5 Investments Destination for Newbie
You are still young and intend to use your income wisely by investing it properly. However, you find yourself in the pickles as you continue to struggle and don't even have extra money to invest.
Worry not. Investment is actually for everyone, as there is always a way to do something if we put in the effort, discipline, and commitment to do it correctly.
Because you are still young, time is on your side in terms of investment; when you start early, time is your friend compared to starting late.
It will give you more flexibility as you have a more extended period to enjoy the magic of compound interest and more flexibility in managing your investments.
Whatever your goals are, start step by step by focusing on building an emergency fund first, before expanding to medium-risk investments such as gold and real estate, and later, into high-risk investment instruments like the stock market.
Do not let your worry about money stop you from investing. The later you start, the more difficult it will be to build wealth, as time has become your enemy, and your investment opportunities become less and less flexible. Start your investment journey today and make time your ally!
How do you invest when you don't have much money?
A long investment timeline allows you to start small and cautiously before strategizing to a more aggressive portfolio as your financial position strengthens.
Therefore, when you want to start investing, you should first build an emergency fund representing at least six months of your current salary.
Since you are still young, investing just RM50 or RM100 monthly is enough to help you build a solid financial foundation.
The long investment period enables you to enjoy the power of compound interest. As long as your capital and dividends are not withdrawn, your money can be compounded more frequently, resulting in a larger accumulated fund.
To build an enormous fund faster, increase your investment amount every time you receive a bonus or a salary increase. Once you have a solid emergency fund, diversify your investment portfolio to include gold, real estate, or stock market.
As you are still young, the opportunity to invest is enormous. As such, you must choose carefully and fully understand each type of investment before taking the first and second steps.
To help you understand more about some of the investment opportunities available to you, we have listed five options ranging from low-risk to high-risk investment destinations.
1. Amanah Saham Bumiputera (ASB)
ASB is a fixed-price unit trust offered at RM1 per unit. It is a low-risk investment because it is transacted at a fixed price of RM1 per unit.
Based on its track record since its launch, ASB has provided stable and competitive returns to investors.
Starting an investment in ASB is also very easy. You can open an account with just RM10 and then add more to it according to your ability.
To start investing, you only need to visit the ASNB branch or ASNB bank agents such as Maybank, RHB Bank, and CIMB Bank with your identification card.
When opening your account, make sure you understand the difference between ASB Financing and a loan. Do not take any financing to invest in ASB if you are not able to pay the monthly installments.
Investing in ASB is also more accessible, as you can invest and manage your investment via the myASNB app. The apps allow you to invest, withdraw, and subscribe to the automatic investment service Autolabur.
As ASB has high liquidity, you can easily withdraw your investment when needed, making it suitable as an Emergency Fund.
2. Fixed Deposit
A fixed deposit (FD), also known as a term deposit, is a financial instrument provided by banks and other financial institutions that offers investors a higher interest rate than a regular savings account until the given maturity date.
It is an investment where you deposit a lump sum of money for a fixed period at a predetermined interest rate. The interest is usually compounded periodically and paid out at maturity or at specified intervals, depending on the terms of the deposit.
Usually, the return offered is between 2 to 3 percent per annum, depending on the investment period.
Fixed deposits differ from Savings accounts, as Savings Accounts give minimal returns, and we can withdraw our money at any time.
3. Robo- Advisors
Robo-advisors are one of the latest investment crazes, which allows us to invest our money and let the robot manage it.
It is a digital platform providing automated, algorithm-driven financial planning services with little human supervision. There are many Robo-advisor application platforms from which to choose.
One latest option is the Robo Investment Advisor (RIA) offered by ASNB. With this option, you can invest in selected ASNB unit trusts according to the portfolio offered to achieve your desired returns. You can start with an investment as low as RM100, with portfolio portfolios ranging from very conservative to highly aggressive.
You can also try Raiz, which automatically invests your spare change every time you spend, even as little as 30 cents.
Start your investment with Robo-Advisors today, and let technology help grow your wealth!
4. Gold
Investing in gold is a popular strategy for diversifying portfolios and protecting against economic uncertainties. Gold has been valued for centuries for its rarity and beauty, and it often serves as a hedge against inflation and currency fluctuations.
You can choose to buy jewelry, invest in gold coins or bars, or open a Gold Account. However, gold prices can be volatile, influenced by various factors including economic data, geopolitical events, and changes in supply and demand.
You must also understand about the term 'spread' because it affects the overall profitability of your gold investment.
The term "spread" in gold investment refers to the difference between the buying price (ask price) and the selling price (bid price) of gold.
This spread represents the transaction cost and can vary depending on the form of gold investment, the market conditions, and the dealer or financial institution involved.
Your initial investment in gold will depend on your choice of gold. For example, the price of jewelry depends on the current price of gold and its weight. For example, if the current price of gold is RM358 per gram, a piece of jewelry weighing 3 grams might cost RM1,074, excluding labor charges.
Gold can be a valuable addition to an investment portfolio, offering diversification and protection against inflation and economic instability.
5. Stock Market
The stock market is a collection of markets and exchanges where publicly held companies' stocks (also known as shares or equities) are issued, bought, and sold.
The stock market is a high-risk investment destination and only suitable if you have extra money that you are okay with losing. As such, if you are brave enough to take the risk to get a high return, you can choose to invest in stocks.
Investing in stocks nowadays is easier as the initial investment is getting smaller, and you can also do it online via banking apps.
As a newbie, start by seizing opportunities through Initial Public Offerings (IPOs) offered by companies that will be listed at Bursa Malaysia.
When investing in the stock market, always remember the advice of leading investor Warren Buffet: "We should take a long-term view and not make decisions based on emotions." What matters is not immediate profits but the returns obtained from the company's dividends.
However, the stock market is only suitable if you have extra money and have built an emergency fund. Any losses are tough to recover, and you may suffer long-term losses.
Summary
When choosing investment instruments, you can invest in low-risk instruments that provide stable returns. You don't need to rush into high-risk investments just to seek high returns; instead, you can take a cautious approach to avoid losses.
However, a long timeline also allows you to invest in medium or high-risk instruments such as unit trusts and the stock market because you still have time to correct any mistakes.
Article Highlights
1. Start with a goal to build an emergency fund.
2. Don't wait until you have a lot of money to start investing. Instead, adopt the concept of 'investing first and spending later'. Create a budget and spend wisely to manage your money more effectively.
3. Investing RM100 monthly in low-risk instruments for the long term is more beneficial than waiting for thousands of ringgit to start investing in high-risk instruments.
