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How to Choose the Right Investment Vehicle for Yourself?

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“Soo Yee, I saw someone on Instagram saying that stock investment is better than unit trust investment. What is your view?”

This is one of the questions that I get from my client on investment.

Everyday, we are bombarded by a myriad of information on social media. It’s especially important to process the information, rather than consuming it blindly. How can you take up a piece of investment advice from someone who does not understand your financial situation as a whole? Does the mentioned investment vehicle suit your investment plan?

Is stock investment really better than unit trust investment? It depends. Stock investment might be good for that person, but it is not necessarily good for you.

When it comes to investment vehicles that suit you, there are many factors to consider. Here are some of the questions to ask to find your preferred investment vehicle.

1. Risk level of the investment

  • Is the investment low, moderate or high risk?
  • Does it match your risk appetite?

2. Capital needed to start investing

  • Does the investment require low or high capital?

3. Investment lock in period

  • Is there a lock in period for your investment?
  • Is the investment easy to sell?

4. Guaranteed element of the investment & its income tax implication

  • Is there a minimum guaranteed return for this investment?
  • How does this investment affect your income tax?

5. Other considerations on the investment

  • Do you enjoy handling property management?
  • Do you enjoy spending time doing stock research & analysis?
  • Are you skilled in stock picking or do you prefer getting professional fund managers to manage your investment?

There’s a multitude of investments available, so here are five of the more common investment types for your reference:

How to Choose the Right Investment Vehicle

If you’re a business person (without EPF contributions) and concerned about payable tax, some of the investments that can be considered are EPF and SSPN. Both EPF and SSPN will help to reduce your payable tax.

If you’re a person who doesn’t have time or enjoy doing stock research & analysis, perhaps you can look into unit trust investment that leverages on professional management to invest your hard earned money.

In short, a suitable investment vehicle for you should be tailored to your financial situation as a whole. If you’re clueless about your investment planning, you may consider investing in a licensed financial planner. A licensed financial planner will be able to look at your whole financial landscape and advise on the right investment vehicles to help you to reach your financial goals.

About the author

Kuah Soo Yee is a Licensed Financial Planner (CFP) who is passionate about helping people make sound financial decisions and achieve their financial goals, and recently launched her own app. Her personalised strategies and advice have helped many to gain better clarity and take firm control of their financial future. She can be contacted at soo.yee@ipp.com.my

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