Smart Investor Malaysia

Investing in the Almighty Capital Market – A Quest Towards Growing Wealth

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With Chinese New Year celebrations now long behind us, the auspicious year of the Ox is now in full swing. Traditionally, the ox has always symbolised positive qualities of strength and determination. So, it’s not surprising that in this year where many are wishing for the end of the Covid-19 pandemic, many are also longing for a capital market that runs with the energy and character of a strong bull, in hopes of making a quick buck or even a fortune from it.

Have you heard glorious tales of some friend-of a-friend that made their “first bucket” of fortune from day trading stocks or bonds in the capital market? Perhaps your uncle’s wife’s relatives have quadrupled their wealth by merely buying and selling glove stocks. This may leave you wishing that you were in their position! 

Is it nothing more than just a beautiful myth (or dream)?

On the flip side, some of us may have also heard stories scarier than Stephen King novels about individuals that crashed and burned in their attempts to trade stocks or bonds on the capital market, causing substantial financial losses as a result of their failed endeavours.  

Taking that into consideration, you may be tempted to think that investing in the stock market is a terrible idea, and it’s still best to nurture your hard earned money in the safety net of fixed deposits? At the very least, there won’t be any risk of losing your capital.

A safe approach to investing?

As an Asian nation, Malaysians have largely inherited the virtue of saving up a portion of the income we bring in. However, there’s still a large number of Malaysians that are inclined to hold a large portion of their wealth in the form of good old fixed deposits in the bank. Yields are currently at an all-time low of under 2% per year, and by hoarding cash in the comfort of capital protected fixed deposits, these people are willingly bidding farewell to potential opportunities to gain higher returns from the stock market.

When it comes to making investment decisions, the majority of people tend to fall on the side of fear, and this is even more so when it comes to investing in the stock market. Often, fears start to take root on a fundamental inadequacy in financial knowledge, which is essential to make well-informed decisions in stock investments. 

On the other hand, some daring souls would simply take their ‘investment’ in the form of speculation, gambling on investment decisions based on unverified news on the street. With the lack of a solid investment base, the outcome is almost always being left to lick their wounds when their investment is burned. Either way, this shouldn’t be the reason for us to shy away from seeking opportunities to grow our wealth in the capital market.

Risk vs reward

Just like battling in a hard-fought war, arms and armour is vital to help us increase the odds of “winning”. Similarly, in the quest of investing to grow our personal wealth, equipping ourselves with necessary knowledge is all the more important to set a foundation that could pave the way to handsome rewards in the journey of wealth growing.  

The capital market has always rewarded prudent investors with decent, if not tremendous, growth in money invested into businesses that support a country’s real economy, as it forms a wholesome and vibrant ecosystem that ultimately contributes to the prosperity of a nation. In a way, we’re growing our wealth alongside the nation while it’s economy grows simultaneously, making it far more meaningful than many would think. 

In this era of ultra low yield environments, if we don’t invest our money, we’ll risk not being able to draw upon a sufficient pool of wealth when we reach our retirement age. This may result in a decline in lifestyle quality, or worse still, the inability to sustain basic needs.  

To our future self, let’s take action now and depart on a journey of investing. Your future self will enjoy the fruits of decent personal wealth as a result of your actions, and will surely be grateful to your efforts put in now!

About the Author

Lim A’Jean is a financial advisor with CMSRL credentials, offering financial planning services to both individuals and businesses. Previously, she worked at a bank as a foreign exchange dealer. She can be contacted at ajlim602@genexus.com.my

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