Unlike many other articles on investment options in Malaysia saturating the Internet…
…written by half-past-six bloggers with no professional certifications or credible qualifications,
…or worse, bankers and financial agents trying to convince you why their products are the best investment options you can invest into…
This no-nonsense, no-holds-barred Guide is written in such a way to focus on you as a person, by ring-fencing the recommended investment options based on your investing experience & risk appetite.
Furthermore, it is written by an independent, licensed CFP (Certified Financial Planner) which will objectively dissect the pros and cons of every investment option available to you…
…at the same time dispelling all the myths, misconceptions and half-truths out there.
These are exciting times. Because not only are there so many more investment options than what our parents had — with the proliferation of the Internet — it’s easier than ever to get kickstart your investment endeavour.
Let’s dive in.
(if you prefer to watch videos instead of reading, below is for you)
- Investment Options in Malaysia A: You are a virgin investor who want to ‘test water’
- Investment Options in Malaysia B: You are an existing investor with some experience but want some more flavor in your investment portfolio
- Investment Options in Malaysia C: You are an investor who want to use Other People’s Money to maximize your investment returns in the shortest time
- Investment Options in Malaysia D: You consider yourself a sophisticated investor who wonder – “what else is out there to invest into?”
- Investment Options in Malaysia E: You are an investor who want to preserve your capital while getting consistent passive income stream
- Investment Options in Malaysia F: You are an inpatient speculative investor who can stand extreme ups and down of the market
- Investment Options in Malaysia G: You are a faux investor who cannot withstand any form of downside in whatever you invest into
Which investment is the best in Malaysia?
The best investment in Malaysia has always been the one that is easiest to start investing in with the least initial capital – namely stocks and unit trust.
Where should I invest my money in Malaysia?
Ideally, everything in this list! 🙂 But seriously, you allocate your money into stocks, bonds and property for a start then take it from there to go more sophisticated.
How can I start investing in Malaysia?
The easiest way to start is to open a stocks and unit trust account online, then put small money in (like RM 1,000) to test the water over the next 6-12 months.
Investment Options in Malaysia A: You are a virgin investor who want to ‘test water’
Stocks (cash-upfront, Bursa Malaysia)
When you purchase one unit of shares or stocks of a publicly traded company in any stocks exchange, you’re essentially owning a fraction of the company.
If the company business does well and grows (otherwise, you would not have bought the stocks right?), its stock price *should go up in time on top of sharing a portion of the profits with you via dividends.
How do you choose the right company to invest in? When to buy and when to sell? Well, you could spend a lifetime and several fortunes studying these two topics.
Mega Guide on Stocks Investing available here: https://howtofinancemoney.com/how-to-invest-in-stocks
How to start investing in stocks in Malaysia
What if I tell you that you can start in as fast as 10 minutes? Watch below
Now, if you lack the time or skills to do fundamental analysis (or find it daunting or befuddling) to select individual stocks to invest in, you can always fall back to an equity fund or unit trust (below) – which is a basket of stocks cherry-picked by the fund manager.
Unit trust (local Malaysia)
Also known as a mutual fund or actively managed fund, it is a regulated structure that pools money from hundreds of investors (both big and small) into a collective investment scheme. The fund will have a mandate stating what it can or cannot invest in, which directly reflects the risk rating or risk appetite of the fund.
The appointed fund manager then make the decision on what and when to buy or sell – for this kind of effort, (s)he charges a management fee which is a fraction of the fund’s total valuation.
Investment return comes in the form of capital gain (or loss) and income distributions.
It enables you to get exposure into a basket of the public-listed company with only RM 1,000 ~ which is not possible when you invest in a share priced at RM 10/share, as your entire RM 1,000 is over-concentrated into 1 company. In Malaysia, 1 lot of shares with 100 units each would have cost your entire RM 1,000.
Shortlist the Best Unit Trust Funds to Invest
Seek advice from an independent licensed adviser to reveal the best unit trusts in the market, minus the sales talk (also to restructure an underperforming investment portfolio)
By the way, Ponzi schemes work the same way, the big distinguishing feature is – any regulated collective investment scheme (CIS) will have a credible trustee in the jurisdiction it operates so that investors’ money is not intermingled with the fund management company’s money. In other words, even if the fund manager goes bust, your money is safe and redeemable.
There are a myriad of unit trusts in any country, investing in a diverse range of countries, sectors, asset classes or any of these combinations.
How to start investing in unit trust Malaysia
- Direct via banking channel or fund management company
- Via platforms like iFast or eUnitTrust, which, ironically can be ‘cheaper’ in terms of upfront costs (aka sales charge), most of the time
You can also invest in unit trust in Malaysia using EPF account 1.
Trivia: The investment portion of any investment-linked insurance policy is actually invested into unit trust funds managed by the insurance company itself.
Similarly, Amanah Saham is really nothing fancy but also fixed-priced unit trusts.
It can be an Endowment Plan (aka Traditional Savings Plan) or an Investment-Linked Policy. Before you start, watch the video guides below:
Sorry, but there is no better-written explanation to this so make sure you watch this before you decide to invest using insurance plans.
Investment Options in Malaysia B: You are an existing investor with some experience but want some more flavor in your investment portfolio
Stocks (cash-upfront, foreign stock market)
Most of the time, you need to have a residential address in the foreign country to open a bank cum stocks brokerage account in order to invest in the foreign country stocks. If that is not viable, then the other option is to do via Malaysian stocks brokerage but obviously, the brokerage fees are on the high side. Furthermore, due to BNM strict guidelines and many internal requirements set by Malaysian domiciled banks, you may face difficulty wiring a huge lump sum of money outside Malaysia for investment purposes.
The more straightforward and hassle-free way?
Watch the video series below on how to invest in the global stock market easily.
Watch the video series below to understand how Robo advisor really works before investing.
Note: Robo-advisor is a platform or supposedly a replacement for a human advisor. It is NOT an asset class.
If you want to invest in foreign (US) Exchange-Traded Funds (ETFs), the likes of iShares, Vanguard, then Stashaway could be the most hassle-free platform to use.
Also, check out this complete Stashaway Robo advisor guide.
Exchange Traded Fund (ETF)
A picture is worth a thousand words? of course, see below
Peer to peer lending (aka P2P lending or financing) uses a platform (it is not an asset class) that enables investors to lend money to small-medium businesses in exchange of a regular but variable income.
Usually, startups or small companies that are in the infancy stage of their business will find it hard to obtain loans from financial institutions.
P2P operators will do due diligence on the credit worthiness and financial strength of the companies before listing them onto their P2P platforms. Therefore, P2P platforms charge a service fee for matching you (and your risk profile) to vetted borrowers, on top of managing your investment. Beware! Some of these service fees can be as much as 18% of the profit you make on top of transaction fees when you conduct fund redemption from P2P platform.
P2P financing is medium-term investment because most companies listed under P2P platforms are looking to borrow funds for 3-5 years.
Best case scenario: Getting double-digit returns.
Worst case scenario – companies go default and you lose your entire capital.
Ensure the P2P operator for the P2P platform (updated list here) you are using are regulated by the Securities Commission. For FAQs on P2P, click here.
Read this first and use at your own risk 🙂
Investment Options in Malaysia C: You are an investor who want to use Other People’s Money to maximize your investment returns in the shortest time
Residential Real Estate Property
Watch these property investing lessons
Stocks (Margin Financing)
Investing in ASB as one of the top choice for investment options in Malaysia is a no brainer. However, using bank financing to start from zero requires some planning. Watch these ASB Financing lessons.
Investment Options in Malaysia D: You consider yourself a sophisticated investor who wonder – “what else is out there to invest into?”
Mega Guide on Private Equity Investment as one of the more advanced investment options in Malaysia available here:
Or watch a the Ultimate Guide on How Private Equity Investments work:
Commercial Real Estate Property
The big brother of residential property investment, many property investors eventually ‘graduate’ to become commercial property investor. Read the mega-guide below on why you want to revamp your investment property portfolio once you become ‘veteran’, to expose yourself to this investment options in Malaysia.
Investment Options in Malaysia E: You are an investor who want to preserve your capital while getting consistent passive income stream
Real Estate Investment Trust (REIT)
No lengthy explanation can replace this compact lesson when it comes to one of the most consistent and inflation-hedged investment options in Malaysia (and anywhere in the world). Watch this lesson
Prefer reading? Then read this
Usually considered a boring investment options in Malaysia, bond is an under-rated instrument. The concept is not unlike P2P financing, where lenders (bondholders) lend money to the businesses requiring to raise capital for a specific duration.
In exchange, bondholders will stand to enjoy steady stream of coupon payment (also known as interest income) at a predetermined annual rate until maturity. At maturity, bondholders will get back the principal amount at par value. Before maturity though, you do NOT possess the option to get back your principal amount.
The interest income for long term bonds are relatively higher than short term bonds as you will be putting your money for longer duration and need to be compensated for time value of money and the ‘lost’ opportunity cost to invest this money elsewhere.
Bond may appear similar to P2P lending but unlike P2P lending, these companies (known as bond issuer) are usually established conglomerates, public-listed corporations and even government. Therefore, the likelihood of default is lower.
In fact, there exists independent agencies which classify the risk of the bond defaulting (not being able to keep service its regular income payment to bondholders on time or not at all, or unable to return initial capital to bondholders ). Bond are graded by credit ratings:
- AAA – Very low default risk
- AA & A – Low default risk
- BBB – Medium default risk
- BB,B & CCC or below – High default risk, aka junk bond
The higher the credit risk, the higher is the coupon rate to attract prospective investors, and vice versa.
Apart from that, bond is prone to inflation risk and reinvestment risk.
Inflation risk: Interest income is fixed (no growth) therefore it is not inflation-hedged.
How to start investing in bonds in Malaysia
Retail bond (direct): Minimum tranche is usually RM 200,000 upwards; may be a concentration risk for you
Bond fund: Can be in the form of actively-managed mutual fund (unit trust) or passively-managed ETFs. Minimum investment as little as RM 1,000 with diversification. (recommended)
Investment Options in Malaysia F: You are an inpatient speculative investor who can stand extreme ups and down of the market
Most popular commodity investment options in Malaysia is precious metal, specifically gold apart from oil, sugar, livestock, silver to name a few.
Gold is one of the oldest investments that humans have made. In modern day, gold investment can come in a few forms:
- Physical gold – Required large capital
- Gold ETFs – Moderate Capital (Refer to ETF Investment above)
- Gold Bank Accounts – Low minimum capital
No fundamental analysis to do as the price fluctuates depending on supply & demand, although gold price tends to move up during recessions or political instability. Also not income-generating.
Some people believe precious metals like gold are good protection against inflation and uncertainty. Like if both the stock markets and bonds are crashing, where do you move your money to? That’s why you’ll often hear conspiracy theorists say: “There’s a big crash coming… buy gold now!”
I’ll let you form your own opinion 🙂
More info: How to invest in gold by iMoney
Foreign exchange investing toys with the idea of trading currency. All currencies have an exchange rate, you can say it is the price of the currency.
An example of an exchange rate is USD/GBP = 0.77
This means, you will need 1 USD to buy USD 0.77. The currency on the left (USD) is called base currency and the currency on the right (GBP) is called quote currency.
To ‘play’ forex, you trade in pairs. For instance, you purchase £ 10 to sell it in the future at higher price as you predict that GBP exchange rate will strengthen (base currency weaken) against USD. When GBP rises against USD, you profit.
Conversely, you sell currency to purchase it later, if you think that the currency exchange rate will weaken (base currency strengthen) in the future.
The difference in exchange rate is expressed as “pips”. The larger pips you gain, the higher is your profit.
Exchange rate highly depends on political and economic changes globally which is all beyond your control. It is a pure ‘heads or tail’ coin toss kind of prediction.
The stakes are high because you can lose much more money than what you have.
Because you usually do forex trading using leverage (for example, borrowing RM100 for every RM1 you have)
Popular FOREX Trading platforms include Octa FX, FXCM & TriumpFX (click each of them to check their licensing under Malaysian financial regulators)
You can hedge against downside risk by opening positions of difference currency pairs. Not to mention, you have to be constantly on your toes 24 hours a day for anything and everything that can impact currency movement.
Not to mention, you are competing against other FOREX traders, which means you must know how to increase your odds in winning by learning how to trade like a casino – watch the video below.
Futures contracts is not really a standalone investment options in Malaysia. Instead, it is conventionally used as short-medium term (3-12 months) hedging instrument for other financial assets like stocks or commodities like oil and precious metals.
For example: You can buy (long) a stocks in the market in anticipation of it going up. However, you are also worried about the stocks dropping in price so you buy put options with a predetermined strike price and expiry date to hedge against you stocks holdings.
It basically manages your risk by taking positions on either side of a deal to assure your profit in the investment.
A future contract allows you to buy or sell a certain item at a specific date in future at a predetermined amount.
You do not need to pay for the full contract up front to buy futures. You can pay only a margin of 5-10% of the total value of the contract to trade in futures
Top 3 Future Contracts Investment Options in Malaysia
- FTSE Bursa Malaysia KLCI Futures (FKLI)
- Crude Palm Oil Futures (FCPO)
- Gold Futures (FGLD)
Recommended reading: from KCLau.com
Crypto-currency & Digital currency
Cryptocurrencies are digital currencies that are not controlled by Government and banks, and therefore its price or value are not dependent on fiat currency. You can find them in decentralized databases as coin or token entries.
This medium of exchange (would not consider it an asset class yet) can make you lose 100% overnight or quadruple your money in a week; it is the riskiest of all. It is truly a roller coaster ride – so only true believer (with a lot of faith) should dabble in it. You probably do not want to put in any amount you cannot afford to lose.
To start trading in cryptocurrency, you have to deposit and convert your Ringgit funds into any of the crypto currencies of your choice (top 3 options below) via a cryptocurrency exchange.
Always check the updated list of regulated and licensed crypto exchange in Malaysia here, the likes of Luno and Tokenize.
Recommended reading: FAQs on Bitcoin for Malaysian newbies
Investment Options in Malaysia G: You are a faux investor who cannot withstand any form of downside in whatever you invest into
I do not consider fixed deposit, EPF/PRS and ASB Saving as ‘investment options in Malaysia’ because they are almost like capital protected, and therefore needs no explanation, if you have questions, post them in the comment section below.
Savings Account & Fixed Deposit
Your Questions Answered? If not, ask below
8 Easy Ways To Start Investing In Malaysia If You’re New To It And Don’t Know Anything
RM1,000 Investment Guide: Where Do You Invest?
Looking For Safe Investments? Here Are 5 Low-Risk Options
The 3 Most Trusted Investment Types In Malaysia To Multiply Your Savings Fund!
Here’s How Millennials Can Start Investing From As Low As RM100
Thanks for the article! Very informative for people who don’t have investments.
I am an authorized financial advisor with Hong Leong Assurance (HLA). We currently have Investment-Linked plan that comes with 20% guaranteed income for the next 20 years with only 6 years of premium payment. For retirees, you can withdraw the amount monthly or yearly as well if you want some income. The funds are managed by Hong Leong Asset Management and they always have a good track record.
Do email me at [censored] if you wanna know more (:
Fren its not 20% x for the 6 uears total i put in a bank or aud bond which is 6.4% as gor ur 20% its based on the girst year amount let say total is 120k for 6 years. Each year is 20k so ur 20% is based on that 20k not 120k . Its good for young people to safe but for mid age or retired ppl its not an good option and ur minimum years of hild will be 10 15 or 20++
This is a piece of More information for the Article. Thank You so much for sharing this Post
you bet! 🙂
In forex, using Metatrader5 if I initiate a sell with take profit, can I adjust the take profit point higher or lower while trade is ongoing?
Is forex trading and investment legal in Malaysia ?
police won’t come to catch you if you do but that does not mean anyone can help you if the forex trading platform run away with your money 🙂