If you’re one of the people that has a personal-finance-related New Year resolution, then you‘re in luck! Whether your objective is to earn more, save more, or invest more, we all have only one final goal - to have more money at the end of the year than we do now.
But, it's not enough to just work harder or work more jobs as our time and energy is very limited. You might've heard of the saying "the poor work for money, the rich make their money work for them", and the way to do that is by investing. So, we've listed down here some methods that can be started almost instantly with the least amount of initial capital:
1. Fixed Deposits
Difficulty: 2 / 5
Risk: 1 / 5
Reward: 1 / 5
Capital: 2 / 5
Ah, the teacher's pet of investments. Obedient, trustworthy, does his homework, but might not score the highest in exams. Fixed deposits have been an anchor in many people's portfolios as they have virtually 0 risk. Unfortunately, these few years have seen the interest rates of fixed deposits in a steady decline so the returns are currently lower than we would like.
Another thing to keep in mind is that your money will technically be "stuck" for the period of time you've chosen. Also, that amount might be anywhere from RM1,000 to RM20,000 depending on the minimum required investment. You can still withdraw it before maturity, but you'll sacrifice the interest you're supposed to earn. Still, the ease of investing and withdrawing together with the sense of security it gives still allows it to make it to our list.
How: Just head to any bank branch (you don't even need to have an account with the bank). Your bank might even have e-Fixed Deposits (like CIMB e-FD / Public Bank e-FD) that allows you to deposit using your online banking platform. Be sure to check for any promotional rates and compare them before choosing your bank! (READ: Best January Fixed Deposit Rates Up to 20.21%!)
2. High Interest Savings Account (HISA)
Difficulty: 3 / 5
Risk: 1 / 5
Reward: 2 / 5
Capital: 1 / 5
Like any other savings account, you can deposit money into it and take money out whenever you need to. The difference is that a normal savings account gives you 0.02% (might as well be 0) while a HISA can give you up to more than 4% of interest. That's almost twice the current fixed deposit rates!
The catch here is that these rates are usually conditional, that means you'll have to fulfill certain conditions to "unlock" the higher interest rates. For example, you might be required to deposit a certain amount of money or spend a fixed amount every month to continue enjoying better rates. This might sound like a chore to many people, but it'll be worth it when you see your savings grow!
How: Head to any bank that has a high interest savings account (can be checked on each bank's website or click here for some examples) to open one. Remember to ask the bank's representative about simple ways to achieve the conditions each month! (READ: Boost Your Savings With These High Yield Savings Accounts!)
3. Unit Trusts (UT) / Mutual Funds (MF)
Difficulty: 3 / 5
Risk: 3 / 5
Reward: 3 / 5
Capital: 2 / 5
*Although differing in technicality, they are practically the same, so I will use unit trusts and mutual funds interchangeably.
Yes, we can do our own plumbing or fix our air conditioner by ourselves, but we still pay a professional to do it. That is what UT/MF are about. They pool money from a couple of investors, including you and I, into a single fund, then a professional takes that money and invests it. After the fund earns money, it gets distributed back to the investors. The more capital you put in at the start, the more percentage of the profit you get back. Simple, right?
UT/MF can invest in anything from property to the stock market to gold, so they provide investors plenty of choice in what they want to invest in. Even seasoned investors will sometimes have investments here to access faraway markets. Since minimal skills and techniques are needed for rewards potentially higher than the more passive savings and fixed deposits, unit trusts are quite an attractive option to newbie investors and long-time veterans alike.
How: Most banks provide unit trust investments. EPF members also have the option to invest part of their retirement savings into unit trusts. A private retirement scheme (PRS) from PPA or various investment banks is another choice. For a wider range of funds, you can consider Fundsupermart.
4. Shares / Stock Market
Difficulty: 4 / 5
Risk: 5 / 5
Reward: 5 / 5
Capital: 1 / 5
From the start of the pandemic last March up till now, you've probably heard of many friends and family members earning big in the stock market. It's definitely possible to double or triple whatever capital you have. However, it's not all sunshine and rainbows, as there are also people who have lost their entire life savings and more.
Basically, buying shares of a company means you own a tiny fragment of the company and have the rights to vote for things a company will do. You get rewarded when the company gives out dividends to its shareholders or if you sell your shares to someone else at a higher price than you bought it at.
The amazing potential rewards correspond to the sky-high risks, so you'll need to do plenty of studying about how they work and which companies you're going to invest in. It's not easy and it's dangerous, so it's at the last of the list, but if you have the time, definitely give it a try! We might have a more detailed article on buying shares so stay tuned!
How: You'll have to open a trading account with one of the investment banks in Malaysia. If you prefer to online option, websites like Rakuten Trade will be the way to go!
There are many ways to make your money work for you, but it is as important to work hard for money yourself. The more capital you have, and the more time you're invested, the better off you might be in the future. If you've always wanted to invest but didn't know where to start, we hope this article will be the little push you needed! Good luck!
*Reward ratings are based on potential rewards and is not a guarantee. All investments have potential risks that will lose you money. Do your own due diligence before starting any investments.
*The article is for sharing purposes and should not be taken as legal financial advise.
