Investment Planning Tips In Malaysia To Avoid Pitfalls

Investments are a great way to grow your wealth, save for your retirement or use in times of hardship. As Malaysians have the habit of saving money, it's no surprise that some of them can fork out a portion and turn them into investments.

How to Start Investing in Malaysia?

Even if you don’t have a large amount of money to invest, you can start small by reducing the amount you save and invest that small portion to gain consistent revenue.

Now, you may be wondering how early can you start investing your money as there’s always a certain level of risk to an investment. We’d say as early as possible like how the early bird gets the worm, though it entails some risk.

You can also start to invest your money before you get a credit card or are debt-free from your credit card. That’s because most credit card providers in Malaysia impose a 15% interest rate or higher if you don’t pay your dues on time.

Although investment plans often come with a risk, you can avoid falling into the pitfalls of risky investments with our specially-curated tips. Before that, let’s look at some ways you can plan for your investment.

Know where your money is going

It’s important to know where your money is going as it may affect your financial status – you either lose your money or earn more wealth. Investments can be tricky, especially if you have no knowledge about it.

More so, if you simply invest your money in an investment plan without knowledge of how the plan works and your possible earning.

Let’s say you invest RM10K in a unit trust fund, you may end up having RM9.5K as your investment capital. This is due to the commission, management fee, etc. If you're looking to grow your wealth, you may want to assess the number of fees that are imposed on your investment capital before starting your investment plan in Malaysia.

Besides, when you know where your money is going, you can make a comparison with other unit trust fund. That way, you can make a sound decision that's ideal for your finances.

Diversify your investment plan

With diverse investment plans available around us, you mustn't put all your eggs in one basket. Should you do that, you risk losing your capital investment along with the earnings.

Allocate your money through different investment plans such as a fixed deposit account, property, stocks, foreign currencies, etc. based on your goals, financial capacity and tolerance for risk.

By diversifying your investments, it can help to mitigate any possible risks so that you can have a stable and healthy finances.

Choose your investment mode

Now that you’ve prep yourself with the necessary knowledge about investment, it’s time to pick your investment mode which is either passive or active. Here’s what you need to know about the two investment modes.

1. Passive mode

This mode of investment requires little participation from the investors which means once you invest your money, you don’t have to monitor your investments regularly.

Before that, you must know that rental yield is calculated by taking the annual rental income generated by your property and dividing it by the total value you invest in it. Multiply it by 100 and you’ll get the percentage of the rental yield.

Several examples of passive investments include unit trust managed by a private entity or government-controlled agency. Investment-linked insurance is also part of the passive investment mode.

2. Active mode

Compared to passive mode, active investment requires the investors to monitor and review their investments regularly.

You can consider this mode of investment to be a high-risked one as investors need to work with financial professionals to get their benefit in real-time. This includes monitoring the stock market and assessing the possible outcome of exchange-traded funds.

With these basic knowledge on how you can invest your money in Malaysia, your next step will be to avoid falling into pitfalls of risky investments. This year alone, we’ve heard of various financial institutions warning Malaysians of scams related to the current pandemic.

As a matter of fact, about 500,000 Malaysians have fallen victim to various investment scams such as the get rich quick scheme or a pyramid scheme between the year 2015 and 2017. Here’s how you can identify a bad investment.

1. Too good to be true

An investment plan that sounds too good to be true is likely to be a scam. If the investment plan promises high returns with little to no risk, chances are that the returns come from investors who were promised the same condition.

When your returns are based on the number of people you recruit, know that it’s part of a scheme that tricks people into believing what they’re promised.

2. Pushy persuasion

When an investment seller is hesitant to share additional information and explain the risks, you should steer clear of such investment.

Scammers usually use hard-sell tactics to get you to invest your money without providing a clear explanation and written information. They may contact you, pretending to be from a reputable institution, and then push for a face-to-face meeting.

Should that happen to you, do a thorough research on the investment and bring along a knowledgeable acquaintance to the meeting.

3. Unregulated or unregistered investment plan in Malaysia

With various investment companies in Malaysia, it’s no surprise that some Malaysians may fall into an investment pitfall.

One way to prevent that from happening is to check for the company’s information on the Securities Commission (SC) website. If you don’t find them there, avoid investing your money into the company.

To protect you and your loved ones from scams, you ought to be vigilant about the latest news on investment scams. Besides, by doing additional research on the investment plan, company and individual, you can avoid the risk of losing your hard-earned money.

If you’re looking to diversify your investment, Gene offers a financial plan that can multiply your wealth, manage and increase your digital assets. You can also earn a daily income and convert your earnings to invest in property and jewellery. Keen to invest with us? Contact us at 011 6939 2180 or email your queries to [email protected]