Ever heard of the saying “Rich people don’t save, they invest”? So, what is investing and how can you do it? We’re deep diving into Investment 101, to share with you all the different ways of investing available for Malaysians!  

Investment is the act of putting your money into something to growth it in the future. Unfortunately, not many people have the knowledge or understanding needed to navigate the world of investing effectively. Common examples include gold, stocks, unit trusts, and bonds. People invest to grow their wealth, save for retirement, or achieve financial goals. Understanding investments is important because it helps you make informed decisions about your money, allowing you to build a secure financial future. In this topic, we will explore different types of investments, their benefits, and why knowing about them can lead to better financial stability and success.  

Stock 

What Are Stocks? 

When we talk about stock investment, we’re essentially talking about buying shares or having equity in a company. A share is like a small piece of that company, and when you buy stock, you become a part-owner. 

For example, let’s consider  Petronas Chemicals Group Berhad  (PCHEM), a major company in Malaysia. Suppose you buy 100 shares of PCHEM at RM8.00 each. That means you’re investing RM800 (100 shares x RM8.00). If PCHEM does well and its stock price rises to RM10.00, your investment would be worth RM1,000 (100 shares x RM10.00). If you decided to sell at that price, you’d make a profit of RM200.  

Additionally, if PCHEM pays a dividend of RM0.20 per share, you’d receive RM20 (100 shares x RM0.20) as a reward for being a shareholder. 

In simple terms, by investing in stocks like PCHEM, you’re buying a small part of a company and can benefit from its success through increased share value and dividends. 

Stockbroker 

A stockbroker refers to a broker for buying stock. It serves as intermediaries for the market and customer. So, when a customer wants to invest in stock, then they will mostly be dealing with a stockbroker. There are many types of stockbrokers out there being offered.  

Discount Broker 

This broker helps you with buying the stock. This option is for investors that are already experts and prefer to handle their own trades at lower cost and only need a broker to buy the stock for them. 

Fulltime Broker 

This broker helps you with not just buying and selling stock, but also with deep research and analysis. This option is good for the investor that has basic experience in stock investing and wants further support and professional advice. 

Online Broker 

An online broker is a company that lets you buy and sell things like stocks and bonds using the internet. Instead of going to a physical office, you can trade through a website or mobile app. Online brokers usually charge lower fees than traditional brokers, making it easier and cheaper for people to invest. They also provide tools and information to help you make smart investment choices. They enable you to manage your investments from anywhere, track performance in real-time, and execute trades at any time, making investing accessible for everyone. A few examples of online brokers are , Octa aHYPERLINK "https://www.octafx.com/"and many others. 

Robo Advisor 

Robo-advisors are automated investment platforms that use algorithms to provide financial advice and manage your stock investments. When you first sign up, they typically ask a series of questions to gather data about your financial goals, risk tolerance, and investment preferences. Based on your responses, the robo-advisor generates a personalized investment strategy tailored to your needs. These options are low cost compared to other option. Ria, Stash Away, Versa and Wahed are one of the platforms that use robo advisors. 

Gold 

Gold Investment in Malaysia 

Gold is one of the most popular things to invest in Malaysia. Here’s why: 

Protection Against Inflation 

Gold is seen as a safe investment. When inflation rises and the economy gets worse, the value of money can decline. However, gold usually keeps its value, making it a good way to protect your wealth. People who own gold can sell it or use it to buy other things when they need cash. This flexibility makes gold a valuable asset during tough times. 

Long-Term Value 

 Over the years, gold has tended to increase in value. For example, since the start of 2024, gold prices have already increased by 33%. (TradingEcnomics). This shows how many people invest in gold to keep their wealth safe, especially during difficult financial times. 

How Investing in Gold Works 

Investing in gold means buying gold as an asset. The value of gold can go up or down based on how much people want it. 

Types of Gold Investment in Malaysia 

Physical Gold 

This includes gold jewelry, coins, and bars. Many people choose physical gold because it is tangible and can be stored at home or in a safe. For example, if you buy a gold bar from Public Gold for RM5,000, you have a physical asset that you can sell whenever you want (Once the gold price value goes up, that's when you sell it at a better price and make profit) 

Gold ETFs (Exchange-Traded Funds) 

Gold ETFs are investment funds that track the price of gold.  

No Physical Ownership 

When you invest in a gold ETF, you don’t have to physically own the gold. This means you don’t need to worry about storage or security. 

Easy Trading 

Gold ETFs are traded on stock exchanges like regular stocks, making them easy to buy and sell whenever the market is open. 

Price Monitoring 

You can easily monitor the price of your investment through stock market platforms or financial news, allowing you to make informed decisions quickly. 

In Malaysia we can buy gold ETF through Bursa Malaysia’s TradePlus Gold Tracker. There are also options for international brokers such as Avatrade, IG Trade and many others. 

In summary, gold is a popular investment in Malaysia because it helps protect against inflation and can increase in value over time. Historically, gold prices have increased by about 50% to 100% over the past decade. Public Gold plays a key role by providing options like physical gold, gold ETFs, and accumulation plans, making it accessible for everyone, even if they are just starting. 

Unit Trust 

A unit trust is a way for people to invest their money together. Think of it like a big basket where many people put their money. This money is then managed by a fund manager who knows where to invest it wisely. The idea is that by combining money, you can buy a variety of investments like stocks and bonds making it easier for individuals to invest in a diversified way without needing a lot of money. 

When you invest in a unit trust, you buy units in that trust. The value of these units goes up or down based on how well the investments in the trust perform. It’s a great option for people who want to invest but don’t have the time or expertise to manage their own investments. 

It’s important to note that while unit trusts can invest in stocks, they are different from investing directly in stocks. In a unit trust, your money is pooled with others and managed by professionals, while buying stocks means you own a part of a specific company and manage those investments yourself. 

ASNB, ASB, and ASM 

ASNB (Amanah Saham Nasional Berhad) 

ASNB is a unit trust management company owned by PNB. It manages various unit trust funds in Malaysia, including ASB and ASM. ASNB oversees six fixed-price unit trusts: ASB1, ASB2, ASB3, ASM1, ASM2, and ASM3. They determine the annual dividend rate for ASB and ASM based on fund performance and market conditions, ensuring dividends are distributed to investors. 

ASB and ASM 

ASB (Amanah Saham Bumiputera) is specifically for Bumiputera and Muslim investors, while ASM (Amanah Saham Malaysia) is open to all Malaysians. Both funds offer a safe investment option as they have fixed prices and guarantee the return of capital. When you invest in ASB or ASM, ASNB manages your investment on your behalf, which is why it's called a unit trust—you trust ASNB to handle your funds. 

The maximum investment is 200,000 units, with each unit priced at RM1. For example, if you invest RM100, you are almost guaranteed to get your RM100 back, regardless of market performance. Currently, ASB offers a dividend rate of about 4.25%, while ASM offers around 4.75% for 2024. This means that if you deposit RM100 in ASB, you will have RM104.25 at the end of the year, and in ASM, you will have RM104.75. 

Differences from Other Unit Trusts 

The key difference between ASB/ASM and other unit trusts is that ASB and ASM have fixed prices. In a typical unit trust, the price can fluctuate. For instance, if you invest RM100 when the unit price is RM1, but it drops to RM0.90, your investment would be worth only RM90 after a year. In contrast, ASB and ASM guarantee that you will get your initial investment back. 

Differences Between ASB and ASM 

The main difference between ASB and ASM is their target audience: ASB is for Bumiputera investors, while ASM is for all Malaysians. Additionally, ASB units are always reserved for eligible Bumiputera and Muslim investors, whereas ASM units are limited and fewer in number. They also have different investment strategies and portfolios. 

Tabung Haji  

Tabung Haji is a financial institution in Malaysia that helps Muslims save and invest their money. It operates on the Islamic concept of  Wadiah, which means trust and custody. In this context, Wadiah refers to the deposits made by investors. 

Types of Wadiah 

Wadiah Yad Amanah 

In this model, the custodian cannot use the money and must return it as it is. Example, if you deposit RM1,000 in a Wadiah Yad Amanah account, you can withdraw the same RM1,000 whenever you want. The custodian keeps your money safe but does not use it for any investments. 

Wadiah Yad Dhamanah 

In this model, the custodian can use the money for investments and generate profits. Example,  if you deposit RM1,000 in a Wadiah Yad Dhamanah account, the custodian may invest that money in various projects. Over time, your deposit could grow, and you might receive a profit share based on the investments made. 

Tabung Haji follows the Wadiah Yad Dhamanah model, meaning that the savings deposited by investors are used to invest in various projects. Think of it like a piggy bank where you can deposit money and watch it grow. 

Purpose of Tabung Haji 

The main purpose of Tabung Haji is to promote saving for Hajj. It has a low minimum deposit of RM1,300 for new depositors which serves as a booking fee for Hajj, this makes it easy for anyone to invest, just like putting coins into a piggy bank. Over time, your small contributions can add up, helping you save for your pilgrimage. Withdrawals from Tabung Haji can also be made at any time, giving account holders flexibility in accessing their funds. 

Additional Benefits 

If you have savings in Tabung Haji, you don’t need to worry about paying  zakat  yourself. Tabung Haji takes care of this for all its account holders by paying zakat on the total savings before distributing any profits. This means your savings and the profits you earn are already accounted for regarding zakat, which is not the case with other options like ASB. 

Conclusion 

In conclusion, investing in instruments like gold, stocks, and unit trusts is important for building your wealth and preparing for the future. However, it's crucial not to invest blindly without understanding the basics. Doing your research and learning about these investment options can help you avoid costly mistakes. With good knowledge, you can make smart choices that allow you to save money for emergencies or achieve your financial goals. Remember, investing wisely today can lead to a more secure tomorrow for you and your family.