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Investing for the first time in Malaysia? Read this first.

Are you interested in making your money work for you as a side passive income? Then perhaps it’s time to start looking at investing your hard-earned cash into investment options available in Malaysia to grow your nest egg. 

If you are just looking through and researching your options for your first-time investment in Malaysia, then you will need to start by determining a few essential details to narrow down which sort of investment would work best for you. One of the first things you would need to do is have a comprehensive understanding of your finances, a complete breakdown of your income and expenditure that would give you a confirmed amount of how much surplus you have to invest. 

Next, you need to set clear goals that you want to achieve with the investment. A clear target of what you want to achieve with the investment would help you pick the right choice to meet your goals. A word to the wise, it’s always best to scatter your investments in various avenues as you don’t want to place all your money in one single investment plan, there is always a risk factor that should be considered when it comes to dealing with money and making it grow.

Here’s a quick guide to investing for first-time investors in Malaysia:

Types of Investments in Malaysia

1. Unit Trusts

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Unit Trusts or equity unit trust is a common method of investment in Malaysia due to its ability to provide exposure to the multitude of companies listed on Bursa Malaysia. A unit trust is not the same as mutual funds there are differences in the legalities of their structures. A mutual fund is an investment company that has redeemable shares (investment schemes) and a unit trust is not a company, and it can only issue units for investment.

There are Unit Trust Consultants (UTC) that are available in Malaysia to help you put through your investment request if you decide to buy units to invest and as with any investment plans, the minimum amount required is a variable that is not constant. The initial investment amount for unit trusts generally starts as low as RM1,000, but it’s always better to refer to the prospectus to get the confirmed required figure.

You may also opt to use your Employee Provident Fund (EPF) to purchase unit trusts although in the case you might not be able to enjoy the fruits of your investment immediately as whatever you earn would be credited right back into your Account 1. Investing with unit trusts has a medium to high risk factor, and it will require you to have some know-how before you start investing.

2. Fixed Deposits

One of the most popular ways to earn a passive and secure income in Malaysia are fixed deposits. If you are a first-time investor in Malaysia and would like a low-risk option, then you should seriously consider placing your cash into fixed deposits. Fixed deposits are basically a hybrid of a savings and investment account where you can place a set amount of cash for a fixed time with a set interest rate. 

The interest rate is calculated on an annual basis, so the longer you place your funds in the fixed deposit account the higher the return, requiring you to have the patience to wait for the money to grow and bear fruit.
The rates provided by banks in Malaysia are competitive; there are rates varying from 3.77% p.a to 3.60% p.a depending on which bank you prefer to place your investment in. Bear in mind that the minimum amount required for a fixed deposit varies according to the financial institution so you would probably be looking at RM5,000 to RM10,000 for a placement.

3. Real Estate

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The property market is highly volatile, and it is a playing field best suited for a high-risk investor. If you are just starting out as a first-time investor in Malaysia, this sort of investment might seem too risky at first glance.

Purchasing property is not cheap in Malaysia, at the very least you would require funds in the range of RM500,000 to a million to purchase a property that would be well worth your time and effort. As with real estate, the prime deciding factor of how well your investment does is the location. And in this current economic climate, investing in property would definitely require thorough research and well-informed decisions.

There is also a myriad of other costs when it comes to purchasing a property, you will have to allocate funds to make the property liveable (if you plan to rent it) or renovate it to make it more attractive to the next buyer. You will also be tied to making monthly mortgage payments till you are able to sell it or charge a rental fee that’s high enough to pay the monthly payment and give you a little extra to save.

And last but not least, another issue for investors to consider is the illiquidity of real estate investments. If you’re looking to buy-and-sell in a short period of time, it is better to consider REITS (Real Estate Investment Trust) as an alternative option to property investing.

4. Fiat Currencies

Fiat currency is basically money that is issued by the government, like US Dollars or Malaysian Ringgit. This method of investment is quite high-risk as you would be purchasing a foreign country’s currency when its rate is low and selling it when its value goes back up, earning you a quick profit.

The risks involved with dealing with foreign currencies is that the value of the currency is highly dependent on the country’s economic and political status. This sort of investment requires you to keep tabs on world economic news, and you also will need to have a quick business sense on when to make decisions to buy or sell the currency.

There is no set minimum amount required for this sort of investment as you can spend or risk as much as you wish, but as a first-time investo, you should exercise caution and try to either start small or look into safer options.

5. Gold

This is a tried and true conventional method of investing, and it pays its due when done right. Gold is a highly valuable asset and inherently more stable than real estate and fiat currencies. You don’t need in-depth financial knowledge when it comes to investing with gold unlike unit trusts, real estate and fiat currencies, making it a good choice for first-time investors in Malaysia. In Malaysia’s current economic situation, perhaps gold is a more stable way of investing compared to other avenues as it’s an effective hedge against inflation. 

You would not have to worry much about price fluctuation or depreciation as gold will always have its value. This might not be a glamorous method of investment, but it’s solid and trustable. Purchasing gold and storing it in a safe deposit box is a popular way of long-term investment with this precious metal or alternatively in Malaysia, some banks offer Gold Investment Accounts that allows you to invest in gold with 99.9% purity without the burden of physically storing the gold. 

You would just have to make a payment to purchase the gold, and you also would have the option to withdraw your investment amount in gold or cash although this might differ depending on the company you invest in. Minimum initial purchases can vary according to different banks, it can be from 1 gram to 20 grams.

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Bear in mind that as with everything in life, investments come with a risk factor, no matter how much you are assured of its safety. However, with enough research and financial know-how, there is an excellent chance for you to place your money in the right investment vehicle and earn. Be open and curious about the economic climate of the country and look at various options before settling on an investment opportunity, the investment arena is exciting and can be highly lucrative when its explored in the right way.


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