How to Invest in a Down Market? – 5 Malaysian Financial Experts Share Their Opinions

“May I ask for your opinion on safe investing strategies, given the devalued Ringgit and lack of trust in the government and Malaysian economy in general nowadays?”
– Suraya from Chicken Floss Bun

I received the above question from one of my readers. I had an opinion of course, which I promptly sent back to her. But let’s be honest, I’m no investment expert. I’m more of a keep-costs-low (stingy), and get the best deal kinda guy.

So I decided to talk to some financial experts.

And by experts, I don’t mean head of investment services of banks. You can find those guys in the newspapers.

Instead, I approached experts who are founders of their own companies, and share investment information for free online. Because I’ve always found their advice to be more practical and easy to understand — especially for beginners. And because I have a great deal of respect for all of them.

This is what they had to say to my question,

“How do I invest in an uncertain market?”

 

1. KC Lau, Founder of KCLau.com

Value investing! During this time of uncertainty, there are better values at depressed prices. Just look at good businesses and good-yield properties. When you buy assets that can generate income immediately, at a very attractive price, I guarantee that it’ll never go wrong.

When the majority is pessimistic, it creates opportunity for value seekers. You can find great assets with deep discounts, and make your investment with minimum downside, but a lot of upside.

p.s. You can buy shares of “good businesses” on the stock market. There are other forms of ownership — but generally, buying stock is the most straightforward.

KC Lau

 

2. Founder of 1-million-dollar-blog.com

My investment strategy during uncertain times is to hold on to your cash. Hard cash is king. You could park your hard cash temporarily in a lower-return but safe and liquid investment like fixed deposits, before you strike with your next investment.

People always say that making an investment during this time is very risky. Yes, it is indeed risky, but if you do your homework and select good stocks or properties, you will be rewarded handsomely.

1-million-dollar-blog

 

3. CF Lieu, Founder of LCF on Personal Finance

I believe asset allocation is the way to weather the storm of uncertainty, taking into consideration your sphere of competency.

It means having the right proportion of asset classes such as stocks, funds, bonds, properties and even small  businesses, which gives you a balanced return in terms of capital appreciation and cashflow.

For example, you might not want to plunk everything into the Malaysian stock market or worse, invest in one single company. Perhaps diversify into growth companies like Vitrox or OCK, and also high-income generating counters like retail REITs.

For funds, diversify into Asia Pacific or Global funds, with little correlation to Malaysian economy.

And lastly, properties. Good deals are always there but you definitely want to invest in areas you are familiar with. No point investing in Iskandar area while you are staying in Penang most of the time.

CF Lieu

 

4. Suzardi Maulan, Founder of Pakdi.net

“Where should I put my money?”

Many people have been asking this.

Especially with current issues in Greece, the weak RM to the USD, and price increases in Roti John this past Ramadan. So here’s the advice (once you’ve already saved enough cash for emergency savings):

  1. Change cash to assets.
  2. Assets that increase in value.
  3. Assets that increase in value are assets that create cashflow, and can increase in value on their own.
  4. Imagine you’re a goat breeder, or a paddy farmer.
  5. When you have more cash, buy more goats. Goats make many baby goats.
  6. Or if you’re a paddy farmer — every season end, you get to to harvest your plants.
  7. In our modern-day context, assets are things that give you dividends, bonuses or rent.
  8. The cash that you get, re-invest. Don’t increase spending or debts.
  9. And don’t forget to pay Zakat (Tithe).

Final word of advice: if we buy something at a discount price relative to its value, then it’s a good buy. Whether in a positive market or a negative market. Be it stocks or properties.

Pakdi

 

5. Lee Ching Wei, Group CEO and Co-founder of iMoney

In my view, in a down market or market where there’s a lot of uncertainty, it’s about finding “safe haven” investments. That means investing less in speculative investments, and more in “quality” investments.

For example, within stocks, it’s about choosing the blue chips over the small / mid-size companies. Within bonds, it’s about choosing the portfolio with better / higher overall credit profile e.g. more government bonds, and less corporates / “junk” bonds.

Unfortunately, it’s not quite as easy, as timing becomes an important factor.

My overall advice: making sure one’s investment horizon matches the assets you’re investing in e.g. a share / equity investor needs a much longer time horizon than a bond investor to ride out the ups / downs of markets.

Lee Ching Wei

 

In Summary

Here’s the common advice I found from the financial experts above. In uncertain times:

  • Be conservative. Hold on to more cash. Invest in safe investments.
  • Do your homework. Invest only in things you understand.
  • Look for value. When other people are selling, it’s a great opportunity to buy something valuable at a low price.

Here’s to hoping the situation in Malaysia gets better soon. But if not, please be safe with your money.

Finally, if you have any questions you think I can help you with, be it about money, time or relationships, send me an email. I read and am grateful for every single one. And even if I don’t know the answer to your question — I’ll try my best to find someone who does.

 

 

Pic at Pexels

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