:
- PitchIN
- FundedByMe Malaysia……
P2P Lending: Another new type of investment available in Malaysia, where you can loan money to businesses (personal reasons not allowed) in return for an agreed interest rate. No banks are involved for this type of lending; it’s a unique fintech offering.It’s risky because there’s always a chance that the borrower will default and not paying back the loan. You should avoid lending to just one company to diversify your portfolio.
Here are all the available P2P lending platforms in Malaysia:
- B2B FinPal
- Funding Societies
- Ethis Kapital / Kapital Boost – the only one focusing on Syariah-compliance
- FundedByMe Malaysia – good if your business wants to attract international investors, not just Malaysians
- ManagePay Services – no website yet as far
- Peoplender / Fundaztic
Conclusion
Pick your risk profile – do you want to be safe but get low returns, or risky but high returns? Perhaps one of each, just to balance it out? If you are just starting out, perhaps start with the safer ones first (the key is to START), then learn as you go along. The best investors are long-term investors. If you have a ‘get rich quick’ mindset you’ll probably lose your money. It is impossible for you to achieve your financial goal the investment way. Fact.
