Money can’t buy you happiness. But everyone should have some basic knowledge about finance, and how to grow their wealth the right way. And the earlier you start learning about financial growth, the better.
This week, the Tips and Tricks team was inspired after attending a talk titled Investing 101, organised by the QIU Accounting and Finance Club on August 12.
We jotted down the top investment tips for beginners that were shared by Mr Mohamad Fairuz Izwan Bakri, Head of Youth Segment Marketing at a local bank. Follow him on LinkedIn here and read on for the rest of the tips!
Make Sure You’re Ready to Invest
Before you make your first investment, you have to be ready – especially if you’re a student. Assess your debt, expenses and cash flow to see where you are.
You should also create an emergency fund first, which should preferably to be able to sustain you for three to six months. Understand how much risk you’re able to make in your investments.
Set Investment Goals and Strategy
Failing to plan is essentially planning to fail. Before you get going, you need to know what you want at the end of the day. Is it a retirement fund? Do you have a set figure that you want to achieve?
This, in turn, will help you develop an investment strategy. You’ll be able to know how much money you can invest, and which platforms to use.
Understand the Types of Investment Methods Available
There are three different types of investment – low-risk, medium-risk and high-risk. Choosing between them comes down to your strategy and the risk you’re willing to take. Here are some of the options
Low-risk
- Savings Account – Generates interest on your savings and is one of the safest forms of investment.
- Fixed Deposits – A time capsule for your money. Your return on investment is guaranteed. It covers the losses you suffer due to inflation and encourages the saving habit.
- Tabung Haji – A 100 per cent shariah-compliant platform that helps Malaysian Muslims save for their hajj.
- Amanah Saham Bumiputera – A fixed-price unit trust and long-term investment for those within the Bumiputera community to generate consistent returns. Pays consistent yearly dividends to investors.
Medium Risk
- Unit Trust – A unit trust is where the fund manager pools money from various investors to invest and generate returns. The profit is then channelled back to the unit owners. Can include a portfolio of different assets, including shares, bonds, real estate etc.
- Gold – An effective hedge against inflation. Paper money loses value due to inflation but gold doesn’t.
High Risk
- Shares – Essentially you’re buying a tiny piece of a company and earning if the stock price goes up.
- Digital Currency – This is another term for cryptocurrency like Bitcoin. Be careful as there are only three organisations currently allowed to trade in Malaysia
- P2P Lending – Investors lend money to individuals through P2P financing platforms. Borrowers get loans without going through the strict requirements of banks.
Know Your Limits and Stick to Them
Now you’re better prepared but the learning doesn’t stop. Do your homework to ensure you don’t make a mistake. Don’t invest based on emotion.
Instead set yourself a limit of how much profit and loss you can afford to take with your investments.
