How to Start Investing in Malaysia – Quick and Easy Guide for 1st Timers

Congratulations on finding this page, and welcome to Fiholic.

You probably found this article on Google when searching for “how to start investing in Malaysia” and there are plenty of burning questions you want answered, right now, for example:

“I want to invest but what to invest in leh?”

If you are looking for “how to make a lot of money in 3 months”, please turn away now. I am not a magician and I’m not here to promote any schemes that promises insane returns.

However, if you’re genuinely curious and you kinda already know the importance of investing, please read on. I would like you to read this article slowly and digest the message behind, so you can get a good grounding in how to start investing in Malaysia.

Please note that this is a monster guide, so I encourage you to bookmark the page so you can come back to it later.

Why Start Investing

This section will be short. It talks about the importance of investing, of starting early, and letting your investments compound.

Investing preserves your wealth now so you get to enjoy it later. In any normal growing economy, inflation will eat away your value so your RM10,000 in savings 30 years from now, will not be able to buy the same things as RM10,000 today. In Malaysia, inflation typically hovers around 2 – 3% so you need to invest to get higher returns to beat the inflation.

It is safe to say that fixed deposit is NOT an investment. FD rates will never beat inflation, and relying on FD alone is a highly dangerous way to plan your future.

We invest because we want to grow our wealth and do so with manageable risk to get a return on our money, so hopefully we will be able to stop working some day and enjoy the fruits of our labour.

The earlier you start, the better your results will be even if you start with a small amount monthly. This is due to the power of compounding.

Also, investing has to begin with a purpose. As Simon Sinek says, Start With Why. You have to find your Big Why. What is your goal for investing? Is it for a big financial goal like a house? Is it for retirement? Or to get regular income?

How do you even begin if you don’t know what your aim is? I highly encourage you to think about what your investment goal is and make it as crystal clear as possible. Better still, treat investment like a side business. You need to write down your business plan.

For example, my investment portfolio is divided into 2: one for short-term active trading and speculation, another for long-term dividend play. I intend to use profits from my short-term trading and plow them into my perpetual money machine i.e. portfolio of stable, dividend stocks. My ultimate aim is to derive passive income from dividends that will give me financial independence.

What to Invest in Malaysia

We are blessed with a relatively stable country that allows us to take part in various types of investments. Generally speaking, you should aim to split your investments into different categories.

  • Equities – stocks, ETFs, unit trust
  • Bonds – MGS, corporate debt
  • Real Estate including REITs
  • Commodities – gold, silver, crude palm oil
  • Alternative assets i.e. cryptocurrency, P2P financing

I believe in the principle of diversification as different types of assets listed above will give different returns depending on many factors such as the prevailing local and global sentiments, changing consumer patterns, economic cycles, rise and fall of certain types of financial instruments etc.

I would highly recommend diversifying your instruments across different assets depending on your risk profile and your investing horizon. Diversifying is the only free lunch in the world.

Your investment portfolios should be well-diversified to reduce volatility, and different asset classes that are inversely correlated will cushion any extreme rise and fall in your portfolio and smoothen the growth curve.

For example, in a fearful climate that leads to stock market crash, gold and Bitcoin prices might rise as investors flee the stock market (hypothetically).

How then to select what percentage you should allocate? It depends on your risk profile. I talk about this further below in the topic on asset allocation.

How to start investing in Malaysia

So Fiholic, how to start investing in Malaysia, for real? To be honest, the topic is simply too big to cover in 1 article, so I have listed all the articles I have written. This list will grow over time so I suggest you bookmark this page so you can come back to it.

Equities

If you want to invest in equities i.e. stocks, there are many choices depending on your time availability and skills.

Bonds

Bonds can be accessed for retail investors via online platforms nowadays, it’s relatively easy though I suggest you do upfront research first.

You can gain exposure to bonds by buying bond funds, instead of buying individual bonds. This spreads your risk so you get similar returns with lower risks.

I recommend FSMOne to research the different types of bonds available.

Commodities

Real Estate

  • Buying a rental property
  • Malaysia REIT – this is a primer article on how to get started in Malaysian REITs

Alternative Classes

  • P2P lending
  • Bitcoin – I’m using Luno to accumulate this asset class

Creating a Good Asset Allocation Strategy

Don’t put all your eggs in one basket. Diversification is the only free lunch in the world. When the stock market crashes, you’ll be glad you didn’t have all your life savings in equities.

How to determine a good portfolio allocation? It depends on your risk profile and your investment timeline, and unfortunately there is no perfect rule to do it.

An aggressive, 25 year-old investor might choose to put 80% in equities, 10% in bonds and 10% in cryptocurrency. Compare that to a 60 year-old retiree who might choose to put 80% in bonds and 20% in dividend equities.

Tweaking your asset allocation in your overall portfolio is crucial to keep risk within a reasonable amount while still achieving the desired returns.

Here’s a reasonably good asset allocation guideline, but you don’t have to follow it strictly.

Things to Do before you start Investing

Investing is just part of your personal finance. In your journey towards financial freedom, don’t forget to think about other aspects of your finance.

  • Have you paid off all your unproductive debts?
  • Take care of your downside risks. Do you have insurance?
  • Estate planning. What happens if you leave the world suddenly?

I would suggest you to fully pay off all your credit card debts before you even begin to think about investing. There’s no point to earn 10% annually when you are paying 18% in credit card fees.

Conclusion

This is by no means a complete resource as to do so would be akin to writing a book. There are too many things to cover!

My aim is to create a concise beginner’s resource list for anyone interested to get a good grounding on how to start investing in Malaysia. If you found it useful, I’d really appreciate it if you could help me share the love by sharing it to your friends on social media.

We will be happy to hear your thoughts

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