Steps to Creating a Solid Investment Plan in Malaysia

05 July 2021

Making an investment involves more than just investing your money in the numerous investment plans available out there. You need to consider a variety of factors to make your money work for you. Hence, it is important to know what is exactly investment planning in Malaysia .

To gain fast money in Malaysia, you need to know why you're investing in the first place. Without any direction for your investment, you may have a difficult time creating a solid investment plan.

Let's discover the meaning of investment planning, its objectives, and how you can create a solid investment plan in Malaysia.

What is investment planning?

As the core component of financial planning, investment planning is the process of identifying your financial goals and realizing them by creating a solid investment plan. Your investment planning begins when you are clear about your financial goals and objectives. After that, you need to match those goals with your financial resources.

Having said that, there are numerous investment plans for you to invest in, with the most common ones being cash, equities, bonds, and property. Each of these investments has varying characteristics and a solid investment plan will usually have all of these.

Once you have a solid investment plan, you can invest the funds available in any of the investments mentioned above to achieve your goals and objectives.

What are the objectives of investment planning in Malaysia?

The options for your investment will continue to increase but each one of them can still be classified according to three fundamental characteristics – safety, income, and capital growth. Aside from these basic objectives of investment planning in Malaysia, you can also have secondary objectives like tax minimization and liquidity when choosing your investments.

i) Safety

As one of the main objectives of investment planning in Malaysia, having a solid investment plan will help to guarantee the financial safety and well-being of you and your loved ones. While there's no such thing as a safe investment, investing in the money market is certainly safer than the bond market.

ii) Income

Another objective of planning your investment is so that you can generate more income. Although high-risk investments yield high returns, you need to analyze the investment plans thoroughly, evaluate the risk-return ratios, and invest accordingly to enjoy the benefits as well as ensure that you don’t lose your capital investment.

iii) Capital growth

Having an investment plan will allow you to achieve capital growth and minimize capital loss. You can achieve capital growth by selling your investment assets at a higher price than the price you paid while selling at a lower price will lead to capital loss. If you want capital gains, you should invest in securities for a longer term.

iv) Tax minimization

Some investors may take up investments to minimize the overall burden of income tax as part of his/her investment strategy. For instance, a business owner may seek investments with favourable tax treatment to lessen their income tax. Investing in an individual retirement account or other tax-advantaged plan is an effective tax minimization strategy.

v) Liquidity

Many investments like bonds and bond funds are relatively liquid, which means you can easily convert them to cash. But to achieve this level of liquidity will require you to sacrifice a certain level of income. For example, real estate or art can be excellent investments unless you’re forced to sell them at the wrong time.

How to create a solid investment plan?

Before you invest in any type of investment, having a solid investment plan will help to define your investment timeline and highlight how much risk you’re willing to take on to determine your optimal asset allocation. Here are the steps to creating your investment plan:

1. Assess your current financial situation

Your first step in creating your investment plan is to assess your current financial situation. This means you need to figure out how much money you can invest. Start by evaluating your monthly disposable income after expenses and emergency savings. You also need to consider how accessible your investment will be in case of an emergency.

2. Set your financial goals

The next step of your investment planning in Malaysia is to set your financial goals. What’s the purpose of your investment? What are you hoping to earn the money for? This can be anything from emergency funds to saving for your retirement. Make sure to define your goal timeline. How fast do you want to gain money from your investments?

3. Determine your risk tolerance

Your next step in creating your investment plan is to determine your risk tolerance. The earlier you start investing, the more risk you can take since your investment portfolio has time to recover from any losses. If you’re older, you should opt for less risky investments and invest more money upfront to spur your financial growth.

4. Decide what to invest in

The final step of your investment planning in Malaysia is to decide where to invest your money. Consider your budget, goals, and risk tolerance when you’re looking for the right type of investment. Also, make sure to diversify your investment portfolio to maximise your financial growth while minimising your risk of losses.

5. Monitor your investments

Never leave your investments unmonitored after making any investment. Regular monitoring of your investments will help you to decide whether you need to re-evaluate your investments. This will allow you to make changes or adjustments to fit your investment goals.

Looking for an investment plan in Malaysia? You can start with Gene App – an investment plan that works to multiply your wealth, manage and increase your digital assets. You also get to earn a daily income and convert your earnings to invest in property and jewellery.

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