An ‘easy investment’ can be a bit of a misnomer. It might be more accurate to regard them as ‘assessable points of entry’ into investing. What makes most of these investments ‘easy’ are largely their low-risk points.
But the first thing you should know as you start your investment journey, is that there is no such thing as low-risk with high-rewards. Neither does choosing to opt for something high-risk so that you can automatically reap high rewards. Whichever choice you make, any type of investment requires additional thought, research and (some) professional advice.
Essentially, an investment is the decision to park your money at a spot with the intention that placing it there will grow your money, preferably in value and quicker than inflation. In Malaysia, here are five options you can explore, especially if you are completely at the beginning of your investment journey.
1. Fixed Deposits
This is usually the first point of entry for most people as there is almost no risk and promises guaranteed returns; and also, no broker fees. A fixed deposit means parking your money in this account for a set amount of time, and upon maturity, you’ll receive returns calculated on the interest rates.
The tenure of a fixed deposit ranges from short-term (one month) to long-term (five months). Usually, the longer the term, the higher the interest rate. However, if you withdraw your deposit before the duration and maturity is up, it will result in less returns.
2. Unit Trusts
A unit trust is a portfolio of assets made up of different investments which include shares (ETFs, REITs, etc), bonds, gold and others. You, as an investor would then be buying a ‘unit’ of this portfolio. This would be a long-term investment and returns come in the form of dividends or any increase in the value of investments.
Unit trust investments usually earn and have higher returns than fixed deposits, but are also riskier. The point of entry for this investment is easy as it does not require a lot of capital and can be tailored to your risk appetite. The risk is dependent on the performance of the investments in the portfolio and the Net Asset Value (NAV) of the unit when you purchase it. Like most investments, other things to note is that this will incur transaction and management fees and sales charges.
3. Investment-Linked Insurance Plans
Insurance plans usually range from the coverage you are looking for. For those that are investment-linked, a portion of the premiums paid for your insurance plan is invested, while the remainder covers the usual insurance premium.
The pull for this investment is usually its flexibility, and its dual service as insurance. If you are paying for insurance, you might as well set aside an amount for investment. This, however, does not guarantee returns like the first two investment options, as it is still dependent on the fund’s performance in the market.
If you do not know where to start when it comes to the stock market, and if you are overwhelmed by the myriad of investment vehicles there are out there, robo-advisors are now a popular mode of entry for investing. The appeal of a robo-advisor is that it utilises data and algorithms to automate your investments, to ensure returns. It also requires a low point of entry and can be tweaked to suit your risk profile.
They also do away with the traditional need to lock in funds for a set amount of time. Its user-friendliness is a positive for beginner investors, and would be a good place to learn how investing works and to understand your personal risk profile and appetite, before moving onto more hands-on and advanced investing.
5. Private Retirement Scheme (PRS)
Best known as a privatised alternative to the government-run EPF (Employee Pension Fund), PRS provides flexibility and also has a variety of retirement funds to invest in. Managed by asset management companies, PRS offers multiple schemes and you have the option to invest in more than one fund.
The different funds are available based on risk appetite, age eligibility and asset allocation breakdown of investment. Another plus point of investing in PRS is a tax relief of RM3,000. However, funds in PRS cannot be withdrawn at any time, much like EPF. It is your retirement fund, after all. But if you are going to invest in saving for your retirement, the best your money can do is make more money while you do too.