There are so many different types of investment in Malaysia. However if you're like us, you only tend to hear about the 4 most popular ones. Which is why we decided to compile a list of 25 types of investments in Malaysia.

Some of them you are very aware of. Some of them are investments that you may have heard about once or twice and some of them are going to be completely new.

Within each investment type, we will cover some of the features, or what makes it unique. We will also look into the risk associated with the investment (relative to the other investment types) as well as the costs associated with making the investment and the historical returns of the investment. And if you get interested in the investment type, we have also included steps for you to get started.

To make this whole thing easier for you to navigate, we have created links to each of these investment types:

1st Type of Investment in Malaysia: Fixed Deposit

Fixed deposit, or commonly referred to as “FD” in Malaysia, is a type of bank savings or investment account that promises the investor a fixed rate of interest. In return, the investor agrees not to withdraw or access his / her funds for a fixed period of time.

Features of fixed deposit

  • Minimum risk, guaranteed returns and flexible tenure
  • You will not be able to withdraw the money for a fixed period of time
  • Interest is only paid at the very end of the investment period
  • You can use FD as a source of your retirement fund or education fund for your children as you will be saving the money for future commitments

How risky is a fixed deposit investment in Malaysia

FD is one of the safest investment option with steady return. Your only risk is putting the money in bank for a specific period of time. You will not suffer any loss and the Government even pays you back in the event that your bank goes bankrupt.

Safe Mode – Rated 1

Time horizon required for a fixed deposit investment

FD accounts have a range of fixed period. You can put your money for any of the chosen period from 1 Month – 5 Years. The longer your FD period, the higher the interest you earn. For example: If you choose to invest in a fixed deposit with a 3-month term, you will be entitled to an interest rate of 3.05% per annum (AKA p.a. – after 365 days) at the end of three months. However, if you decide to invest in FD for 12 months, your interest rate of will increase from 3.05 to 3.15% p.a.

Cost of investing in a fixed deposit investment

While banks usually don’t charge any fees, fees, or periodic charges with fixed deposit accounts, you should still check with your bank before signing any contract. If you break the FD mid tenure, you will get a lower rate of interest. You will also have to pay a penalty for the premature withdrawal.

Who should invest in fixed deposit

Fixed deposit investments are great if you are looking to grow your savings and have a significant amount of money that you want to put away for long time. Typically, the larger the amount of money and the longer the duration, the better the interest rate and returns

Also, if you are risk aversive and do not expect high returns for your investment then fixed deposits are also great for you.

Generally, families, senior citizens and newbie investors and average earning employees see FD as a good investment opportunity

Required Budget for a fixed deposit investment

Though there are no set rules, typically fixed deposits require a minimum of RM 1,000-RM 250,000

Typical returns of a fixed deposit investment in Malaysia

You can typically expect 3-4% per year in a fixed deposit investment in Malaysia.

Historical return rates of fixed deposit investment in Malaysia

Malaysia’s fixed deposit rate has seen a gradual increase over the years without much dramatic fluctuation. In 2009, fixed deposits were offered at an average rate of 2.08% while now you can enjoy more than 2.9% interest income for the same amount of money.
historical returns rates of fixed deposit investment in malaysia

Top 5 best fixed deposit investment in Malaysia

If you invest RM 10,000 for 1 Year, then your returns will be as follows:

How to invest in fixed deposit investments in Malaysia

The easiest way to invest in fixed deposits is through your bank. Most banks already have e-fixed deposits at their online banking portals. Log in to your account and apply directly online. However, if you are opening a bank account for the first time, you may need to submit some document to the bank such as you ID, Letter of Employment before opening the FD account.

Learn more about fixed deposit investments in Malaysia

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2nd Type of Investment in Malaysia: AMANAH SAHAM NASIONAL BERHAD

Amanah Saham Nasional Berhad (ASNB) was created by a Government linked investment company called Permodalan Nasional Berhad (PNB) in 1979, to provide feasible investment instruments for all Malaysians. An Amanah Saham Nasional Berhad is like a Trust Fund. You put your money to PNB’s investment pool and PNB will invest this money to various bonds and stocks and provide you a dividend yield at the end of each financial year.

There are 3 types of ASNB available for all Malaysians:

Features of Amanah Saham Nasional Berhad

You will find 2 types of ASNB: Fixed Price Funds & Variable Price Funds. Here, we will focus on Fixed Price Funds only as they provide regular income to unit holders at minimal capital risk. The features are:

  • The fund units are always offered in fixed price so there are no fluctuation in unit price
  • Your money invested in ASNB will not depreciate below your invested value
  • You will get a fixed dividend of at least 6% per year on your investment
  • The dividend you earn is not taxable and it does not bear any sales charge or entry charge making it a pure profit on your investment
  • You can redeem your profit on-the-spot over the counter. Usually, you can withdraw the money in cash but if the amount is too large, then ASNB will issue cheque or bank transfer to pay your money
  • If you use you EPF to invest on ASNB, then the profit you receive will add to your EPF account

Risks of the Investing in Amanah Saham Nasional Berhad

On a scale of 1 to 10, with 1 bearing the lowest risk, ASNB is the safest investment available for you. You can start investment with lowest input with maximum return as much as 10%. Plus, the unit price of funds is always fixed at RM 1 per unit reducing the price volatility to zero.

Safe Mode – Rated 1

Time horizon for investing in ASNB

All three funds of ASNB for Malaysians provide yearly returns on your investment. Minimum timeframe for the return is 1 year with no maximum limitations. The return of your investment does not depend on the timeframe. So, you will enjoy same benefit whether you invest the money for long term or short term.

Cost of investing in Amanah Saham Nasional Berhad

Minimum price per unit of ASNB fund is only RM 1 without any sales charge or external fees. Plus, there is no applicable tax on your investment, so the investment cost is absolutely zero.

Why should you be investing in Amanah Saham Nasional Berhad

If you are looking for a safe way of appreciating your earnings, then there is no better choice than ASNB. Your age limit or income level is a non-issue here. So, if you have a few extra bucks which you won’t need for the next 12 months, then this investment is perfect for you.

The only requirement for investing in ASNB is that you must be a Malaysian citizen.

Required Budget for investing in Amanah Saham Nasional Berhad

You can start as low as RM 10 and go up to the units available in ASNB fund to start investing in ASNB.

Typical Return of investing in Amanah Saham Nasional Berhad

You can expect a return of 6-10% per year from investing in a Amanah Saham Nasional Berhad fund.

Historical returns of ASNB

The table below reflects the fund’s return for the past 10 years:
historical returns of ASNB

Top 5 places for the best ASNB investment

  • Maybank
  • RHB
  • CIMB
  • Affin Bank
  • POS

How to invest in Amanah Saham Nasional Berhad funds

  • First, register with one of ASNB branches or agents. Their agents include Maybank, Maybank Islamic, CIMB Bank, RHB Bank, Pos Malaysia, Affin Bank, Bank Simpanan Nasional, Alliance Bank, AmBank and AmBank Islamic
  • Go to the portal (Link) and click on Register (“Dartar di sini”)
  • Key in personal information especially your contact number during registration
  • Follow the instructions to set up your account
  • Once your account is set up, get hold of ASNB units via ASNB website. You can also check your balance and invest directly through this portal
  • Your payment will be conducted online through Financial Process Exchange (FPX)

To get more information about Amanah Saham Nasional Berhad funds

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3rd Type of Investment in Malaysia: Amanah Saham Bumiputera

This special note is a type of ASNB fund designed especially for the Bumiputera to offer them an alternate mode of saving. The nature of this investment is same as ASNB above, the only difference being that it is applicable to Bumiputera only. You will invest in ASB funds and enjoy dividends at year end.
There are 3 available Bumiputera special notes as follows:

Fund Name Asset Class Eligibility Financial Year End
Amanah Saham Bumiputera (ASB) Equity Malaysian Bumiputera December 31
Amanah Saham Bumiputera 2 (ASB 2) Mixed Asset Malaysian Bumiputera March 31
Amanah Saham Didik (ASD) Equity Malaysian Bumiputera June 30

Features of amanah saham bumiputera

  • You can invest in these funds in 2 different accounts as follows:
Account Age Eligibility Minimum Investment Maximum Investment
Akaun Bijak 6 months – 18 years 1 Unit 50,000 Units
Akaun Dewasa 19 years or above 1 Unit 200,000 Units
  • It is a low cost and high return investment where dividends are calculated monthly and distributed annually
  • All other features are exactly the same as ASNB instrument above. You can withdraw your returns on-the-spot over the counter when your dividend is due same as ASNB instrument

Risks of the investing in amanah saham bumiputera

This note provides steady constant return at lowest risk making it the safest investment of all. You are not bound by any charges and taxes on your yearly dividend, making it a pure return on your investment
Safe Mode – Rated 1

Time Horizon of investing in special note for bumiputera

To expect a return, you will have to invest your money for a minimum of 1 year to as long as you want without any maximum cap.

Cost of Investing in investing in amanah saham bumiputera

Minimum price per unit of Special Note for Bumiputera is only RM 1 without any sales charge or external fees. Plus, there is no applicable tax on your investment, so the investment cost is absolutely zero.

Fund Name Price Per Unit Minimum Initial Investment Maximum Investment
Amanah Saham Bumiputera (ASB) RM 1.00 RM 10 RM 200,000
Amanah Saham Bumiputera 2 (ASB 2) RM 1.00 RM 10 RM 200,000
Amanah Saham Didik (ASD) RM 1.00 RM 10 Unlimited, subject to availability of units

Who are should invest in amanah saham bumiputera

If you have some money sitting idle in your bank account for the next 12 months and you are a Bumiputera, then you are ideal for this investment option regardless of age or income level.

Required budget for investing in amanah saham bumiputera

You can start investing in ASB from as low as RM 10 to a maximum of RM 200,000. As for ASD fund units, there is no limit on investment amount as long there are available units from ASNB to buy.

Typical Return of amanah saham bumiputera

You can expect 8-10% annually from investing in an amanah saham bumiputera

Historical return for amanah saham bumiputera

The table below reflects the fund’s return for the past 28 years:
historical returns of ASB

Top 5 Places best for investing in amanah saham bumiputera

  • Maybank
  • Affin Bank
  • Alliance Bank
  • Ambank
  • CIMB

How to invest in amanah saham bumiputera

  • First, register with one of ASNB branches or agents. Their agents include Maybank, Maybank Islamic, CIMB Bank, RHB Bank, Pos Malaysia, Affin Bank, Bank Simpanan Nasional, Alliance Bank, AmBank and AmBank Islamic
  • Go to the portal (Link) and click on Register (“Dartar di sini”)
  • Key in personal information especially your contact number during registration
  • Follow the instructions to set up your account
  • Once your account is set up, get hold of ASNB units via ASNB website. You can also check your balance and invest directly through this portal
  • Your payment will be conducted online through Financial Process Exchange (FPX)

To get more information about amanah saham bumiputera

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4th Type of Investment in Malaysia: Tabung Haji

Of all the Amanah Saham Nasional Berhad funds, Tabung Haji is the most profitable investment in Malaysia. This investment is designed by Tabung Haji for the special purpose of saving for Hajj (pilgrim) for Malaysian Muslims. You can invest in this Shariah-compliant vehicle to earn quite high return as much as 10% per year in form of dividend with no visible risk.

Features of tabung haji

  • Though this investment vehicle is to save up for Hajj, you can also use it for investment purpose due to its appraising high return
  • You can use your EPF fund to invest here and the return earned will add in to your EPF account
  • The fund automatically pays out 2.5% of Zakat on your behalf from your earned return
  • You are eligible to invest here if you are a Muslim, never been to Hajj before and aged between 14-55 years old

Risk of the tabung haji

Tabung Haji is one of the low risk investments in Malaysia with high yearly return.
Safe Mode – Rated 3

Time Horizon of Tabung Haji

You have to invest in this fund for at least 2 years to enjoy returns with a maximum of 5 years in total.

Cost of investing in tabung haji

The cost associated with investing in tabung haji is limited to the bank transfer fee when you withdraw the fund. Click here get full disclosure of different bank charges. Other than this, 2.5% of your return will be deducted for Zakat payment. However, your return is not taxable and there are no additional fees involved with this investment.

Who is most suitable for investing in tabung haji

If you are planning to go to Hajj then this option is perfect for you to save your money for this holy purpose. You can also use this option for normal savings if you have money to put for at least 2 years in expectation of good return.

Required budget for investing in tabung haji

The starting amount for this investment is RM 1300. However, if you were to invest more into tabung haji, you may be qualified to get a higher dividend.

Typical return of tabung haji

People who have invested in tabung haji can expect a return of 4-8% annually though in 2018 the dividend was 1.25%

Historical return of tabung haji

Check the historical return for this profitable investment for the past two and a half decades as follows:
historical return of tabung haji

Top 5 best places to invest for tabung haji

  • Pos Malaysia Berhad (POS)
  • Bank Simpanan Nasional (BSN)
  • CIMB
  • RHB
  • Public Bank

How to invest for tabung haji

Open an account by visiting a TH branch, Bank Islam, Bank Rakyat, or TH’s mobile counters. For step by step guidance on opening a TH account, click here.

More information about tabung haji investing

You can get more information about investing for tabung haji at Tabung Haji FAQ

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5th Type of Investment in Malaysia: Unit Trusts / Mutual Funds

If you've ever visited any blog in the United States, you will hear the term mutual fund quite often. However in Malaysia, we call mutual funds, unit trusts.

Unit trusts are same as Amanah Saham Funds where you put money in a collective investment pool with other investors who share the same appetite of security portfolio as yours. The fund manager invests this pooled fund into diverse portfolio of assets including cash, bonds, shares, properties, etc and you receive a yearly return from your invested fund in form of income distribution.

Features of unit trusts investing in Malaysia

There are many features of unit trusts and some of these features may differ from one unit trust to another. However, here are the more common features of unit trusts:

  • A unit trust includes various type of securities at different risk level to diversify your risk
  • Each unit of your fund will provide equal return, so the more unit fund you hold, the greater the return
  • You have a variety of unit trust funds to choose from such as South American bonds, European banks, commodities. However, if you are new to investing, you can go for low-cost index funds
  • You can receive return from the invested funds in 3 ways:
    • Dividends on stocks and interest on bonds paid out as yearly distribution
    • Capital gain if the fund sells securities that have increased in price
    • If fund holdings increase in price and you sell the unit trust fund shares for a profit in the market

Risks of unit trust investing in Malaysia

Unit trust funds are not as safe as saving accounts. It is real investment as you are investing in a basket of securities and therefore has the chance of gain or loss as the securities impact in the market. The longer your mutual fund’s duration, the greater the risk. Plus, you have to pay a fee to your fund manager and have associated charges to maintain the fund.
Medium Mode – 6

Suggested time horizon for unit trust investments in Malaysia

The timeframe of a mutual fund varies from as short as 3-months to as long you live. If you are planning to invest in unit trusts, we would suggest to keep those investments as long as it is giving you a return that you are happy with because switching from one unit trust to another will incur a lot of costs. Such as…

Cost of unit trust investing in Malaysia

There are several costs associated with unit trust funds investment as follows:

  • Salary of the fund manager
  • Yearly transaction cost of your fund
  • Capital gain tax on your earnings
  • Sales charge and platform charge
  • Trustee fee

These charges can be reduced if you opt for online platforms like Fundsupermart instead of investing with a fund manager. However, that also means that you are responsible for understanding your investments and will not have someone there to help guide you.

Who is most suitable for unit trust investments in malaysia

If you are ready to take a calculative risk on your money and interested on investing in equities, then unit trusts are ideal for you. You can directly put your money in a diversified pool of securities without having to hand pick them at a lower starting capital. Besides, you will have an expert (fund manager) to manage the fund for you to enjoy returns.

How much should you have to invest in unit trusts

Most institutions will ask you to start with a minimum of RM 1,000. However, there are some banks and institutions who agree to let you invest as low as RM 100 per month on their mutual fund such as CIMB-Principal Bond Fund or Amanah Mutual Berhad.

Typical returns of unit trust investments in Malaysia

Although we do not suggest that you use this to make your decisions, there was a blog post that broke showed that the 20 best unit trusts in Malaysia gave a return between 8.72% and 14.28% each year for 20 years.

However, it is very dangerous to look back at past results to think that it will be the same going forward because that is definitely not the case.

Historical return of the 20 best unit trust investments in Malaysia

This picture shows you how the 20 best unit trust investments in Malaysia have done.
historical return of unit trust investments in malaysia

How to start investing in unit trusts in Malaysia

There are a few different ways for you to invest in unit trusts in Malaysia. If you would like to do this yourself, you can sign up on online platforms like Fundsupermart or eUnittrust to start investing in unit trusts. Or you can directly call companies and banks dealing with unit trusts to open a unit trust account and start investing.

Another way to invest in unit trusts is through your investment linkedin medical card.

If you would like to work with someone who has a pretty good understanding of unit trusts investments in Malaysia, you can work with our trusted financial advisor and purchase your unit trusts through her.

More information about unit trust investments in Malaysia

To get more information about investing in unit trusts, check out some of these sites:

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6th Type of Investment in Malaysia: Blue Chip Stocks in Stock Exchange

Another type of investment in Malaysia is investing in the biggest companies by buying their stocks. Blue chip stocks are high quality shares offered by reputable and financially sound firms. The companies handling such top-quality shares have the ability to maintain stability and emerge profitability in volatile economic conditions.

Although you can own blue chip stocks out of Malaysia, we will keep to investing in Malaysia here.

Features of investing in blue chip stocks

  • Tend to be more stable than other types of stocks
  • Stocks involve the following industries: Consumer, Industrial, Finance, Plantation, Property, Services, Technology
  • The shares stretch geographically across Malaysia, USA, Singapore, Asia Pacific, Japan, Euro and Emerging Market
  • You will be typically be earning dividends as well as capital gains from selling these shares in the future

Risks of investing in blue chip stocks in Malaysia

Blue chip stocks are no good to you if you cannot invest for long term and as we know longer duration constitutes high volatility and greater risk. Plus, you will also have to pay capital gains tax on your earnings and other charges over a long time period to enjoy your returns which adds to the risk.

High Mode – 8

Time horizon for blue chip investing in Malaysia

You can typically invest in blue chip stocks for as short as a few minutes but the longer the time period, the better will be your return as these stocks are famous for withstanding sluggish market and generate high return over the long run. So, we prefer you to commit to holding these companies as long as possible.

Cost of investing in blue chip stocks in Malaysia

Costs for investing in blue chip stocks are not too bad. Some of these costs are:

  • Brokerage fees – 0.6-0.7% of the total value of traded shares
  • Clearing fees – 0.03% of contract value or RM 200, whichever is lower
  • Stamp duty – RM 1 for every RM 1000 invested in shares

Who should look at blue chip investing in Malaysia

If you have a higher risk appetite and you are interested in learning about these investments for long term investment, then blue chip stocks are perfect for you.

Required budget to invest in blue chip stocks in Malaysia

These stocks are high quality and expensive and you have to buy at least 100 shares known as 1 board lot to enter into the trading market. So, your budget would be price per blue chip stock multiplied by 100. To give you an idea, Maybank's stock price is RM9 which means you will need at least RM900 plus any additional funds to cover the cost for the investment in order to make the purchase.

Typical return for blue chip stocks in Malaysia

There is no such thing as a typical return for blue chip stocks as it depends on what stocks you purchase.

How to invest in blue chip stocks in Malaysia

You can purchase shares directly through a brokerage or consider a “value investing strategy” to grab shares when they are under-priced. However, if you are long on budget and like to invest in multiple blue chip stocks together, then go for blue chip stocks via unit trust funds or an Exchange-Traded Fund(ETF). Whatever your approach, follow these steps to get you started in the trading market:

  • Open a Central Depository System (CDS) account with stockbroking companies/investment banks
  • Find the right broker to trade your stocks in the market

To Get More Information

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7th Type of Investment in Malaysia: Real Estate Investment Trusts

Real estate is one of the most popular investment conversations people like. However, because real estate is so expensive to buy, a popular alternative is to invest in real estate investment trusts (REITS).

REITs gives you the opportunity to invest in property with low capital. It is similar to trust funds with the only exception that this investment pool manages property stocks only. You will invest in a large pool and the money will be used in property such as shopping malls, office building, hotels, etc to yield you yearly return on your investment.

Features of REIT investments in Malaysia

  • Only trade in property stocks especially retail lots
  • You will enjoy good dividend as 90% of property stocks are paid to investors as dividends
  • You can find REITS that focus on specific types of properties or specific geographic locations, which allows you to invest indirectly in property that you might have more understanding in.

Risks of investing in real estate investment trusts

REITs are meant for long term investment with greater return, hence the volatility or risk level is medium. Your investment has risks from impacted volatility in the property market, however the impact on property market is not as sensitive as share prices. REITS are more related to the economic condition of the country. Plus, property market can be sluggish showing a lower growth on investment but rarely declines in value, hence making it safer than investing in shares.
Medium Mode – 5

Time horizon of REIT investments in Malaysia

This is also similar to unit trust funds. You can invest for as short as 3 months to as long as you want, but the longer the duration, the better the chances your returns will be good.

Cost of investing in REITS in Malaysia

You will have to pay dividend taxes on your return. However, you won’t have to pay stamp duty, RPGT or income tax on your earning when you trade in REITS.

Who should invest in real estate investment trusts?

If you are interested to invest in property but have low capital, then REITs in the way to go. Plus, some people like to trade in stocks but the share volatility in the market can be too high for their risk appetite. Hence, the alternative to investing in shares is REIT as the risk with this option is relatively lower than trading in stocks and the return is good as well.

Required budget to invest in REITS

You can start as low as RM 1000 to start trading in REITs in the market.

Typical return of REIT investments in Malaysia

Since investing in REIT is similar to investing in a stock of a company, the return is highly dependent on which REIT company you end up investing in.

How to invest in REIT investments in Malaysia

You can start REIT investing in Malaysia the same way you did for blue chip stocks. REITs are listed on the Bursa Malaysia Stock Exchange. Sign up for a stockbroking account to buy them. For a step by step guide, click here.

More information about REITS in Malaysia

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8th Type of Investment in Malaysia: High Interest Savings Account

High interest Savings Account (HISA) has the same attributes as a normal savings account. It is an interest earning account. If you put a deposit at the start of the year, you will get a percentage of return at the end of the year, given that your balance does not fall below the initial deposit throughout the year. The only difference between HISA and a basic savings account is that the interest earned on HISA is higher than the basic. This account is only granted by the bank if you are one of their long time loyal customer with a significant capital base.

Features of High Interest Savings Account in Malaysia

  • You need to maintain the deposit amount as minimum balance throughout the year
  • You can freely deposit and withdraw money at will
  • Can enjoy cashback facilities depending on the bank

Risks of HISA

Like fixed deposits, high interest savings account is one of the safest investment available in the market because your money is protected by PDIM. You will not have to tie up your money with the bank. You can withdraw and deposit money at free will without any consequences. Your only risk is that, if your withdrawal exceeds initial deposit amount, then you may lose the high interest rate privilege.
Safe Mode – Rated 1

Time Horizon For High Interest Savings Account Investments in Malaysia

One of the best parts is that high interest savings account have no time limit. You can keep the account indefinitely.

Cost of Investing in a High Interest Savings Account Investments in Malaysia

There are no real fees associated with opening a high interest savings account.

Who Should Use a High Interest Savings Account in Malaysia

If you wish to start saving but not confident whether you will be able to commit to put away the money for the whole year, HISA is perfect for you. It is a stepping stone to start savings without having any fixed commitments. Plus, the return in a HISA is way better than a normal savings account.

Required Budget for High Interest Savings Account in Malaysia

The minimum amount to start a HISA account can be as low as RM500 to as high as RM200,000 depending on HISA you are applying for. Typically the higher the deposit, the more interest you will earn.

Typical Return of High Interest Savings Account Investments in Malaysia

Interest rate for HISA is offered depending on your credibility with the bank. So, we have looked into the best HISA account available in Malaysia and according to that your interest rate on an average ranged from 0.20%-4.1% per annum

Historical Return of High Interest Savings Account Investments in Malaysia

Since the interest rate offered for HISA depends on the deposit made by you, let’s look at the historical deposit interest rate to see how much you can be offered by the bank for maintain your balance in HISA.


Top 5 High Interest Savings Account Investments in Malaysia

If you are thinking of investing in HISA, you can refer to the table below to find the best interest rate offering HISA in Malaysia as of 2019.

Account Name Interest Rate Earned Per Annum Minimum Deposit
OCBC Al-Amin 360 Account-i 0.20-4.1% RM500
OCBC Al-Amin Booster Account-i 0.25-3.25% RM500
OCBC 360 Account 0.2-4.1% RM500
AmBank Islamic Savers' G.A.N.G Account-i 1-4% RM500
UOB Stash Savings Account 1.2-3.2% RM1

How to Invest in a HISA

Opening a HISA is same as opening a savings account. You can go to the bank counter and open the bank by paying the minimum deposit and submitting documents such as your ikad as your identity proof. Now, you can even open account online via online banking.

More Information About HISA

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9th Type of Investment in Malaysia: Exchange Traded Funds

Exchange Traded Funds (ETF) has the best of both stock and mutual fund. As it behaves like a mutual fund, the money you put will be invested in a diverse set of securities. ETF actually follows an index fund on the market and the composition of securities it holds is similar to that benchmark index fund. This is done so that the ETF performance can replicate the index fund it is tracking. Since, you can buy the ETF fund units like stock, you will be exposed to market risk and your investment will impact as to how your securities perform in the market.

Features of Exchange Traded Funds

  • Cheapest way to invest in diverse securities with lowest possible risks
  • Replicates performance of benchmark index. For example: iShares MSCI Malaysia Index Fund (NYSE: EWM) mimics the MSCI Malaysia Index
  • You can invest in securities outside Malaysia
  • You can buy and sell ETF fund units in the market whenever you please
  • Charges much lower management fees compared to mutual funds and unit trusts

Risks of investing in ETFs

Risks of ETF depends upon which sector you are investing your money. For example equity ETFs are riskier than bond ETFs and the higher your risk, the higher the return. That being said, since ETFs consist diverse type of securities in its pool, the risk of securities is diversifies to maintain an average risk appetite.

Safe mode 5

Time Horizon for Exchange Traded Fund Investments

You are free to buy and sell units of ETF directly from Bursa Malaysia so long as the market is open for you to buy or sell ETF shares.

Cost of investing in ETFs

You have to pay the following fees to trade in ETFs efficiently:

  • Brokerage fee – 0.7% of contract value (minimum of RM40)
  • Management fee – 0.6% per year on Net Asset Value (NAV) of your fund
  • Annual trustee fee – 0.08% per annum on Net Asset Value (NAV) of your fund
  • Stamp duty
  • Clearing fees

Who Should Invest in Exchange Traded Funds

  • ETF is ideal for those who does not have a high risk appetite of trading stocks but wish to hold securities in a more risk managed position
  • If you are looking to expand your investment beyond Malaysian securities
  • Looking to invest in the stock market in a simplified manner with minimum fee and capital
  • If you are not interested in spending time learning about different companies to invest in stocks and would rather take a more passive approach to investing

Required Budget To Invest in ETFs

There is no minimum amount bound for ETFs. The only condition is that you have to buy 1 board lot of 100 units of any ETF fund you choose to invest. For example: the reference price for FTSE Bursa Malaysia KLCI ETF is at RM1.725, so you have to invest a minimum of RM172.50 to buy this ETF.

Typical Return of Exchange Traded Fund Investments in Malaysia

ETF return depends on what type of ETF you are choosing. This link will give you a more transparent view of how ETF returns can vary according to your chosen option.

Historical Return Of Exchange Traded Fund Investments in Malaysia

Historical return varies according to the type of ETF chosen. Here are some ETFs and how their returns have been over time:

Equity ETF (Shariah Compliant) – MyETF-DJIM25

Fixed Income (Bond) ETF – ABF Malaysia Bond Index Fund (ABFMY1)

Where Can You Find the Best Performing ETF?

Bursa Malaysia actually has a great list of ETFs

How to Invest in Exchange Traded Funds in Malaysia

To get started, you need to open a Central Depository System (CDS) account and a trading account with a stockbroking firm that is registered in Malaysia. You can also choose to open a global trading account, in which case you can gain access to ETfs and REITs in foreign stock markets.

Where To Get More Information About ETFs

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10th Type of Investment in Malaysia: Employee Provident Fund

If you are working, chances are you are already investing in the Employee Provident Fund (EPF). As an employee, you have to put a portion of your monthly earnings to the EPF fund. The good thing is that your employer adds to it, so that at your retirement age you can leave with significant saving to spend your golden days in peace.

However, this money is sitting in your provident fund account which you cannot withdraw until retirement. So, there are investment schemes which allows you to invest in EPF-approved unit trust funds to grow your savings in EPF.

Features of Employee Provident Fund

  • You are limited to invest maximum of 30% of your EPF savings for investment
  • You will earn dividend from your investment which will be channeled back to your fund
  • You can make profit in form of capital gain if your investment unit price increase in the market

Risks of investing in EPF

The risk of EPF investment schemes depends on your risk appetite.

  • You can invest in low risk bond funds which which will yield low but steady return
  • You can invest in high risk equity fund which has higher return but more volatile to the market
  • Or you can invest in balanced fund, a mixtures of securities at medium to high risk and return option
    Safe mode 4

Also, bear in mind that this investment is not capital guaranteed meaning if your unit funds price decrease in the market, then your investment capital will decrease, incurring a loss. However, if the unit price increase, your investment value will profit from capital gain.

Time Horizon for Employee Provident Fund

Duration of these type of investment depends on you. You can commit to short term investment (less than a year) or you may choose to commit as long as 7-10 years for medium or long term investment. The more time you invest the money, the greater is your chance of growing your investment.

Cost of Investing in EPFs

You will have to pay the following charges for EPF investment schemes:

  • Service charge
  • Transfer charge
  • Management charge
  • Exit fee
    The above 4 charge totals to 2%-4% of your investment depending on the fund management institute you choose.

Plus all EPF-approved unit funds are not exempt of taxes. Some funds likes Amanah Saham Bumiputera are exempt of taxes whereas others are subject to tax on your dividend earnings.

Who Should Invest in EPFs

  • If you are seeking to grow your retirement savings and do not want to pay out of your pocket, then EPF investment schemes are perfect for you.
  • If you are not expecting to use the profit from the investment before retirement age as all money gained from this investment will be added back to your EPF which is only accessible when you retire

Required Budget for Investing in EPFs

You have to put minimum RM1000 to get this investment rolling with maximum of 30% of your EPF savings in the account.

Typical Return of EPFs in Malaysia

Average dividend return of 6.4-6.9% per year. While dividend is the regular stream of income, you can earn more than this if your unit funds have capital gain when their price increase.

Historical Returns for EPFs

Since equity Unit Trust Funds are riskier in nature, let’s see how some of the best EPF-approved equity funds performed over the years.

Domestic EPF approved Equity Funds ing-EPF-Funds

Foreign EPF approved Equity Funds ing-EPF-Funds

Top 4 Places to Invest in EPFs

Here’s a list of all 21 EPF approved unit trust funds for you to invest and following are 4 Unit Trust Funds you can pick according to your chosen risk level.

  1. AFFIN HWANG Aiiman Income Plus Fund – Low risk, steady income for short time investment
  2. Hong Leong Money Market Fund – Low risk, steady income for short time investment
  3. RHB Smart Balance Fund – Moderate risk with both regular dividend income and capital gain income. This is a long term investment (5-7 years).
  4. AmCumulative Growth – High risk with more income coming from capital gain. This is a long term, 5 years investment

How to Start Investing in EPFs

  1. Choose from any of the 21 unit funds list you want to invest
  2. Fill out KWSP 9N (AHL) Application form
  3. Then submit the application with all other required documents such as your identity proof, employment letter, etc. via your appointed Fund Management Institute

For further information, you can reach to any of their branches nearest to you

More Information About EPFs

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11th Type of Investment in Malaysia: Stocks

If you are looking to invest in a company then you can simply buy their shares from the stock market. Of course, you must have knowledge of how the stock behaves as the stock price is closely related to the company’s reputation and performance. If the company does well, your stock price will increase and you will enjoy capital gain on increased share price and vice versa. Plus, you are entitled to dividend earning at year end.

Features of Stock Investing in Malaysia

  • Stocks are riskier due to their volatility in the market
  • Tends to provide higher return compared to other securities
  • You can either manage the shares online or hire a broker at a fee to do your job

Time Horizon of Investing in Stocks

You can keep the shares for as short as a few minutes or retain it for decades. However, if you like to enjoy dividend earnings and significant capital gain, then you should plan to hold onto the stocks of the company for as long as it makes sense (or be like Warren Buffet where most stocks never get sold)

Risks of Investing in Stocks in Malaysia

The price of a stock depends on a lot of factors such as how many people want to buy the stock, the company’s performance, economic conditions, etc. Hence, you can rule this as one of the riskiest investment, especially if you have no trading experience. However, shares have relatively high returns compared to others to compensate for its risky nature.
Risky – 8

Cost of Stock Investing in Malaysia

The dividend earnings of stock are liable to tax. Other then that, you will have to pay brokerage fee, clearing fee and stamp duty to trade in the market. If you ever trade stocks on margin (which means borrowing part of the cost of the stock from the stock broker), you will have to pay interest on the money borrowed and also have to maintain a high enough margin.

Who Should Invest in Stocks in Malaysia

  • People who have stock knowledge and can study stock patterns to choose potentially profitable shares
  • Knows how to read company reports and familiar with the terminologies involved
  • Have high risk appetite
  • Do not depend on the investment return for day to day expenses

Required Budget for Stock Investing in Malaysia

There is no cap on your budget, the only requirement is that you have to buy 100 units (1 boarding lot) of any share you choose to purchase.

Typical Return of Stock Investing in Malaysia

Depends on the nature of your share. Bursa Malaysia has over 800 listed companies and you can purchase any one of their shares. Their return depends on many factors, so there is no average return for stocks. You can click here to check all historical and current prices of shares trading in Malaysian market.

Historical Return of the Stock Market in Malaysia

Top 5 Stocks in Malaysia

  • Astro Malaysia Holding Bhd
  • AirAsia Group Bhd
  • Malakoff Corporation Bhd
  • Magnum Berhad
  • CMMT or Capital and Mall Trust

How to Invest in Stocks in Malaysia

To get started, you need to open a Central Depository System (CDS) account and a
trading account with a stockbroking firm that is registered in Malaysia. However, if you can, we suggest that you open an account with TD Ameritrade to get access to buying of stocks from around the world.

Where To Get More Information About Stock Investing in Malaysia

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12th Type of Investment in Malaysia: Bonds

Bonds are fixed income assets issued by Government, corporations or municipality to raise money. Basically, you will be lending money to these parties for a specific period of time and in return, you will receive steady stream of coupon payment (also known as interest income) at a fixed rate until maturity. At maturity, you will get back the principal amount at par value.

Features of Bond Investing

  • It is a safer form of investment income
  • Interest income are fixed at a certain rate
  • You have to put your money for a fixed period of time

Time Horizon for Bond Investing

Bonds are available for short terms (less than 1 year) to long term period. The interest income for long term bonds are relatively higher than short term bonds as you will be putting your money for longer time period and need to be compensated for time value of money and the opportunity to use this money elsewhere.

Risk of Investing in Bonds

Bonds lean to the safer side of investment as your money is capital guaranteed by the issuer. This means, usually you will not bear loss on the initial capital. Plus, the income rate is fixed, so no matter what, you will get your interest income at regular intervals until maturity. However, if you buy a bond, you should have the intention of holding it until maturity otherwise you may have to sell it at a loss if interest rates go up.

Safe mode 4

Bonds have independent agencies which rank the risk of the bond defaulting (not being able to keep its promise). The risks of bonds are evaluated using their credit rating:

  • AAA & AA – High credit rating
  • A & BBB – Medium credit quality
  • BB, B & CCC – Low credit quality

The higher the credit risk, the lower the risk of any default payment and hence lower interest income and vice versa.

Cost of Investing in Bonds

You are liable for any transaction costs associated with the bond. Other then that, there is not tax imposed on bond earnings.

Who Should Make Bond Investments

  • If you like to earn passive income, that is earn money with minimal effort, then bonds are perfect choice
  • If you trades in shares and would like to balance your risk profile, then low-risk bonds will bring stability to your portfolio
  • If you are an investor and wish to diversify your investment, then bonds comes as the second preferred choice after stocks

Required Budget For Bond Investing in Malaysia

You have to buy a minimum of 1 lot containing 10 units on your selected bond. Each unit cost RM100, so the minimum purchase amount of a bond is RM1,000.

Typical Return of Bond Investments

The current value of a 10 year Malaysian Government Bond is 3.83%

Historical Return of Malaysian Government Bond

Malaysian Government Bonds are the most popular in the market. Let’s see its historical return over the years.
Corporate bonds are riskier in nature and by right have higher return rate.

Top 5 Bonds in Malaysia

Click this LINK to find the most active bonds in the market and choose according to your risk appetite from the various types of bonds such as government bonds, quasi government bonds, corporate bonds and Islamic bonds.

How to Buy Bonds in Malaysia

There are 2 possible ways to buy bonds in Malaysia. The first way is to buy Exchange Traded Bonds and Sukuk (ETBS) on the Bursa Malaysia Stock Exchange and open a stockbroking account to actively trade your bonds.

The other way is to buy bonds on platform like Fundsupermart who helps you to manage the bonds. However, required budget for such platform is RM10,000

Where To Get More Information About Bond Investing in Malaysia

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13th Type of Investment in Malaysia: Real Estate in Malaysia

Having a roof over you is a common dream of everyone. So, buying a property may come naturally to you and renting it to gain some extra income is the most common and oldest way to capitalize from your asset. Rental properties offers you both short term rental income and long term capital appreciation earnings.

Features of Property Investment in Malaysia

  • There are many types of properties for rent such as condominiums, apartments, terrace houses, bungalows, etc.
  • Different properties may hold different rental income
  • You need to buy property in a location that has high demand for rentals and most preferable by tenants
  • Calculate Net Rental Yield before investing in rental properties to make sure that you can earn marginable income from rental after covering for your expenses.
    Net Rental Yield (NRY) = (Annual Rental Income – Annual Expenses)/Total Property Cost x 100%
    The net rental yield will show your rental income as a percentage of your total property value after deducting any expenses involved. For example, if you buy a property for RM 300,000 and have a 3% NRY, it means you are earning RM 9000 (300,000 x 3%) per year on your investment after deducting all expenses.
  • You can sell the rental property at any given time and earn a profit if your property has appreciated in value since you purchased it.

Risks of the Property Investment in Malaysia

Rental income must count for certain elements to work as a profitable investment.

  • Suppose, if you took loan to buy the rental property, then the monthly rental income should be higher than your monthly loan instalment to yield positive earnings.
  • You should factor in economic and political shocks as these may affect your rental rate
  • Risk of finding reliable tenant who gives rent on time is also a crucial factor
  • There could be a situation where the supply of homes is higher than the demand. When this occurs, your property value may go down and the rent that people are willing to pay may also go down.

Medium Risk – 6

Time Horizon of Investment Property in Malaysia

Rental properties are long term investment that requires you to make large investment up front to buy the property. However, over the years, you will enjoy steady rental returns and own an asset that is most likely to appreciate, allowing you to enjoy substantial profit on sale. So, the longer you retain the property, the greater will be its value. To avoid paying extra tax such as additional RPGT, keep the property for at least 5 years.

Cost of Property Investment in Malaysia

In order to have a property investment that gives you a positive rental yield, ,ake sure your annual rental is greater than the following expenses to yield positive rental income from your property.

  • Fees spent on agents to find tenants
  • Repairs and renovation costs of property
  • Loan instalment cost
  • Insurance
  • Strate reports, stamp duty and legal fees
  • Property maintenance charge
  • Income tax

Who Should Make Property Investments in Malaysia

This option is viable for all Malaysians considering you have the eye and dedication to do background research on which properties have highest rental demands. If you seek for an asset where the chances of capital guaranteed and increase in value over time are high, then property is the best way to go. If purchased properly, properties rarely depreciates in value and you can sell it for significant marginal profit if you don’t like the rent the property anymore.

Required Budget for Property Investment in Malaysia

Property price differs depending on location of your choice. As of late 2018, an average Malaysian home cost RM 293,000. We have provided a list to look at the highest and lowest average price of houses depending on their location for your reference:

Highest Average Price (RM)
Kuala Lumpur

Lowest Average Price (RM)

Typical Return of Property Investments in Malaysia

Average annual growth rate on rental properties ranges from 7-10%.

Historical Returns of Property Investments in Malaysia

Historical return is not the accurate performance measure for this investment type. You have to factor in economic and political conditions to estimate your return. So, we have provided this table below to give you a complete idea of how property rental price and its yield vary according to location and size of your property. You can compare and contrast this data to find a suitable property for your expected rental income.

Top 5 Locations for Property Investment in Malaysia

As of 2017, the following 5 properties have the highest rental yield and therefore ideal for investment (as per this article):
| [Name] | Location | Property Type | Rental Yield |
| Taman Desaru Utama | Kota Tinggi, Johor | Terrace House | 10.90% |
| Kiara Ville | Mont’ Kiara | Condominium | 10.60% |
| Taman Tasik Semenyih | Semenyih, Selangor | Terrace House | 10.30% |
| Taman Damai Jaya | Skudai | Terrace House | 9.40% |
| Berjaya Times Square Serviced Residence | Bukit Bintang | Condominium | 7.20% |

How to Start Investing in Properties

  • Research on high demand properties and areas which are populated with tenants
  • Survey the property market with help of online portals like iProperty & Property Guru
  • Contact with property agents to determine an ideal rental area with maximum amenities
  • Follow these 12 steps to buy the house
  • Survey for current rental rate for your property
  • Open accounts in online platforms such as Mudah or connect with agents to find tenants
  • Draw proper agreements with tenants to earn rentals

To Learn More About Property Investments in Malaysia

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14th Type of Investment in Malaysia: Commercial Properties in Malaysia

We've talked about residential properties so now it's time to talk about commercial properties. Investing in commercial property offers you more chances to capitalize on assets to maximize returns on your investment. You can choose from these 4 types of commercial properties in the market: retail, office lots, mixed developments and industrial properties. In general, What all of them have in common are higher rental rate and faster capital appreciation than residential properties.

Besides, you have no restriction on the number of commercial properties you purchase and the bank also offers you as much as 85% loan financing for each of your commercial property investment.

Features of Commercial Properties in Malaysia

  • Timing and location determines rental and sales value of the property
  • Requires less upfront deposit as loan financing is higher for such properties
  • Lease period is longer than residential properties – up to 4-6 months
  • Rental rate and property value grows much faster than residential properties
  • Tenant management is easier as you deal with companies and professionals with set legal agreements
  • Can take advantage of promotional packages and rebates offered by developers and sellers
  • Preferable commercial location are properties in close proximity to universities, hospitals, downtown areas. For example: properties near KLCC and Subang Jaya are highly demandable

Risks of Commercial Property Investments

Commercial properties are high risk high return investments. The cost of commercial properties are much higher than residential lots, so you have to put a larger amount of downpayment to lock in the asset. Plus, these type of properties are highly sensitive to economy because your property occupancy depends on growing number of businesses in your area.
If the economy performs well, businesses will grow and so will demand for your property. However, if economy takes a down turn, businesses will fall. They will delay in paying your rent and you will struggle to sell your property at good price.
Slightly Higher Risk – 7

Time Horizon Suggested for Commercial Property Investments in Malaysia

You must retain commercial properties for at least 5 years to avoid additional RPGT costs. Also, the higher you retain the property, the larger will be your rental gain and capital appreciation on sale. So, if you decide to invest in this option, make it for the long haul.

Costs of Investing in Commercial Real Estate

Buying and maintaining commercial real estate will involve the following cost:

  • Loan installment
  • Stamp duty, agreement and legal fees
  • Maintenance fee
  • Expenses to install upgraded facilities such as fiber optics cable or green index certification to invite larger clients
  • Tax
    Count the above factors while deciding on your investment options.

Who Should Invest in Commercial Properties in Malaysia

If you have knowledge of commercial properties in Malaysia and keep updated on the economic climate of Malaysia, then this investment option is suitable for you. It works better for people who are already in property business and wants to buy the property purely for investment purpose.

The other type of person who would do well investing in commercial properties here in Malaysia are those who are already renting their property for business. By buying your property instead of renting, you will naturally pay down the cost of the loan and eventually end up with a free and clear commercial property.

Required Budget for Commercial Property Investments in Malaysia

Commercial properties investments in Malaysia are expensive and the price varies according to the location and the amenities offered by the developers. Check out this link to find a complete list of prices according to location and property size.

Typical Return for Commercial Property Investments in Malaysia

As per this article, a decent commercial property usually fetches a yield from approximately 5% onward depending on the property area..

Historical Returns for Commercial Properties

Follow this link by Knight Frank to see the occupancy level of various commercial properties over the years and how their return have grown with time.

Top 4 Commercial Property Investment Locations

Look for commercial properties in areas that are surrounded by buzzing businesses and locations which promise logistics and and industrial growth in future. Currently, the top 4 places that will do well with commercial properties are:

  • Klang Valley
  • Johor
  • Penang
  • Sabah

How to Invest Commercial Properties Malaysia

  • Look for online portals such as Property Guru to look at the various commercial properties available in the market and their price range
  • Get loan approval before bidding on the selected property
  • Find a solicitor and an agent, to help you through the conveyancing process
  • Prepare 2-3% of property value for deposit and arrange for another 7-10% of the property amount to pay while signing the Sales & Purchases Agreement (SPA)
  • Hire agents to lease out your property or take help of online portal such as iProperty
  • Select tenants who agrees on your terms and preferably wish to stay for long term

To Learn More About Commercial Property Investments in Malaysia

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15th Type of Investment in Malaysia: Equity Crowdfunding

Equity Crowdfunding (also known as ECF) is very new to Malaysia. The first platform has only been operating for only 4 years in local market. It is an alternative investment platform where early stage or early growth companies raise pre-seed and seed money to fund their projects. Equity crowdfunding allows you to directly invest in these projects or ventures in exchange for shares of the companies via online platform.

Currently, there are 7 equity crowdfunding platforms operating in Malaysia, all of whom managed to garner significant fund and produce successful projects to provide impressive returns to investors.
Equity crowdfunding malaysia

Features of Equity Crowdfunding in Malaysia

  • Returns are in form of capital gain on sale of shares if your funded project becomes successful
  • You will also enjoy dividends after several years of investment when your funded company grows larger and is able to generate free cash flows to distribute to shareholders
  • Malaysian ECFs are regulated by Security Commission to give you extra layer of protection from fraud or loss-incurring projects
  • It is a portfolio diversification option for regular investors

Risks of Investing in Equity Crowdfunding in Malaysia

Equity crowdfunding investments are potentially high risk high return investments. You have to closely scrutinize a project before funding to evaluate its promise of success. You will be investing in unlisted companies with low correlation between company performance and the stock market. Hence, if the project fails, you will lose your capital. Other risks involved in the projects are as follows:

  • You will have to wait a long time to sell your shares at a profit as you must give time for the company to grow
  • Your share percentage may dilute if the company conducts multiple fund raising and issue new shares
  • You cannot expect dividend any time soon as these companies mostly their earning to grow and expand

High Risk – 10

Time Horizon Needed For ECF Investments in Malaysia

ECF platforms are for long term investment just like stocks. In fact, equity crowdfunding will require a much longer time horizon and you may not be able to sell out when you want as the company is not publicly traded (which means there's no open market for you to buy or sell your share in the company).

The most common ways to sell out would be to sell your shares when the company does another round of financing (this is when the company is taking in more money in return for more shares. At this point, you will be able to sell your shares at the rate the company is selling their shares at) or when the company goes public.

Either case, you should go into equity crowdfunding with the expectation that you will be holding onto the shares of this company for decades.

Cost of Equity Crowdfunding Investments in Malaysia

Signing up for ECF platform is completely free.

Who Should Invest in Equity Crowdfunding Investments in Malaysia

In order to invest in equity crowdfundings, you have to be a registered operator under Security Commission (SC) to transaction in ECF. The criteria should meet any one of the 3 categories below:

  1. Sophisticated Investor – Total net personal asset of RM 3 million or above and have investment knowledge. If you are a sophisticated investor, you will be allowed to invest as much as you want in ECF.
  2. Angel Investor – Gross individual income of RM 180,000 per year OR gross joint income of couple of RM 250,000 per year. If you are are able to get angel investor status, you are allowed to invest up to RM50,000 in a company, up to RM500,000 a year.
  3. Retail investor – General public who can afford low capital. As a retail investor, you are allowed to invest up to RM5000 in a company, up to RM50,000 a year.

For more information on registration guideline, click on this link.

Required Budget for Equity Crowdfunding Investing in Malaysia

The SEC has put restrictions on how much a person can invest in ECF in Malaysia based off their income status.

  • Sophisticated Investor – those who have over RM3 million in personal assets have no limits in how much they can invest in equity crowdfunding.
  • Angel Investor – Those who have income of at least RM180,000 (or a combined income of over RM250,000) can invest up to RM 50,000 for each company and cannot exceed RM 500,000 in 1 year
  • Retail Investor – Those who are under the angel investor threshold are allowed to invest a maximum RM 5000 for each company and cannot exceed RM 50,000 in 1 year

Typical Return of Equity Crowdfunding Investments in Malaysia

Although it depends solely on the company you invest in, Free Malaysia Today has stated that you can see returns around 20-30% per year. You can even earn 3 to 5 times your original investment over the years if your funded company successfully grow bigger.

Historical Return of Equity Crowdfunding in Malaysia

ECF is still quite new in Malaysia to have a historical pattern of returns. Plus, each project you fund is unique by nature (otherwise the investment you made will have a lot of troubles differentiating itself from competition) and have different business model. So, rather than historical return, you must analyze how the ECF platforms have performed over the years, how much they managed to raise as capital and how many of their funded projects have been successfully operating in the market.
Equity crowdfunding in malaysia
For more detail on ECF performance in Malaysia, visit this link.

How to Start Investing in ECF

  • Sign up for free in your chosen online ECF platform
  • Browse the business listings offered by entrepreneurs on the site and identify a business proposition to your liking
  • Contact the entrepreneur directly to learn more about the project and assess its proposed financial projections. You can also follow their online forum to see their online discussion with other investors
  • Commit the amount you want to invest in the project
  • Choose your eligibility criteria: whether you are a Sophisticated, angel or retail investor
  • Confirm investment by paying online

Learn More about Equity Crowdfunding

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16th Type of Investment in Malaysia: P2P Lending

Peer to peer lending (more commonly known as P2P lending) is an online platform that allows investors to directly lend money to investors in exchange for regular fixed income. The platform is populated by entrepreneurs and small companies looking for short-term loan. Since, these establishments are in their early stage of business, it is difficult for them to approve loans from banks, giving you a chance to make returns far higher than a fixed deposit.

P2P offers a more flexible platform where borrowers can apply for loan without stringent rules and waiting period. On the other hand, investors with small capital can lend their money to earn regular interest income.

Features of P2P Lending in Malaysia

  • Only 6 out of 5 P2P platforms are regulated by Security Commission (SC), these are more secure for investment as they follow standard guideline from SC
  • All transactions are conducted via P2P online platform
  • You will lend money for a specific period of time and receive principal amount with interest income at frequent intervals (monthly)
  • Your risk appetite will determine your interest rate of return
  • Diversification option for investors with small capital

Risks of P2P Lending in Malaysia

Because P2P is an online platform where you invest money in companies or entrepreneurs that are really early on in their business, you bear the risk of them defaulting on their payment (in other words, they will not be able to pay you back). Plus, P2P platforms are not backed by Government so, if borrowers default on your payment, the Government will not pay for your loss.

However, with the securities commission coming in to regulate P2P platforms, it has levelled up in security. This platform is less volatile than Unit Trusts or Stocks and gives you much higher return than Fixed Deposits. Besides, you can lend money by assessing the risk profile of the borrower. High risk profile will offer higher interest income, but you can also choose low risk profile with low interest income to be on the safe side.

Medium Risk – 6

Time Horizon of P2P Lending in Malaysia

P2P lending is mid term investment. Most companies are looking to borrow your money for 3-5 years.

Cost of P2P Lending

P2P platforms charge a service fee for matching you to suitable borrowers and manage your investment. Some of these service fees can be as much as 18% of the money you make (as per funding societies)! Plus, you will also be subject to usual transaction fee when you withdraw your money from the platform. In our opinion, this is the part of the P2P story that most people forget about.

Who Should Partake in P2P Lending in Malaysia

If you have light knowledge of investment and have small savings for investment, then P2P lending can be a great option for you. More experienced investors can also use this platform as a safe avenue to diversity their portfolio.

Required Budget for P2P lending in Malaysia

Assuming that you will choose securities commission regulated P2P platform to invest money, you can start with as low as RM 50 to maximum RM 50,000 at any point of time.

Typical Return of P2P Lending in Malaysia

Average return of P2P investment varies according to risk profile of the borrower and the P2P platforms. We have analyzed 6 of the SC approved platform and found that the lowest return you can expect is 8% as per QuicKash and highest return can be as much as 22.46% as per Fundaztic. However, the P2P platform can take up to 18% of the interest that you earn.

Historical P2P Platform Performance

Due to diverse portfolio catered by P2P platforms, finding their historical return is impossible. However, Funding Societies (one of the most popular platforms) has marketed that their returns are around 14%

List of P2P Platforms in Malaysia

How to Start Investing in P2P Lending in Malaysia

  • Apply online with necessary documents
  • Make the minimum deposit to fund your account in the P2P platform
  • Select a project to invest
  • The investment return will accumulate in your account in the platform with frequent intervals
  • You can withdraw the money or invest it in another project

Learn More About P2P Lending in Malaysia

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17th Type of Investment in Malaysia: Forex

Foreign exchange (more commonly known as Forex) investment plays with the concept of trading currency (like how someone can trade stocks). All currencies have an exchange rate, you can say it is the price of the currency. The more expensive the currency’s exchange rate, the greater is the currency’s value.

A currency’s exchange rate is determined by the country’s economic strength and their global business power. The stronger the country, the higher is its exchange rate.

An example of an exchange rate is MYR/USD = 0.24

This means, you will need 1 MYR to buy USD 0.24. The currency on the left (MYR) is called base currency and the currency on the right (USD) is called quote currency.

To invest in forex, you will always have to trade in pairs. For example, you purchase $10 to sell it in the future at higher price as you predict that USD exchange rate will go up against MYR. Based on your prediction, the higher USD goes up against MYR, the greater your profit.
You can also sell currency to buy it later, if you think that the currency exchange rate will weaken in the future. The difference in exchange rate is expressed as “pips”. The more positive pips you have, the better is your earnings.

Features of Forex Investments in Malaysia

  • Exchange rate highly depends on global factors and economic changes throughout the world
  • You have to predict the price direction of a currency and buy or sell it to make profit
  • Buying a currency to sell means either you predict the quote currency to strengthen or the base currency to weaken in future
  • Selling a currency to buy means either you predict the quote currency to weaken or the base currency to strengthen in future
  • If your prediction is wrong, you can lose much more money than what you have as in many cases, you will be trading forex on extremely high leverage (you can be borrowing RM100 for every RM1 you have)

Risks of Forex Investments

Forex trading is highly sensitive to change in exchange rate. The exchange rate of a currency changes rapidly and depends on various factors such as political stability, foreign investments, global news, etc. If a currency unexpectedly falls, you have to bear the loss no matter what as it is a decentralized investments. However, you also have the option to diversify your risk by investing in different position of currencies and trading in more than 1 pair. As long as you are in constant vigilance on world trade news, you can maintain a moderately high risk high return investment capacity.

Because of the extremely high leverage you have in forex trading (100:1), you can lose all your money in a very short amount of time.

Risky Mode – 10

Time Horizon for Forex Investments in Malaysia

Exchange rate are very sensitive to time. The rates are always fluctuating and currencies are bought and sold every second. If you plan on investing in forex (and have a reason to have a belief that one currency will be stronger than another in the future), then you will want to hold the forex until that scenario happens.

However most people are trading forex and are only holding for a few seconds to a day in order to see the positive pip.

Cost of Forex Investment

  • You will have to pay a brokerage fee to brokerage firms or agents to manage your transactions. However, this fee is much less compared to other financial tradings
  • Transaction cost – usually less than 0.1% under normal market condition

Who Should Invest in Forex

  • Forex is a high risk high return investment and hence only suitable if you are an experienced investor with extensive knowledge on global trades and world economy
  • Must have insight on how and when the exchange rate moves up and down by observing their historical pattern combined with external trade and global business factors
  • It is highly recommended that you only explore this option once your money foundations are set in place and you have additional money that you can afford to lose.

Required Budget to Invest in Forex

You can open trade with ‘mini’ forex account with as little as RM 100.

Typical Return of Forex Investments

Return depends on your preciseness of exchange rate prediction and the amount you spend. For example, if you buy $200 at USD/MYR=0.24 and the USD increases by 0.1, your earning will be as follows:

Current Exchange rate: USD/MYR=0.24
Buy: $200 = MYR (200/0.24=RM 833.33)
Future Exchange rate: MYR/USD = 4.30
Sell: $200 (200 x 4.30 = RM 860)
So, your earnings is RM 860-833.33 = RM 26.67

Top 5 Forex Brokerage Firms

Some forex brokerage firms are regulated by Government while others are not. Opt for the regular ones for extra security. Some brokers even offer bonuses in form of cashback cash incentive on joining their platform. Here’s a list of 5 most popular Forex Brokers for your perusal.

Brokerage Firms Deposit Amount Bonus on Sign up
Hot Forex 50 1
Alpari 100 Cashback
FBS 1 1
FP Markets 100 Deposit

How to Start Forex Investing in Malaysia

  • Choose a brokerage firm that gives you maximum facility such as demo account for training, price charts, onboard resources and automated trading options
  • You can sign up with them online or visit them first
  • Practice on the demo account before starting real trading on standard professional account
  • Place a deposit in your actual account
  • Invest an amount on a pair of currencies to open trade

Learn More About Forex Investing in Malaysia

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18th Type of Investment in Malaysia: Fiat Currency

Fiat currency is simply paper money that we use everyday. Our paper currency are not backed by any commodities such as gold or silver. Rather it is a legal tender issued by the Government instilling value in it. The value of such currency is built on the relationship of demand and supply and the stability of the issuing Government.

Government’s central bank controls the country’s economy by determining how much money should be printed. Over supply of money causes inflation and in turn the value of the currency falls. In today’s date, if a country’s currency is falling, you have a number of ways to invest this fiat currency to gain from this losing value.

The difference between investing in fiat currency and forex is with fiat currency, your objective with fiat currency is to buy a different currency and hold it, whereas with forex, your goal is to trade and sell the different currency pairs for a profit.

Features of Fiat Currency Investments in Malaysia

  • Park your money in USD priced assets. Some common USD denominated assets are gold and cryptocurrency (to learn how to invest in these, follow our next 2 investments). You can also buy assets dominated by SGD/EURO is you think, they are performing better than USD
  • Make money in USD by Forex Trading (explained above) and work on projects who pay in dollars
  • A falling economy leads people to sell properties in cheap or the stock price of businesses fall. You can take advantage of this to buy properties or stocks lower their intrinsic value.
  • In order to do this, you would need the currency that the stock or property is denominated in, thus the need to have the fiat currency.
  • Another way to invest in fiat currency is to buy the currency of countries who are going through tough times as the value of their currency would be highly depressed. However, you should be buying these currencies with a reason to believe that the country will do better in the future so that the value of the currency improves,

Risks of Fiat Currency Investments in Malaysia

Just like forex, I=investing by betting on a fallen currency is highly risky as it is not a conventional or regulated way of investing. However, if you understand global economy and religiously follow trade news and how businesses change hands across the world, the risk pays off big time by providing lucrative return.
Risky Mode – 10

Time Horizon of Fiat Currency Investments

If you are investing in other fiat currencies because you believe they are undervalued, then you will have to wait years for the country and the currency to improve.

Costs of Fiat Currency Investments

Cost of such investment depends on your method of choice.

  • You can directly buy USD priced commodities without any additional
  • If you like to bet on your currency, then you have to pay for brokerage and transaction fees just like Forex
  • If you want to invest in properties, then costs entail legal fees, deposit, housing loan installments, stamp duty and property maintenance fees
  • Buying stocks will involve brokerage fee, stamp duty and clearing fee

Who Should Invest in Fiat Currencies

If you are an expert on world economy and have deep knowledge of business trading across countries, then you can opt for such investment method. You must also have high risk appetite and cash reserves to capitalize from here.

Also just like forex investments, you should only explore fiat currency investments only when you are financially stable and can risk having the investment disappear.

Required Budget for Fiat Currency Investments

The amount you need will depend on your method of investment. If you are planning to buy property in a foreign currency, you will need much more of their fiat currency than if you were to buy stocks,

Typical Return of Fiat Currency Investments

There is no way to determine a typical return of fiat currency investment.

Top 4 Reasons for Getting Into Fiat Currency Investments

  • Commodities – you want to buy commodities which is priced in a different fiat currency
  • Forex
  • Stocks
  • Property

How to Start Investing in Fiat Currency

Extensive research and prediction on the 4 promising approach to invest in Fiat in both current and future point: Commodities, Forex, Stocks & Property. Then make your move on the best available option.

Learn More About Fiat Currency Investments

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19th Type of Investment in Malaysia: Gold

Gold is one of the oldest investments that humans have made. Previously, world currencies were backed by commodities such as gold but over time we have become highly dependent on fiat money. People tend to use gold to hedge against fiat money because there is a limited supply of gold in the world and because people believe that no matter where you are in the world, gold will always be accepted and treasured.

Previously, buying gold required high capital investment but now with presence of gold bank account and mobile apps, you have 4 ways of investing in gold:

  • Physical purchase – Required large capital
  • Gold ETFs – Moderate Capital (Refer to ETF Investment above)
  • Gold Bank Accounts – Low minimum capital
  • Mobile Apps – Low minimum capital

As you can easily buy physical gold from shops and ETF is explained above, we will mainly explain about gold bank account and app in this section.

Features of Gold Investment in Malaysia

  • Gold’s price increase if inflation increase unlike fiat currency which drops in value
  • Gold is valued all over the world so your gold investment is free of geographical tension
  • Excellent diversification effect as it has negative correlation to other financial instruments. For example: if stocks or bonds price falls, gold’s price will typically increase
  • Gold price is determined by banks depending on its buying and selling price, local market price condition, world news and exchange rate between MYR and USD
  • Neverending demand of gold worldwide especially China and India so
  • You can withdraw your income in cash, physical gold or transfer into your current/savings bank account

Risks of Gold Investments in Malaysia

Risk of investing in gold is very minimal. Yes, you have to spend a moderate amount of deposit in gold account or app to start investing. For gold account, you will also have to pay service fee if your account balance falls below minimum limit. Plus, gold bank accounts are not regulated by Perbadanan Insurans Deposit Malaysia (PIDM).
Apart from this, there is no pertaining risk. Plus, your investment is capital guaranteed. Gold’s value tends to appreciate over time, so your earning may be low at times but is a great way to protect yourself from the volatile market.

Very Low Risk Mode – 2

Time Horizon of Gold Investments in Malaysia

Gold is long term investment and tends to do real well during recessions or when the world is uneasy about the future of stock prices.

Cost of Gold Investments in Malaysia

Currently, there are 6 bank account and 1 app that allows you to trade in gold.
In addition, you have to pay a conversion fee if you want to withdraw gold earnings as physical gold
For Gold Investment App, you can register on the app for free but needs to pay RM 1.20 per transaction

Who Should Invest in Gold

If you have moderate cash reserve and low risk appetite, then gold investment is perfect for you.

Required Budget to Invest in Gold

You have to put a minimum initial deposit equivalent to the price of 1 gram gold to start trading in gold bank account. As for gold app, you can simply top up cash and make your transactions.

Typical Return of Gold

You should not look at gold as a way to make a return. Rather, you should use gold as a way to hedge your other investments such as stocks because when the stock market falls, gold prices tend to shoot up.

Historical Return of Gold Investment

Gold Investment in Malaysia

Top 7 Places To Make Gold Investment

Gold Investment Accounts:

Gold App: Hello Gold

How to Start Gold Investing

Visit the respected Gold Investment Accounts above to sign up for the gold account.

  • You will have to register the account providing necessary documents
  • Make deposit of minimum 1 gram depending on your chosen Gold Account
  • Then you can put more money to open trading in gold

For Hello Gold App:

  • Download the app from Google Play store or App Store
  • Register your account for free
  • Verify your email address
  • Take a photo of you MyKad and your selfie as proof of your identity
  • Once your account is approved, top up your account using online banking
  • Open trade by starting to buy and sell gold

Learn More About Gold Investment

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20th Type of Investment in Malaysia: Cryptocurrency

Cryptocurrencies are digital currencies that have different purposes. Some currencies are meant to be like real currency – to be able to be freely spent on daily life. Whereas some other currencies are meant to provide a way for businesses to make their operations more efficient. These currencies allow you to make online purchase and exist in only digital form. Cryptocurrencies are not backed by Government and banks. You can find them in decentralized databases as coin or token entries.
You can invest in cryptocurrencies much like forex, the difference being that their value do not depend on fiat currency. Its value depends on its high demand. If people want to own a specific currency, the value of that currency will go up.
Cryptocurrencies are of various forms. Some are straightforward currencies like Bitcoin. Bitcoin has network’s data ledger where your amount will be recorded, time, sender’s and receiver’s address. Other cryptocurrencies like Ethereum are created as a part of high tech blockchain platforms. They are defined as smart contracts to trade in digital market.Then there are Private-centric cryptocurrencies like ZCash, Zcoin and Monero where you can invest anonymously. The most common cryptocurrencies found in Malaysian cryptocurrency exchanges are are Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Ripple, Dash and Dogecoin.
To start trading in cryptocurrency, first you have to buy some from cryptocurrency exchange. Most exchanges encourage buying in Bitcoin first as bitcoins are easier to trade for other cryptocurrencies.

Features of Cryptocurrency Investments in Malaysia

  • 56 cryptocurrency exchanges are registered with Bank Negara Malaysia (BNM). They comply with BNM’s regulations and reporting requirements, providing you an extra layer of protection
  • You can buy cryptocurrencies via direct bank transfer or cryptocurrency exchanges’ personal ATM to start trading
  • Your investment value will appreciate depending on your skills to buy and sell cryptocurrencies efficiently by predicting their price movements accurately
  • Malaysia provides local customer support if you are new to this investment option to help you with trading difficulties

The infographic below highlights some core terminologies and cryptocurrency behaviour to help you understand it better.
Cryptocurrency investments in malaysia

Risks of the Cryptocurrency Investments in Malaysia

The risks of cryptocurrencies come from its lack of understanding. Many of us lack the insight or fail to understand the mechanics that changes its price. It is a new class of asset, so it is highly unpredictable. It has shown habits of rapid increase or sharp fall in recent past to declare it as one of the most volatile investments. Plus, once you submit a transaction in cryptocurrency network, you cannot cancel it.
It also follows a different format of transaction with digital wallets and private access keys and passwords to guard your money. So, you may be subject to pro-hackers and face problems if you forget your passwords (to the point where your currencies in the account will never be retrievable).

Very risky – 10

Time Horizon of Cryptocurrency Investments

Cryptocurrency price change in real time, so you are not tied up to any specific timeframe for this investment. Of course, due to its rapid fluctuation, you must know when to pull out or hold the investment depending on your prediction of price movement.

Cost of Investing in Cryptocurrencies

Transaction costs is the main expenses for this type of investment. Besides that, you will also be subject to trading fees such as deposit and withdrawal charges to keep trading.

Who Should Invest in Cryptocurrencies

If you have large cash reserve and knowledge of blockchain, then you can try your hands with cryptocurrencies. It goes without saying that your risk appetite must be high and you should be informed of the digital world trade movement to be able to buy and sell your cryptocurrencies efficiently.

Required Budget for Cryptocurrency Investments

You will find 1448 cryptocurrencies available in the market, each with a different price. So, you must do your research before deciding on which one to invest.

Typical Return of Cryptocurrency Investments

Cryptocurrencies value have increased unbelievably over the years. For example, Bitcoin entered the market in 2011 and since then its value has increased by 25000%. Another popular cryptocurrency, Ethereum penetrated the market in 2016 and has shown 3000% growth so far. In average, market capitalization of cryptocurrencies have exceeded 10000% in these few years. You can see how unpredictable it is, but the return record is certainly impressive and supersedes its risk.

However, there has also been a huge crash in the cryptocurrency world where the price of bitcoin dropped 80% within a few months, wiping out many investors.

Top 5 Cryptocurrencies Investments

According to a Review Cryptocurrency Report in 2017, following are the top 5 cryptocurrencies that yielded great results:

  • Bitcoin
  • Ripple
  • Ethereum
  • Verge
  • Litecoin

How to Start Investing in Cryptocurrencies

  • Register an account in any of the available cryptocurrency exchanges in Malaysia
  • Enable 2-factor authorization
  • Verify your account
  • Set up a digital wallet
  • Click “Deposit MYR” to transfer fund into your account
  • Select the amount of cryptocurrency you want to buy or the amount of MYR you want to spend to purchase cryptocurrency
  • Open trade and grow your investment

Learn More About Cryptocurrencies

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21st Type of Investment in Malaysia: Futures Contracts

You may be wondering what is futures contract. A futures contracts is a type of investment that allows you to earn money by hedging technique. To simplify, future contracts are just like investing in stocks or commodities. The only exception is that with Futures, you have the opportunity to make the transactions at a future date.

For example: You can buy stocks in the market on spot and buy future contract to sell it at a higher price at a predetermined date in the future. Or, you can sell your stocks now and buy a future contract to buy back the stocks at a cheaper price at a predetermined date in future. This is the mechanics of hedging. It basically manages your risk by taking position on either side of a deal to assure your profit in the investment.

A future contract allows you to buy or sell a certain item at a specific date in future at a predetermined amount. The underlying assets for which you can buy future contracts can be divided into 2 types: commodities and financial.

Commodity futures involves assets such as oil, gold, livestock, food, metal and energy
Financial futures include stocks, treasury bills, certificate to deposits, bonds and foreign currencies

Features of Future Contract Investments in Malaysia

  • You do not need to pay for the full contract up front to buy futures. You can pay only a margin of 5-10% of the total value of the contract to trade in futures
  • You can make profit in both bull and bear market by taking future position on both side
  • Gives you confidence to invest in volatile investments such as stock or oil by setting your transaction value beforehand and lets you predict your profit

Risks Future Contract Investments in Malaysia

Dealing in future contracts requires you to predict the price movement of your commodities or financial futures correctly. For example: if you buy a future contract to sell your stocks in future for RM 10 but the stock at that future date has a market price of RM 15, then you have underestimated the value of your stock and will lose the opportunity to sell it in the market at higher price.

However, stocks bonds or any other commodities are volatile in nature. Investing in future contracts give you the power to control your buying and selling price and ensures profit, making it a safer investment.

Moderate Risk Mode – 5

Time Horizon for Future Contracts

The time frame of future contracts are mentioned in their contract. It usually ranges from 3 month-12 months period.

Cost of Investing in Future Contracts

The margin you have to pay for future contract is the price involved in this investment.

Who Should Invest in Future Contracts

If you are an expert investor with large investment portfolio, then future contracts is an excellent to earn profit. This gives you control over the price of your asset and reduces your risk of loss unlike other investments.

Budget Required for Future Contract Investments in Malaysia

There are 12 Future Contracts available in Malaysian derivative market as of October 2016. Each of them have different margin value as follows:

Typical Return of Future Contract Investments in Malaysia

Depending on the market condition, the future contracts offer a value to buy or sell your assets in future.

Top 3 Future Contracts for Investment

  • FTSE Bursa Malaysia KLCI Futures (FKLI)
  • Crude Palm Oil Futures (FCPO)
  • Gold Futures (FGLD)

How to Trade Futures in Malaysia

Open an account with a licensed brokerage firm to buy future contracts. You can refer to this brokerage firms listed under Bursa Malaysia. To learn in depth about future contracts and regulation under Security Commission, click here.

To Learn More About Future Contract Investments in Malaysia

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22nd Type of Investment in Malaysia: Private Retirement Scheme Malaysia

You may be wondering what is private retirement scheme. A private retirement schemes (also known as PRS) is an investment scheme to save enough for your retirement. Yes, all Malaysians have EPF for their retirement use but PRS Malaysia gives you the flexibility of how much to invest and when to contribute, depending on your preference and affordability. PRS is managed by asset management companies but since 2011, it is under regulation of Security Commission (SC), which ensures trust and reliability of investing in this option.
Private retirement scheme providers offer multiple retirement schemes. So, you can invest in more than 1 retirement fund under the same schemes and you can also invest across different PRS providers with as many schemes as you like. Below is a simplified structure of how investing in multiple PRS schemes look like:

PRS Malaysia

Features of PRS Malaysia

PRS offers 2 types of funds: Core Funds & Non-Core Funds

Core Funds
PRS Malaysia provide must offer at least 3 core funds to you. The core funds determines the risk appetite, age eligibility and method of asset allocation of your investment so that you can instantly choose a category for investment. Look at the 3 different categories below:
PRS Malaysia Core Funds

Non-Core Funds
These funds are created for expert level investors. If you prefer to choose your own fund to invest and set your risk level at your suitable taste by selecting asset allocation according to your needs, then Non-Core Funds will provide you these options.

  • PRS assigns Scheme Trustees to act like your guardian to manage the fund. The trustees take custody and control the funds’ assets and hold them for you. They also keep accurate report of your investment so, that you get the best service from your PRS providers

Risks of Private Retirement Scheme Investments in Malaysia

You can count PRS in Malaysia as one of the safest investment option for your future. You will get help from your trustee to manage fund and have option of diversifying it among multiple schemes to lower your risk. Plus, you are offered 4 different class of retirement schemes, Class A being the safest investment and Class D being the riskiest investment. So, you have the freedom to choose schemes according to your risk appetite.
Another assurance of private retirement schemes is that it offers you RM 3,000 tax relief. So, no matter which scheme you invest in, you can take advantage of this benefit, confirming a minimum investment return.
Safety Mode – 4

Time Horizon of PRS Investments in Malaysia

PRS is a long term investment. Whenever you decide to invest in PRS, you have to wait till age of 55 to withdraw it completely. Look at the table below:
Private Retirement Schemes in Malaysia

Your account will be divided in 2 sub-account. Sub-Account A will hold 70% of your investment (principal+return) and Sub-account B will hold the remaining 30%. You are not allowed to withdraw from sub-account A till the age of 55. The only exception to this is if you permanently leave the country, have serious disability or suffer death.

You have the option of withdrawing from sub-account B each, but you will have to pay 8% tax penalty on withdrawal amount, reducing your earnings. Hence, unless you can commit to PRS for long time, your return amount will suffer.

Cost of Investing in PRS in Malaysia

The charges involved to invest in PRS are as follows:

  • RM 10 one-off charge for registration – this fee is waived if you sign up online
  • Annual fee of RM 8 to PRS provider
  • 0.04% of your Net Asset Value (NAV)
  • Sales charge
  • Redemption charge
  • Switching fund charge
    Transfer fee and pre-withdrawal fee are exempt as per now. You can keep updated on recent fees here. To compare fees across different PRS providers, follow this link.

Who Should Invest in PRS in malaysia

Investors of all risk preference are welcome to invest in PRS as they offer diverse set of schemes. Even foreigners are allowed to invest in PRS. The only requirement is you need to be 18 years old or above and have cash reserve to commit for a long period of time.

Required Budget for Investing in PRS in Malaysia

You can start as low as RM 100 to invest in PRS and with time, you can top-up the amount to expect significant return in the future.

Typical Return of PRS

Since retirement schemes offered by PRS providers are diverse in nature, there is no single average return as you will notice in their historical return in the next section.
However, since you will enjoy tax incentive of RM 3000 from PRS, let’s look at the tax bracket of different income earners:
PRS Tax incentive
So, if your monthly salary is RM 5000, you will be in tax bracket of 16%. So, disregarding additional return, you will save RM 480 per year from your tax itself (RM 3000*16%), confirming at least 16% return from your PRS investment.

Historical Return of PRS

Fundsmart has conducted a research to find the annualized return of keeping PRS in 3 core funds: Conservative, Moderate and Growth. This will give you a clear picture of anticipated return for your investment.

Conservative PRS Fund Returns
conservative Malaysia PRS Funds

Moderate PRS Fund Returns
Moderate PRS Malaysia Funds Performance

Growth PRS Fund Returns
Growth PRS Malaysia Funds Performance

8 Available PRS Providers for Investment

You can invest in any of the following 8 PRS providers registered under SC:

  1. Affin Hwang Asset Management Berhad
  2. AIA Pension and Asset Management Sdn. Bhd.
  3. AmFunds Management Berhad
  4. CIMB-Principal Asset Management Berhad
  5. Kenanga Investors Berhad
  6. Manulife Asset Management Services Berhad
  7. Public Mutual Berhad
  8. RHB Asset Management Sdn. Bhd.

How to Start Investing in PRS in Malaysia

Learn More About PRS Malaysia Investments

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23rd Type of Investment in Malaysia: Investment Linked Insurance Plans

Investment linked insurance plans (ILP) offers you the options of investing your money in protected environment under regulation of Bank Negara. You will be getting protection for your health as well as earn investment returns.

Unlike normal insurance, the premium paid for insurance linked insurance are divided into 2 portions; one portion goes for your protection coverage while the other portion is used to buy investment funds. You have the option to pay a single premium for the whole duration of the insurance plan or you can opt for regular premium (monthly or yearly basis) according to your convenience.

If you would like to learn more about ILP, we have written an ultimate guide to choosing the perfect plan for you.

Features of Investment Linked Insurance

  • You can choose the type of insurance fund you want to invest. So, you have the option to choose the risk and diversification level of your funds
  • You can monitor your portfolio and top up or change your premium anytime, according to your needs.
  • You will get yearly report on your insurance and investment performance. The report will include premium allocation, charges applied, investment value and fund unit price
  • Your premium will gradually increase over time as your age increases
  • Initially, your protection coverage cost will be low, so you will save more on investment. However, with time your coverage cost will increase, and if this cost exceeds your premium, then the insurance company will deduct money from your investment account to compensate for it
  • The amount of coverage offers by ILPs different depending on the insurance company. Some companies offer only death coverage while others offer additional coverage such as critical-illness and hospitalization
  • You can add riders such as saving plans to save the amount earned from investment for retirement. However such riders are subject to additional premium
  • You can withdraw from your investment linked insurance plan account anytime

Risks of the Investment Linked Insurance Plans

The amount of your premium in investment account is not capital guaranteed. Your money will be invested in various funds related to equity, bonds, ETFs, etc. The combination of several methods will help to diversify your investment but still the return depends on your fund’s performance in the market. So, while the insurance company manages your fund in the best possible way to appreciate your net asset value, any downturn in market can cause your investment to incur loss as well.

However, you have the flexibility to choose your unit funds for investment, so this gives you assurance and control over your risk appetite making ILPs an average risky investment.

Moderate Risk Mode – 6

Time Horizon of Investment Linked Insurance Plans

Investment Linked Insurance Plans are long term investments. The more time you invest, the greater chance of your investment return to grow. According to Maybank ILPs, you can invest in their ILPs until you are 100 years old.

Cost of Investment Linked Insurance Plans

An investment linked insurance plan involves several different type of charges as follows:

  • Initial charge – Admin cost for policy issuance
  • Fund management fee
  • Fund switching fee
  • Policy fee
  • Other charges for add on riders
    The amount of these charges depend on the tenure of your insurance, premium amount, coverage amount and investment amount among other factors such as your age or claims over the years

Who Should Invest in Investment Linked Insurance Plans

Anyone can invest in ILPs. However, to maximize your return, it is best for those who has investment knowledge. Insight on investment will help you pick the appropriate fund units and adjust your premiums accordingly to maximize your profit.

Required Budget for Investment Linked Insurance Plans

You can start as low as RM 100 monthly premium to invest in ILPs. Later, you can top up the premium depending on your affordability to grow your return further.

Typical Return of Investment Linked Insurance Plans

For ILPs, you have the flexibility to invest as much as you can afford, choose your investment fund units, set your investment duration. So, your return completely depends on the combination of all these factors and how well your fund units perform in the market.

Historical Return of Investment Linked Insurance Plans

You can consult our ETFs, Stocks and Bonds investment above to get an idea of the historical return for your investment as your fund units will include a combination of such investment instruments to grow your earning.

How to Get Investment Linked Insurance Plans

  • Understand what you need from an insurance side as the first thing ILPs are is an insurance product
  • Research on which insurance company you like depending on the ILP policy is suitable for you
  • Contact the insurance company who offers your preferred ILP policy
  • Make sure to double check your policy agreement before signing
  • Choose your investment funds wisely to maximize your returns
  • Monitor your ILP accounts regularly to keep track of your earnings and coverage

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24th Type of Investment in Malaysia: Art, Antiquities & Jewellery

If you are a High Net Worth Individual (HNWI) or you are already deep into collecting unique items, then you can invest in non-conventional items such as art, antiquities and jewellery. These type of investment involves physical possession of priced items to keep in your collection.

Features of Being a Collector

  • You must be rich in historical knowledge to keep tabs of antiquities from around the world that are of immense value
  • You must be an enthusiast for collecting old items such as rare coins which has been passed on from generation of royal families
  • You must have a keen eye for art to collect items that will increase in value in future. For example, imagine the price of an original Michelangelo piece at today’s time

Risk of Investment in Collectables

Since you might be investing in millions to collect such item and bide your time to cash in your money, it constitutes high risk. To add to the fact, many scammers try to sell off fake items as originals and if you are not careful, you may fall into their trap. Lastly, you are always at risk of theft or robbery as such pieces. These are of great value and you have to hold them physically to someplace secure to protect them.

High Risk Mode – 8

Time Horizon Needed

It is a long term investment. You have to spend time money and effort to find such valuable pieces and wait for the right time to appraise their value in auction or in museums.

Cost of Investment

  • Research fee to locate items
  • Verification fee to confirm the items’ originality
  • Travelling fees to make the transactions
  • Transport cost to ship them to your storage place
  • Security and storage fee to keep the item securely
  • Maintenance fee to maintain its quality
  • Auction organization or packaging fee for sale

Who Should Look Into Collectables

People with taste for antique items, appreciate art and like to own expensive jewelleries. So, if you are the elite class of society with excellent taste for valuables, then you must be already in this investment.

Required Budget

Investment can range from RM 6000 for a table bought from Gandhara to RM 1.5 million for a rung from Tibet. Your budget depends on how valuable your item is and how demanding it is in the market.

Typical Return

Items can provide you $100,000 (RM 419656.72) return for $50 (RM 209.83) items depending on its age, value and demand across the world.

How to Start

Start by researching on your interest and growing your network who serves to this niche to get hold of such item.

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25th Type of Investment in Malaysia: Investing In Your Skills

One of the most overlooked investments but one of the most profitable investments in the world. In fact, we believe that investing in your skills is the best investment possible.

Skill investment means to improve the skills you need at work faster than the average person. It means to know what skills your seniors have that you're still lacking and then finding ways to improve those skills through books, courses or seminars.

Features of investing in your skills

  • The faster you are able to develop them, the more you will make during your working career because you will be promoted that much faster
  • The better you get at your job, the less time it takes you to do it which means the more you can do
  • Once you have the skill, you can find many other ways to make money off it, be it through freelancing or consulting

Risks of investing in your skills

There are no risks associated with investing in your skills. However, if you decide not to invest in your skills, or worse, decide not to keep up with what you need to know to be successful, you will quickly find yourself not needed within the company and may be fired.

Time horizon needed for investing in your skills

Skill development is something that you should really focus on in your 20s and early 30s because the earlier you can start, the faster you will move up the career ladder, the longer you will be able to enjoy the 'peak earning' period of your life.

Cost of investing in skill development

Skill development can be free if you were to read blogs. It could also be the cost of a book that really helps you learn something (we suggest using goodreads to find the best books). Or you could sign up for a seminar to learn, or sign up to online courses.

The most expensive way to learn would be to go to the main conference for the skill you want to develop. To give you an example, if you wanted to be known for marketing, you may want to check out Traffic and Conversion Summit. The main event is held in the US and costs close to $2000US. Plus the cost of flights and accommodation.

Who should invest

This is the one investment we believe everyone should make because the return on investment from investing in your skills and not investing in your skills can be over 100% (in our CS' case, the return on his investment was over 300% within one year).

Required budget to invest

We would recommend that you put in 10% of your take home salary each month to invest in your skill development, especially if you're still under 35.

Typical return

The typical return depends greatly on the skill you are developing and the demand of that skill in the workforce. However, it's pretty common to get average returns of 50%+ in the first few years of your career.

How to invest

  • look up on goodreads the skill you want to develop and buy the most popular book
  • google the skill you want to develop and find a few blogs that talk about those skills
  • ask your seniors for suggestions on how to grow faster in your career

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