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Where can you invest or grow your money (legally)?

The purpose of this write up is to explore options that we all have to choose where to park our money. There are a lot of schemes (or I should call most of them scams) around us and we ought to be very careful. Below are the options that we all have and it's just an introduction of the asset classes. I will also go into the details of some and how to hunt for good deals in future articles.

1. Bank Deposit (Fixed Deposit and Savings Account). Malaysia's FD currently gives a yield of 1.5 to 2.25% these days while Savings Accounts provide a very poor 0.25 to 0.5% interests. The deposits are capital protected by PIDM up to RM250,000.00 per customer per bank.

2. Skim Simpanan Pendidikan Nasional (SSPN) is an alternative for parents with kids up to 21 years old. It offers 4% interest rate and does not restrict you from withdrawing your money. For middle to upper income group, you may also have tax deductions up to RM8,000/year. Visit their website to find out more how you can benefit.

3. Unit Trusts are 'pooled funds' that is managed by professional fund managers to grow the portfolio according to the fund's mandate. There are generally 3 types of funds:
a. Fixed Income
b. Mixed Asset/Multi Asset Funds
c. Equities fund

A lot of people have bad experiences with Unit Trust funds due to wrong selling tactic and lack of management (i.e. fund switching) by respective Unit Trust consultants. There are however a lot of successfully managed portfolios which managed to provide up to 8 or 9% returns per annum over a 10 years period.

There were some comments asking if why is Amanah Saham under the management of PNB does not show up. It is a matter of fact a form of Unit Trust investment. There are 2 types of Amanah Saham, one is fixed value (where the funds will only declare dividend) and variable value (similar to any unit trusts fund around).

4. Invest Directly in Equities (Stocks) - There are 900+ companies listed in Bursa Malaysia and many more in US (Nasdaq, NYSE) and Hong Kong Stock Exchange. By investing directly in stocks of companies, the investors  will act as a passive or sleeping partner who let the professional team run the day-to-day of the companies and only go back to all the shareholders for certain mandates (i.e. AGM, EGM). Investing in stocks require investors to have some degree of knowledge in understanding accounting, business environment etc. It is however, been treated as 'casino' for some as stock prices can be volatile and speculative at times. Bottom line, to be successful in stocks investment, the person will likely need to be a seasoned or advance investor.

5. Invest in Precious Metals. There are several ways to invest in them:
a. Paper products (i.e. Paper Gold, Silver)
b. Physical (i.e. buy physical Gold and store them in a vault)

6. Buy into cryptocurrencies like Bitcoins. There are some exchanges to allow people to buy into a small proportion of the coins (i.e. 0.001) since 1 bitcoin costs USD17,000 (25/11/2020 price)!

7. Invest in Properties - This is the 2nd most popular investment vehicle in the world. Favoured by the rich as it takes a large amount of money to purchase a single property and also the fact that it can be leveraged (i.e. take a loan against the property). Properties investment is also seen as a hedge to asset price inflation (i.e. scarcity of land as population grows, increasing skilled labour costs, human urge for bigger space or certain nice and strategic location)

8. Invest in other products (i.e. Wine, Vintage Vehicles, Stamps, Antiques, Paintings, Old Coins). Investing in these products are the hardest of all. The valuation of the items often are tied to how much the buyer is willing to pay and prices can only be determined at the time of auction considering that the monetary value of it is 'how much a buyer is willing to pay'.

9. The last but not least is the most traditional way - keep your money underneath your pillows or at home. However, be warned and cautioned that this is simply the worse of all (considering no war happening)! You can easily lose your physical money and the value of your money will definitely not grow in any way.

And... don't ask me about the scams where money can earn 1% per week. Do remember this, there is no free lunch on this earth and same goes to money. Do remember the rule, if it sounds too good to be true, it's probably is. Always refer to your financially sound friends first or Bank Negara (if you're in Malaysia) or your country's financial regulators for advice prior to any suspicious investments.


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