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How to Invest RM1,000 for Future Growth!

RM100 or even RM1000 may not sound like a lot. Especially in this day and age.

Thanks to inflation!

Well, money doesn’t grow on trees, and you’ll need to put some work into it. 

Like you, I also had these questions:

  • How can I grow my money?
  • Where to park the money?
  • Is the investment platform and fund trusted? 

You’ll be surprised to find that there are many reliable investment funds for you to choose from.

You don’t need hundred thousands of ringgit to start investing.

Whether you have RM1,000 or RM100, here are 10 ways for you to invest your money! This list is in order from low risk to high risk.

1. Amanah Saham Bumiputera (ASB)

ASB is managed by Amanah Saham Nasional Berhad (ASNB), a wholly-owned subsidiary of Permodalan Nasional Berhad (PNB) that owns all of its shares. ASNB’s main objective is to promote savings and investment among Malaysians, especially those from the Bumiputera community. ASB is a premier unit trust investment meant for the Malaysian Bumiputera.

Malaysian non-bumiputeras can also invest in one of Amanah Saham Nasional Berhad’s unit trust – Amanah Saham Malaysia (ASM). 

If you’re interested in ASM, I’ll put the links here as well.

Highlights:

  • Risk Level: Low
  • Returns: Returns are between 4.25%, up to 10% per annum. Its relatively stable returns make it one of the best low-risk investment vehicles in Malaysia.
  • Investment: Only RM 1 per unit, with no negative returns until to date. Maximum investment caps at RM200,000.
  • Costs: No sales or redemption charges
  • Timeframe: It is intended to be a long-term investment fund. 

2. Employees Provident Fund (EPF)

EPF is a scheme that is created when you start a full-time job at a government or private organisation. This investment pays interest (or also known as dividends) and can be used to fund a portion of your post-retirement life or future ambitions!

As an employee, although you may already be contributing to your EPF savings with the mandated rates (links in description) you can actually contribute far more through voluntary EPF contributions. You can also self-contribute to your EPF account through online banking, i-Akaun or even bank agent counters in Malaysia. 

If you’re self-employed or you don’t earn a regular income, you can also contribute to your EPF account through i-Saraan.

To learn more about EPF and how to withdraw from EPF, you can watch on YouTube below here.

Highlights:

  • Risk Level: Low
  • Returns: Annual returns has been between 5% to 6.4%. EPF guarantees minimum payout of 2.5% for conventional (non-Shariah) accounts 

3. Private Retirement Schemes (PRS)

The PRS is like your EPF account, with the difference that this investment fund is optional. The PRS is a voluntary investment scheme to help you save more for retirement. 

It allows you to invest in authorized unit trust funds administered by 3rd-party PRS providers.

It’s a form of forced saving. You can only withdraw funds for specific purposes, such as housing or healthcare, or you may face an 8% tax penalty. 

Highlights:

  • Risk Level: Low – Medium
  • Returns: Investment returns are not guaranteed. Depends on unit trust fund; as of this recording, the top eight PRS funds produced annual returns of 7.96% to 11.52% p.a. in the past five years.
  • Benefits: Able to receive up to RM3,000 in tax exemptions if you invest in PRS until 2025. Depending on your income bracket, you can save up to RM900 in taxes!
  • Cost: 3% upfront sales costs and 5% annual management costs

4. Real Estate Investment Trusts (REITS)

Want to invest in property, but don’t have the capital to buy them outright? Consider investing in real estate investment trusts (REITs).

REITs are unit trusts founded by businesses that purchase and manage real estate with funds raised from shareholders. REITs invest in a wide range of assets and sectors: residential, offfice and commercial, industrial, retail, hospitality, and healthcare.

The companies are encouraged to give out large dividends since they must transfer at least 90% of their profits in order to be tax-free. You’re able to earn from them as well through capital appreciation.

Being in Malaysia, some examples of Malaysian REITS are Sunway REIT, Axis REIT, Pavilion REIT. Just to name a few.

If you’re interested in Singapore REITs. Some examples are Capital Land Mall Trust REIT, Keppel REIT, MapleTree REIT, Suntec REIT and more. I’ll put the link in the description below.

Then, if you’re interested in US REITs. Some examples are Realty Income Corporation, Prologis, Office Properties Income Trust, Medical Properties Trust, and more.

Highlights:

  • Risk Level: Medium
  • Returns: Return rates vary from each organisation, so please check beforehand. This form of investment is preferred by investors as they have better dividend distributions than conventional stocks, typically between 4% – 8%. Dividends can be paid out monthly, quarterly, semi-annually, or annually.
  • Timeframe: Advised to invest funds over a long period of time to have positive growth

5. Unit Trust Funds

Unit trust fund is a type of mutual fund that allows investors with similar objectives to combine their funds and invest in a portfolio of securities or other assets. 

The joint funds are subsequently invested in a portfolio, including cash, bonds, deposit, stocks, real estate, and commodities by a professional fund manager.

In Malaysia, to invest in unit trust, you can invest through your bank, PublicMutual, or FSMOne Malaysia.

Highlights:

  • Risk level: Low – High
  • Returns: Depends on portfolio and funds. Your ROI (return of investment) will typically be in the form of income distribution and capital appreciation obtained from the pool of assets backing the unit trust fund too. 
  • Investment: From as little as RM 1,000, the Unit Trust Funds allows you to invest in a diversified, professionally managed portfolio! 
  • Costs:
    • Sales charges: around 5%
    • Other fees include platform fees, annual management charges, trustee fees, etc

6. Exchange Traded Funds (ETFs)

ETFs are similar to unit trust funds, as it’s an accumulated investment scheme that allows you to invest in diversified underlying assets. 

ETFs tend to combine investors’ funds to acquire a portfolio or group of stocks, bonds, or other investments. Like stocks, ETFs can provide returns through dividends and capital appreciation. 

However, ETF fund management monitors or duplicates the performance of a benchmark index rather than choosing specific stocks or assets to invest in as unit trust funds do. 

So, unlike unit trusts, an ETF’s success does not depend on a fund manager’s forecasts of how the market will perform in the short term. 

If you’re a Malaysian investors or investors who want to invest in Malaysian ETFs. There are commodity ETF, equity ETF, fixed income ETF, and Leveraged & Inverse ETF. There are also Shariah-compliant ETFs – i-ETFs that tracks only benchmark index where the index constituents are Shariah-compliant securities.

In the US stock market, examples of US ETFs: SPDR S&P 500 ETF Trust (commonly known as SPY), Vanguard S&P 500 ETF (VOO), Vanguard Total Stock Market ETF (VTI), Invest QQQ Trust Series I (QQQ), Schwab US Dividend Equity ETF (SCHD), and more!

Highlights:

  • Risk Level: Medium. It depends on the specific ETFs chosen.
  • Return: Rates depends on specific ETF
  • Investment: If you’re a new investor and have RM1,000 to start investing. ETFs are advantageous as they offer rapid access to a diverse set of investments for a relatively small amount of money.
  • Costs: It also has lower fees (usually less than 1% each year). 
  • Timeframe: Advised to invest funds over a long period of time to have positive growth

7. Blue Chip Stocks

There’s stocks and then, there are blue-chip stocks.

Blue-chip stocks are not like regular stocks! 

Blue chip stocks are popular shares of corporations with substantial market capitalizations. They are reputable and financially sound corporations. These organizations offer high-quality and generally recognized products or services. They can withstand economic setbacks, contributing to their long track record of consistent and reliable growth.

As mentioned earlier, I’m sure we’ve come across, or used, or consumed some of these popular company’s products. Whether we like them or not – they are no stranger to us.

In Malaysia, examples of blue chip stocks are Maybank, Public Bank, Tenaga Nasional, Sime Darby, Maxis, and more!

In US, blue chip stocks are Apple, McDonalds, Nike, Disney, Walmart and more!

Highlights:

  • Risk Level: High
  • Return: Rates vary – depend on company and market. Blue chip stocks also pay out dividends regularly (can be quarterly, yearly, etc.), an advantage for investors who seek consistent income from their investments. 
  • Costs:
    • There are also brokerage and transaction fees, of which generally 0.05% to 0.5% will be charged.
    • In Malaysia, there is also a minimum fee of RM 7 to RM 12. Meaning, if you had invested about RM 100, RM 10 will be transaction fees alone.
  • Timeframe: Advised to invest funds over a long period of time to have positive growth and to make a big profit

8. Robo-Advisor

I know there are so many investment jargons.

If you want to hand over your money to someone and have them or “it” invest it for you automatically?

There’s robo-advisor. But what’s a robo advisor?

A robo-advisor is an automated financial advisor offering algorithm-driven wealth management services with little to no human participation. Algorithms are used by Robo advisor services to automate your investing portfolio.

When joining a robo-adviser platform, a questionnaire will need to be filled out concerning your risk tolerance and investment timescale. 

The platform will then implement specific algorithms to automatically invest your money (typically in ETFs) and adjust your portfolio in response to market circumstances regularly.

In Malaysia, robo-advisor platforms like Wahed Invest, StashAway, and Akru are all very accessible to many, and anyone can start investing in them with just a few RM too!

Highlights:

  • Risk Level: Low to High
  • Return: Depends robo advisor platform and portfolio risk
  • Costs: They also offer lower management fees (around 1%) than unit trusts, consuming less of your potential earnings over time. 
  • Timeframe: Advised to invest funds over a long period of time to have positive growth

9. Cryptocurrency

Question: Is cryptocurrency even considered an investment?

An investment refers to something you purchase with the expectations that it will increase in value of generate income. This seems applicable to cryptocurrencies – if you had invested US$1,000 in Bitcoin in July 2011, it would have grown to US$2,785,738 in July 2021.

Investing in cryptocurrencies or crypto (in short), could take numerous forms, from purchasing cryptocurrency directly to investing in cryptocurrency funds or buying the stocks of organizations with crypto exposure. 

Although investing in crypto is lucrative, it is highly speculative, very risky, and volatile. It is also susceptible to market manipulation, which would likely lead to a sharp downfall in its value. 

If you think you can take a shot at crypto, you can invest through Luno or Tokenize or MX Global or SINEGY DAX, as these are currently verified and authorised platforms by the Securities Commissions Malaysia.

Highlights:

  • Risk Level: High
  • Returns: Depends on cryptocurrency
  • Timeframe: Advised to invest funds over a long period of time to have positive growth

10. Crowdfunding

Crowdfunding is another way that companies use to raise money to fund their growth or operations. There are a few types of crowdfunding and we’ll be exploring mainly two types: equity crowdfunding and debt-based crowdfunding.

Equity crowdfunding

This refers to when individuals invest in companies in exchange for a share of ownership or profit.

Equity crowdfunding sites in Malaysia include Crowdo, pitchIN and Leet Capital. If you’re looking for a Shariah-compliant crowdfunding platform, you could also consider Ethis. The minimum investment amount depends on each campaign.

The great thing about equity crowdfunding is that it allows you to invest in early-stage companies and startups. In the past, only high-net-worth individuals had access to these opportunities.

When you invest through equity crowdfunding, you generate returns when there’s a successful “exit” – this happens when the company is listed for an initial public offering (IPO), or if it’s acquired by another company, allowing you to sell your shares for a profit. The company might also issue you other forms of returns, such as dividends or discounts on its products and services.

Debt-Based Crowdfunding

The other type of crowdfunding mentioned is debt-based crowdfunding or commonly known as Peer-to-Peer Lending, or P2P Lending or P2P in short. 

It differs from equity crowdfunding, as P2P involves loaning money to businesses in the exchange for receiving interest payments until the debt is paid off. 

P2P can potentially provide better returns than bonds or blue-chip organizations, with potential profits hitting 10% a year. With high profits, it comes with high risks, as this form of investment is used by startups or new organisations. You would need to be mentally prepared if the business were to go south or go under. 

Some of the well-known Malaysian P2P financing platforms are Funding Societies, Fundaztic and B2B Finpal.

Highlights:

  • Risk Level: High
  • Returns: depends on campaign and P2P platform
  • Investment: Generally, RM 1,000 is needed to deposit into your account to start investing but it varies with each campaign you choose. Take note it is a high-risk investment, so do consider it before investing!

Conclusion

To conclude, investment funds are a great option to increase your income! Do note that whichever you select, it should be a long-term investment for it to mature. It also depends on your risk appetite, tolerance level, and investment goals. 

For those of you who are struggling to save money to invest, remember, it can always be done over time. You can top up your investment in various investment vehicles as and when you have the funds. If you keep at it over time you will gradually build up a pretty secure and diverse investment portfolio. It’s always good to start early!

Remember, it’s over time, not overnight!

You can also watch the full YouTube video and explainer below.

Originally Published on IQI Global blog

Financial Disclaimer: The content provided in this video is for educational and informational purposes only. It is not intended as financial advice, and I am not a licensed financial advisor. Investing and financial planning involve risks, and there are no guarantees of specific outcomes. Past performance is not indicative of future results. Always conduct thorough research and consider your individual financial goals, risk tolerance, and investment horizon before making any financial decisions. I do not endorse or recommend any specific financial products, services, or companies mentioned in this video. Any references to such entities are for illustrative purposes only. By watching this video, you acknowledge that you have read and understood this financial disclaimer. You are solely responsible for your financial decisions, and I disclaim any liability for any actions taken based on the content of this video.


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