How to Start Investing in Malaysia | Beginners Ultimate Guide | Investment Series

How to Start Investing in Malaysia

Discover how to choose your Malaysian investment account, where to find the best broker, and how to pick stocks.

 

You can start building your gains into a sizable nest egg as soon as you start investing. With the help of compound interest, investors in Malaysia may be able to increase their initial investment of RM 10,000 by nearly RM 700,000 over the course of 30 years by making a monthly contribution of RM 500.

 

It's time to get to work whether you have never invested before or are just getting started. How to invest your money is as follows: Prepare your finances. So that it has time to grow, you want to invest money you won't need right away.

 

You must first complete a few tasks.

 

Create an emergency fund. Three to six months of living expenses are usually advised. However, you are not required to keep this money in your current account. It is acceptable to use a money market fund at a share trading account or a high-yield savings account.

 

Pay off high-interest debt. If the interest rates on your credit cards are double digits, paying off the debt will save you more money in the long run than many short-term investments would.

 

You can open a share trading account (if you don't already have one) and begin investing with these objectives in mind.

 

Choose the type of investor you want to be.

 

Choose the proper accounts.

 

Different types of investment accounts exist.

 

You must open a trading account and a Central Depository System (CDS) account in order to conduct business in Malaysia.

 

Bursa Malaysia Depository Sdn Bhd is the sole operator of a CDS account.

 

Any authorised depository agent will be able to help you open an account (ADAs). You can make as many deposits and withdrawals as you'd like with this kind of account.

 

Although you can deduct taxes on losses, you must pay taxes on profits. Pick a trustworthy broker. You'll probably discover the ideal broker for your financial situation in Malaysia since there are so many to choose from.

 

How can they be compared?

 

When choosing a broker, take your needs and options into account.

 

You can invest in anything you believe will increase in value over time, but for the majority of people, stocks or exchange-traded funds are where they begin (ETFs).

 

Specific stocks perform better than the market average each year. Just in 2020, Tesla increased by nearly 700 percent. In the previous ten years, Netflix increased by 3,900 percent.

 

Owning the right hot stocks is enjoyable, without a doubt. But in investing, taking big risks usually means winning big.

 

Thus, even though many Malaysian investors begin with individual stocks, it's best to limit stock selection to the portion of your account set aside for riskier investments.

 

Keep the majority of your money in safer investments, like big blue-chip stocks or ETFs.

 

Before purchasing a large number of individual stocks, most financial advisors in Malaysia would advise new investors to invest in exchange-traded funds.

 

This is because ETFs allow you to diversify your portfolio across various industries and companies, which is how you achieve long-term, steady growth.

 

ETFs typically follow indices, matching their performance at a low cost of about 1% of invested funds annually on average. As you gain experience targeting your investments and have access to more funds, you might want to add additional ETF classes like sector funds, commodity funds, and others in the future.

 

Bond funds and bonds.

The conventional hedge for a diversified portfolio that is stock-focused is to purchase bonds. Bond prices typically rise when stocks decline, though the returns are typically lower.

 

The conventional wisdom was to invest in bonds equal to your age, for example, at 30, 30%, and at 60, 60%. But because bond returns have been so much lower for such a long time, new regulations have been developed.

 

One instructs you to deduct your age from 110 and invest the difference in stocks. As a result, at age 30, you would own 80% stocks and 20% bonds. Even retirees should have a 90/10 mix of investments, with the majority in a broad market index fund, according to investing sage Warren Buffett.

 

Like stocks, you can invest seriously in bonds by purchasing bond funds, real bonds, junk bonds, and ladders of bonds with varying maturities. gold, real estate, and other things. Although stocks and bonds are easily available, your investment portfolio can include almost anything you believe will appreciate in value.

 

One option is to invest in real estate. Try an ETF, a real estate investment trust (REIT), or one of the many specialised investment brokers that allow you to join a deal with a very low buy-in.

 

Some people would argue that buying your home or rental property counts as an investment because you need a place to live, but that is a separate concern.

 

Metals investing, and particularly gold investing, has always been seen as a safe haven during market downturns.

 

In reality, you can invest in the majority of commodities through futures markets or ETFs, though it might not be as satisfying as putting a gold coin in your pocket. (However, keeping goods on your own can be difficult.).

 

Cryptocurrencies and foreign exchange trading have become more well-liked in recent years. In forex, you essentially wager on the ups and downs of one nation's currency relative to another.

 

In cryptocurrency, you choose from a variety of digital currencies because you anticipate that demand will increase over time.

 

Cryptocurrency is only worth what someone is willing to pay you for it, unlike stocks that are backed by a real company or currencies that are backed by governments.

 

Therefore, the risks are greater, but the rewards have recently been enormous.

 

Collectibles: Almost anything can be bought and stored away as an investment, including collectible cars, artwork, and antiques. Some people are literally worth more than gold.

 

The problem is that in order to make the biggest profits, you need to be familiar enough with the market to predict what will sell in ten years or more. Or possess the money to acquire classics after they have already become timeless. That is at least as difficult as selecting specific stocks.

Happy Investing! 😉