This article is about Do-It-Yourself (DIY) investment options available in Malaysia.
What do I mean by DIY? I mean investments that you can reasonably make behind a computer screen, while lounging at home in your pajamas. Investments that don’t take too much effort — because you know, you have a day job like me.
For example, I’m not including property here — because to manage properties yourself (e.g. buying, renovating, looking for tenants, collecting rent, repairs) takes a ton of effort. But I am including Real Estate Investment Trusts (REITs) — because they allow you to invest in properties easily.
I’m also excluding stuff that needs huge sums of money, contacts or “cable” — like the once-in-a-lifetime shares your friend wants to offer you for his food-delivery startup. Instead, this is all commonly available stuff that the average person can invest in.
I’ll also include links — so you can immediately click to learn more and maybe eventually sign up.
These are exciting times. Because not only are there so many more options for investors than the typical stocks and unit trusts our parents had — with the Internet/apps/and shameless writers like me — it’s easier than ever to get started.
I hope you find something new and interesting.
Why DIY Investing?
Firstly, the all-important question. Why invest yourself, when you can outsource it to someone else, like your father, brother, or financial adviser?
Well, because learning how to manage money is probably one of the most underrated skills of all time. And while many of us at least have some knowledge on how to save money, a lot of us lack skill in investing.
Reading and attending seminars can help. But really, the best way to learn is to take a small amount of money, and give it a try.
There’s nothing like having “skin in the game” to motivate you to learn.
DIY Lets You Earn More
The second reason why DIY is amazing, is because it allows you, the investor to potentially earn more money. Because every time someone (like an adviser or agent) helps invest your money, their fees reduce your profits — sometimes by a lot.
Remember, the more middlemen there are in any business, the more expensive it gets for you — the end user. This example has been quoted to death — but many people still buy unit trusts through agents and get hit by high (5%!) commissions. But just like how the Internet continues to remove middlemen from every industry, finance will eventually change too.
Finally, just because someone dresses nicely, talks well, and carries a fancy title at a licensed-company — doesn’t mean they’re better than you at making money. Another quoted-to-death piece of research: A bunch of monkeys were better at picking winning stocks than a bunch of highly-paid, highly-learned professionals.
And I get it, in an emerging market like ours, people often feel like they need to talk to someone before investing. It’s scary to think you might do something wrong and lose your money.
But what if you could learn and practice to a level where you’re confident of doing it yourself? What if you could take control of your financial destiny, instead of leaving it to others? Well, if you want to, come, let’s take the first step. Let’s dive into this exciting world of investment opportunities together.
Here’s (almost) every DIY investment opportunity available in Malaysia, ranked from least risky (as boring as your economics lecturer in uni) to most risky (feels like a roller coaster, except the thing flying up and down is not your hair — it’s your money).
1. Fixed Deposits
Ah, good old fixed deposits. What your mother and my mother feels most happy about putting money in. Fixed deposits are viewed as the safest of safe investments: You put your money in the bank for a fixed period, and they pay you interest for trusting in them.
Why is it so safe? Because the banks literally guarantee it — and the government will even pay you back, in the unlikely event the banks go bankrupt.
Typical Returns: 3-4% per year
How to Start: Most banks already have e-fixed deposits at their online banking portals. Log in to your account and apply directly online! (Alternately, you can go to the bank with your mother.)
Best Places to Compare/Learn:
- GenXGenYGenZ (latest promotions)
- iMoney (comparison table)
- RinggitPlus (comparison table)
If you’re the geeky type (like me!) that likes to read finance news, you’ll often see the words “bonds” and “stocks.” We’ll cover stocks/shares later, but bonds are traditionally viewed as a less-risky partner to stocks.
For example, you’ll also see a lot of “traditional investing” articles saying things like “80% stocks 20% bonds” when you’re young. And “40% stocks, 60% bonds” when you retire. The idea is to balance the higher risk in stocks by buying more-stable bonds.
What happens in a bond? When you invest, you’re basically lending your money to a company/government — and they’re paying you interest (because why should you lend them money for free?).
Typical Returns: 4-9% per year
How to Start: Up until recently, it wasn’t easy to directly invest into bonds in Malaysia (unless you’re damn rich). But now, you can:
- Buy ETBS on the Bursa Malaysia Stock Exchange. (Minimum investment: RM 1,000. You’ll need a stockbroking account to do this. More at “Stocks” section below.)
- Buy Bonds on a platform like Fundsupermart. (Minimum investment: RM 10,000)
Best Places to Compare/Learn:
- Fundsupermart (about bonds)
- CompareHero (about ETBS)
3. Amanah Saham
Amanah Saham are “Trust Funds” (similar to Unit Trusts) created by a government-linked investment company, PNB. And to me — these are some of the most underrated investments in Malaysia.
What PNB does is, they’ll take money from you and me, combine it into a monster (think billions of Ringgit) account — and then use that money to invest in things like stocks and bonds. And because they’re really good at investing, they make good money, and then pay it out (dividends) to you and me.
There are two types of Amanah Saham funds: Fixed-price funds and variable-price funds.
Fixed-price funds: ASB, ASW 2020, ASM, ASD, AS 1 Malaysia, & ASB2
Variable-price funds: ASN, ASN Equity 2, ASN Imbang 1, ASN Imbang 2, ASN Equity 3, & ASN Sara 1
The fixed-price funds are fantastic (no sales charge, and consistently-good returns!). But I can’t say the same for the variable-price funds due to their meh returns and high sales charges. I’d stick to the fixed-priced ones for now.
Typical Returns (Fixed-priced Funds): 6-10% per year
How to Start: The challenge with Amanah Saham has always been getting hold of them. The fixed-priced fund units are limited, and some even have race-based quotas. You can try getting units at the ASNB website. (Remember to sign up for an account first — by visiting an ASNB office or one of their agents, which includes banks and post offices.)
The other way to get hold of Amanah Saham is when PNB launches new funds. This is when you’ll see poorly-dressed aunties lining up to buy with thick bundles of cash. Don’t judge!
Best Places to Compare/Learn:
- 1-million-dollar-blog (comparison table)
- Jom Urus Duit (how to sign up in Bahasa)
3a. Special Note For Bumiputeras
For all my Bumiputera friends out there, congratulations — you have access to what might be the most generous investment opportunity of all time:
Every Bumiputera in Malaysia has the privilege to invest up to RM 200,000 into a special form of Amanah Saham, called Amanah Saham Bumiputera. You don’t pay any fees to invest in it, you don’t pay any charges when you withdraw your money, and it’s consistently given higher returns than other Amanah Sahams. What’s there not to like? (Unless you jelly…)
ASB is so special that banks will even give you 100% loans to invest in it, called ASB financing. This is probably the only time I would consider breaking the “never borrow to invest” rule.
p.s. Bumiputeras also have privileged access to ASD and ASB2.
Typical Returns (ASB): 7-10 % per year
How to Start: As above — like any other Amanah Saham.
Best Places to Compare/Learn:
- iMoney (about ASB)
- Loanstreet (ASB financing)
Even the great financial writer Pakdi himself once said:
“For Bumiputeras, maximize your ASB and Tabung Haji first, before anything else.”
3b. Special Note For Muslims
Not all Malaysian Bumiputeras are Muslims. But most Malaysian Muslims are Bumiputeras. While you think about whether my statement is true or not, allow me to propose another stellar opportunity open to Muslims: the Tabung Haji fund.
Technically speaking, Tabung Haji’s objective is to help Malaysian Muslims save for the Hajj and Pilgrimage. So it’s 100% shariah compliant. And even though it’s not as worldly-profit-focused as some of the other investments in this article, Tabung Haji still gives good dividends to its investors.
Typical Returns: 4-8 % per year (TH pays out 2.5% Zakat on behalf of its investors, which makes it really convenient for all you soleh Muslims)
How to Start: Open an account by visiting a TH branch, Bank Islam, Bank Rakyat, or TH’s mobile counters.
Best Places to Compare/Learn:
- Jom Urus Duit (TH vs ASB)
- Majalah Labur (TH vs ASB)
4. Unit Trusts / Mutual Funds
I have a love-hate relationship with unit trusts. The idea behind them is amazing — but funds in this country come with charges that are too high. I long for the day when a true low-cost fund manager like Vanguard comes to town.
Anyway, unit trusts are similar to Amanah Saham. A big group of investors (you and me) put their money into a gigantic fund, then the fund manager invests in stuff and hopefully makes money (and still takes his/her fees regardless of whether the fund goes up or down).
There are a huge number of unit trusts in the market, investing in lots of different things. So whether you wanna invest in South American bonds, European banks or commodities like Oil/Gold — you have lots of options. Take your time to choose a good fund and fund manager. (Hint: historically it’s usually the one who charges you the least fees.)
p.s. In case the huge number of options confuses you, Warren Buffett suggests the average investor would do well just investing in low-cost index funds.
p.p.s. Sometimes when you buy insurance, they’ll tell you there’s an “investment” or “savings” portion. Well, this portion is usually invested into unit trusts, plus a big fee.
Typical Returns: Because there are unit trusts for so many different things, it’s hard to give an “estimated return.” Also, the riskier/more volatile things we get into — the harder it is to estimate. Remember, even if something has given you 8% for the past 100 years, there’s no guarantee it won’t crash tomorrow.
How to Start: Sign up for an online fund platform like Fundsupermart or eUnittrust.
Best Places to Compare/Learn:
- Business Insider, CNBC (articles about low-cost, index fund investing)
- Loanstreet (general info about unit trusts)
5. Real Estate Investment Trusts (REITs)
You know what’s the real Number 1 investment in Malaysia? And by Number 1, I don’t mean the amount of money people have invested. I measure it by this: if you go to any random lecture hall, Starbucks, or office tower in Malaysia and shout out the words: “Hey mofos, I’m gonna invest in <xxx>!!!” how many people will think you’re crazy?
Well, if you shout out the words “Bitcoin” or “Stock Market,” a lot of people will cover their children’s ears and walk away. But this is what happens if you shout out “PROPERTY!!!”:
- 80% of people will silently approve (tho still think you’re crazy for shouting in public).
- 18% of people will have an internal debate about whether interest rates are too high, if rental yields are too low, or where’s the next “hot” area.
- 2% will walk up to you and say “Hey, can you teach me?”
But property investment has a few problems… like affordability and liquidity. How many people can afford the downpayment for an RM 800k new development? And then the liquidity problem: even if you manage to buy a property at 500k, and the market price in five years is 750k — how quickly/easily can you sell?
Because if you can’t sell or rent easily — then you’re gonna be stuck paying painful loans for a long time…
Thankfully, this is where REITs come in handy. They allow investors to easily invest in the property sector — but without liquidity and affordability issues. (They’re also really good for lazy people like me.)
Think of REITs like unit trusts — but instead of investing in other stuff, they invest into property like shopping malls, office buildings and hotels. The best thing? At least 90% of their profits must be paid back to investors as dividends.
Typical Returns: 5-7 % per year
How to Start: REITs are listed on the Bursa Malaysia Stock Exchange. Sign up for a stockbroking account to buy them. More at Stocks section below.
Best Places to Compare/Learn:
- Dividend Magic (guide to REITs)
- MalaysiaStock.Biz (list of REITs)
p.s. There’s also a special form of REIT for Bumiputeras called AHB.
6. Exchange Traded Funds (ETFs)
We’re getting into real mainstream stuff now… And before we talk about the ever-popular stock market, let’s talk about her low-maintenance younger cousin: Exchange Traded Funds.
ETFs are the beautiful love child between stock markets and unit trusts. Like unit trusts, they’re a gigantic pool of many investors’ money. And like stocks, they’re traded on stock markets. This makes it easier for investors to acquire or dump ETFs whenever they please (as long as the stock market is open).
What do ETFs invest in, you ask? You actually have many choices. For example, there’s an ETF that tracks the Top 50 companies on the US stock market. There are also ETFs that track the price of gold, or the Top 40 companies in Southeast Asia. (If you look overseas, there are ETFs that track everything — for example there’s even an Obesity Management ETF!)
An average investor would practically never be able to buy shares in 50 top companies in the USA. But an ETF does that for you. And because ETFs just look to track/copy/mimic something else, they don’t require a lot of highly-paid fund managers to make investing decisions. Important Outcome: ETFs are an economical way to invest.
For comparison’s sake, typical unit trusts in Malaysia charge annual management fees between 1.5-2%. ETFs here typically charge between 0.5-0.7%.
Typical Returns: Like unit trusts, this really depends on which sector your ETF is tracking. Higher risk, higher returns.
How to Start: Like stocks, ETFs are listed on the Bursa Malaysia Stock Exchange. Sign up for a stockbroking account to buy them. (If you sign up for a global trading account, you can gain access to ETFs or REITs on foreign stock markets too.)
Best Places to Compare/Learn:
- iMoney (understanding ETFs)
- Bursa Malaysia (ETFs listed in Malaysia)
7. Stocks / Shares
Moving on to the mainstream of mainstream investments: the stock market.
When you buy a stock, you’re basically buying a tiny piece of a company. And if the company does well and makes good profits (as you believe it will), its stock price should go up and/or the company will share some of its profits with you, by paying you dividends.
How do you choose the right company to invest in? When to buy and when to sell? Well, you could spend a lifetime and several fortunes studying these two topics.
There’s a huge amount of resources available (books, websites, videos, forums, groups, seminars, etc.) if you wanna learn more; even for a small market like ours. I’m no stock market expert, so I’ll leave it at this and share you some of my favorite resources to learn from below.
BTW — If the concept of picking individual stocks scares you, you can always fall back to ETFs or low-cost unit trusts.
Typical Returns: Too diverse to tell. For example, everyone’s favorite blue chip stock, Maybank went up from RM 8.20 (30th Dec 2016) to RM 9.80 (29th Dec 2017). That’s ~19.5% gain in one year. In the stock market’s last big crash however, Maybank went down from RM 9.44 (28th Dec 2007) to RM 5.15 (26th Dec 2008). That’s a 45% loss in one year. Play with the charts yourself here.
How to Start: Sign up for an online stockbroking account to gain access to stocks. I personally use Rakuten Trade and Hong Leong.
p.s. Remember the ETBS, REITs and ETFs we spoke about earlier? Signing up for a stockbroking account allows you to buy these too. And if it’s a global trading account, you can also buy foreign stocks.
Best Places to Compare/Learn:
- Dividend Magic (quick guide to Malaysian stock investing)
- Bursa Malaysia (stock market basics)
- 1-million-dollar-blog (how to invest in foreign stocks)
8. Peer-to-Peer Lending
On to the fun stuff now. Now that we’ve covered mainstream investments, the next few investments we’ll talk about are either new, or considered “niche.”
The cool thing about these is they’re sexy, have cool websites, and can make you good profits. The bad news is, they’re risky — meaning there’s a higher chance you could lose your money.
First up is Peer-to-peer (P2P) Lending. Did you know there are already six licensed P2P Lending platforms available in Malaysia? These companies match Small and Medium Enterprises (SMEs) who need to borrow money with individual investors like you and me. They’re basically helping to collect sums of money from lots of people, and then package it into loans for these SMEs.
The SMEs get their loan (because you know, sometimes banks make it hard to borrow money), the investors usually get paid with good returns, and the platforms take a small fee. Everyone’s happy.
It’s a brilliant business model, and the good news is the Securities Commission of Malaysia regulates P2P Lending, along with her more mysterious older cousin Equity Crowdfunding described below.
Typical Returns: 10-14% per year
How to Start: Sign up at one of the six licensed P2P Lending platforms listed here. I personally use Funding Societies.
Best Places to Compare/Learn:
- CompareHero (understanding P2P Lending)
- LoanStreet (FAQs)
9. Equity Crowdfunding
There’s a saying that you need money and connections to make more money. Well, what if you don’t have much money, and don’t have connections? Traditionally, you’d find it very difficult to invest in an early-stage business (plus you’d also be more vulnerable to scams).
Interesting side note: By law, some investments are only open to “accredited investors,” meaning you have to be a certain amount of rich before you can invest. The first time I read this I was outraged: “WTF? Things that can make people rich are only legally available to people who are already rich?!
But why would anyone — rich or not — wanna invest in an early-stage business anyway? Well, if you had the opportunity to invest in Facebook before anyone knew about it, would you? Yes, the answer is of course potential profit: invest in something early, and when they go big and list on the stock market — suddenly your shares could be worth a lot.
Enter Equity Crowdfunding (ECF) — a way for the average person on the street to get into early-stage action. Like P2P Lending, ECF platforms help connect young businesses to investors. However, instead of getting paid monthly with interest, the investors are given shares instead.
What if the company goes bankrupt next year? Could those shares be worth millions in ten years’ time? That’s risk, and that’s potential reward…
Typical Returns: Too diverse to tell. Different for every investment opportunity.
How to Start: Sign up at one of the licensed ECF platforms listed here.
Best Places to Compare/Learn:
10. Gold, Silver & Precious Metals
Trivia: did you know that about 100 years ago, most developed countries in the world directly tied the value of their money/currency to gold? And I’m guessing many of you might find it disturbing that since 1971, money (a.k.a. fiat money as we know it today), isn’t backed by anything except trust in the government?
(Seriously, go read up on it — the government basically decides how much money it wants in the system, and implements policies to make this happen. Contrary to popular belief, monetary supply is not backed by how much gold, silver or vibranium currently sitting in the vaults of Bank Negara or the ex-PM’s house.)
But I’m getting distracted. What I meant to bring up was that historically, people have always had a liking for shiny metals like gold and silver — so much that they were used as money between people and governments. But now that we’re so used to online transfers and debit cards though, why would anyone still want silver or gold?
It turns out that a lot of smart people believe precious metals are good protection against inflation and uncertainty. Like if both the stock markets and bonds are crashing, where do you move your money to? That’s why you’ll often hear conspiracy theorists say: “There’s a big crash coming… buy gold now!”
How easy is it to buy? Due to the wonders of the Internet, thankfully there are now modern ways of investing in one of humanity’s oldest forms of money.
Typical Returns: If I could predict gold/silver prices — I’d be a billionaire.
How to Start: A couple of banks already provide online services to buy gold. Still waiting for silver and other commodities. You can also check out HelloGold app, which allows you to buy gold with a very small initial investment — as low as RM 1.
Best Places to Compare/Learn:
- Investopedia (beginner’s guide)
- Focus Malaysia (how/why do it?)
11. Bitcoin & Digital Currencies
Welcome to the end of the risk-reward spectrum. A wild and mythical place where fortunes are made and lost. Where things are so fluid and new that even governments are playing catch-up — scrambling to create laws around this new asset class.
What on earth is Bitcoin and why are digital currencies important? I could speak to you for days about this, but perhaps you’d instead like to read my full introduction here?
To me, buying Bitcoin and digital currencies is a lot more like venture investing than traditional investing. It’s investing with full understanding that it’s really early and price/technology/regulation/etc. can change overnight. Investing in this space is like choosing ten things, fully expecting that eight will fail. But that one success might change the world.
Bitcoin could go to zero, but there’s also a chance it goes up 20x. I’m a believer, but still realistic enough to understand it might fail (or take 20 years). A little bit like deciding whether to invest in Amazon (yes) or Excite.com (no) in 1998.
Reminder: I left this for last, because these are the riskiest of all the investments in this article. Please only ever invest money you can afford to lose.
Typical Returns: Not even gonna pretend this is predictable. (For example, from Dec 2017 to June 2018 — I lost about 60% of my portfolio’s value. On the other hand, from Sept 2016 to Nov 2017, I gained ~300%.)
How to Start: Most people get into digital currencies via an exchange/broker (who will help them convert money into Bitcoin or Ethereum). The best one for me is Luno.
Best Places to Compare/Learn:
- Luno (What is Bitcoin?)
- Upfolio (Blockchain & digital currencies explained using visuals)
- Ringgit Oh Ringgit (FAQs for Malaysian newbies)
Conclusion: So How Do I Choose What to Invest In?
I’ve covered how to build your investment portfolio in this post, but for now, perhaps I can share my personal style:
For most of my life, I’ve been quite a conservative investor (e.g. leaving my EPF intact, and getting as much Amanah Saham as I can), but I also have investments in extremely-high-risk stuff like Bitcoin. So I’m not what you’d call a typical investor at all. Basically I have a highly-bastardized version of Nassim Taleb’s Barbell Investment Strategy.
I’m not suggesting you follow me though.
Again, legendary investor Warren Buffett suggests that for most people, investing in a low-cost USA Stock Market index fund is good enough. Take a portion of your salary every month, and dump it into the index fund. Then hold for the long term.
Update Dec 2018: Robo-advisors have now launched in Malaysia. They super-simplify investing, especially for people who don’t have time/knowledge. If you’d like to try, they’ve even got a special promo for you, my beloved reader. Click here to learn more. Click here for an exclusive promotion.
Other super-simple options: If you’re gonna choose just one investment over here, I’d go for Amanah Saham. I’m also gonna take the unpopular opinion that leaving money in your EPF retirement fund and allowing it to compound over decades is underrated.
Ideally though, my biggest wish is for you to figure out your own strategy. Think about your own strengths and weaknesses, do some research, learn from others — and then make your own investments. Start small, and learn from the experience.
I know this might sound daunting, but it isn’t something to outsource to anyone else. It’s something that you need to take responsibility for. Because after all, it’s your money.
And if you’ve made it all the way here, I’m pretty sure you have both some time and money to spare. Why not start today?
– – –
Please let me know if I’ve missed out anything. I’ll consider, and add it to the list if appropriate. I’ve intentionally left out:
1. Retirement schemes (e.g. EPF and PRS).
2. Things that are probably too complex for the average investor like derivatives, warrants and foreign currency swaps.
This article contains affiliate links, meaning if you sign up for something I might get a small fee — but at no cost to you.
Pics from Pexels, Pixabay, Pexels, Pexels, Pexels, Pixabay, Pexels and Max Pixel.
Hi Mr Stingy,
Can i know what is the current portfolio you own and what are the specific ETFs you have? it does not have to be in amount for privacy sake, just around the percentage will do.
I will do my due diligence.
CHeers and have a great day!
I hope this article helps: https://www.mr-stingy.com/how-invest-own-money/
All the best!
Hi Mr. Stingy,
Thanks for the informative article. I’m a newbie just venturing into ASN variable unit trust and just wondering if you can enlighten me regarding these few questions:-
1) Are the so-called dividends which are declared during financial-end is actually already seen in the daily fluctuation value which indicates your balance? So after they declare the dividends, nothing additional is actually added to your balance? I seem to notice this with my ASN Sara 2 recently.
2) Are there any sales charges when you want to cash-out these funds?
3) Considering that you mention that you don’t really advise investing with the variable ASN funds because of high fee. I’ve used the app for purchase and it seems to have a cheaper 1.5% fee for every transaction and an annual 1% fee which I assume is calculated daily. Is it still something not worth looking into?
Thanks for dropping by. I don’t really have experience in ASN variable funds so please re-check my thoughts. Just trying to answer based on what I remember:
1. I’m not sure, but something should definitely change — whether it’s in the number of units you have, or the value of the units. Or perhaps it’s juts a time delay and they haven’t credited to you yet?
2. I don’t think so. I think these funds are “front-loaded.” Meaning sales charge when buying only.
3. 1.5% sales charge and 1% annual fees sounds a lot better. I would consider, but also compare with other opportunities out there. My personal pick is robo-advisory, where all in yearly fees go below 1% (+ no sales charge).
Dear Mr. Stingy, I recently found out that SSPN-i account is giving a decent average return of 4% and the saving is government guaranteed. Besides that, there is RM8000 tax relief, free takaful and you can withdraw the money at anytime. Also, you don’t need to have kid to open an account, you can open individual account (https://www.ptptn.gov.my/kategori-had-umur-sspn-i-side).
Isn’t this a good saving plan? It is better that bank saving account and FD rate. Appreciate your kind comment and advice.
Dear Mr. Stingy, Any thoughts on putting money to SSPN-i account for the 4% dividend? Thanks. 🙂
Hmmm, haven’t looked too deeply into this myself, but I’m thinking if it’s purely for returns, there are better alternatives (ASB immediately comes to mind if you’re Bumi). If you’re a parent though, I think the combination of tax relief + dividends + guaranteed saving by government might make sense.
Thanks for your thoughts, Mr. Stingy. Your approval meant a lot. 🙂 I’m not a Bumi. Hard to get ASN fixed price fund but I just found out that there is now myASNB portal for investor to buy fund directly, no need to go to counter anymore. I will give that a try. 😉
Awesome. All the best here!
Dear Mr Stingy, First of all, thanks for all your wonderful articles. I find them very credible and helpful. Thanks for taking the time to write and share them with the public.
I’m from Malaysia and uninitiated in investment. Just feel that the Covid-19 pandemic is a good opportunity to investment in stock market at a good price (hopefully). I don’t know how to read financial report or pick an undervalued stock but my guess is many blue chip stocks are now at attractive price. Since I don’t know how to pick a good stock, I was thinking of investing in Vanguard S&P500 index fund. Although, I’m not quite sure how to do that yet. I know you mention Stashaway, so, will have a look at it. If I do open Stashaway account, I will be sure to use your referral link. 🙂
Now, I have a question that I can’t seem to go around it. I’m not sure how to ask it but it goes something like this. If most fund managers can’t beat the S&P500 performance, why doesn’t everyone just track the index? Won’t it make life easy for the fund managers and also ensure investors get a good return? Why all the many funds when none can beat the S&P500? Thanks for taking the time to reply and elaborate. May life always be kind to you and your family.
Thanks for your kind words Baymax. Just to clarify, investing in the Vanguard S&P500 index fund (one fund only) is quite different from investing in a robo-advisor (which might invest into 6 different ETFs for you).
On your question about fund managers and the S&P 500, here’s an analogy using music. The majority of people in the world probably can’t sing better than a professional backup singer (who while can sing well, isn’t famous or very successful commercially). But that doesn’t stop many other people trying to become professional singers. Because if you’re that ONE special person who beats the market (whether it’s investing markets, or the music markets), you can make a lot of money and become very successful. Most people won’t make it, but people will try anyway.
Also, remember that a fund manager gets paid in fees (regardless of whether the fund makes money or not). It’s a very lucrative career.
Thanks for the helping me with the puzzling question, Mr. Stingy. I’m a little slow, I read your analogy a few times and I think I finally get it. Many fund managers are “trying” to beat the market but most are not successful. 😀
As mentioned, I don’t know about stocks, I mentioned Vanguard S&P500 because I read that it is the one recommended by Warren Buffett. I guess it is better to listen to the expert than trying to be a “professional singer”.
Investing in multiple ETFs is better than just investing in one S&P500 index fund? How is that so? Thanks.
Investing in multiple ETFs is better than just investing in one S&P500 index fund? <-- well yes and no. Yes, because technically the more ETFs you have, the more diversified you are. No, because historically just one S&P 500 index fund might beat the combination of ETFs. (Sorry I know investing is confusing.) The issue with buying an S&P 500 index fund from Malaysia is it isn't the most straightforward thing to do. It's a bit "troublesome." Hence, why I think robo-advisory makes more sense for most people.
Thanks for the explanation on investing in multiple ETFs. Recently, I attended Stashaway Webinar: Investing Basics. It is my first webinar with them. In the talk, Ken mentioned that investing in robo-advisory is a long term thing, 3, 5, 10 and etc. years. There is a question by one of the participants. What happens if in unfortunate event the company closes down. Ken explained that investors money are in trust fund and separate from the company operation expenses. Investors will still get back their money. But if at that point of time the ETF price has gone down then investors might get back less than what they put in. That seems to be a likely risk, since robo-advisory are a new thing and not sure how long they can survive. It will be good if they continue to operate for many years. But if not, we might not have opportunity to see our investment bearing fruits? Just my 2 cents. 🙂
Historically over time, you would expect the majority of the ETFs invested in to go up in price.
But even if the ETF goes down in price, whether the robo-advisor survives or not is kinda irrelevant. You would be still “losing” money. In other words, what determines your profit/loss is not whether the robo-advisor survives or not. It’s the ETFs prices.
Is it good to invest in the EPF approved unit trust with Account 1?
Personally I wouldn’t do it. Unit Trusts come with larger risks and higher fees, whereas I consider EPF to be a “low-risk” retirement fund.
Hi Aaron, thanks for the excellent write up, very helpful!
It truly is a pity we still don’t have low cost index funds like Vanguard in the US, have you managed to find any other alternatives that Malaysians can take advantage of?
Currently the only reasonable alternatives (not too crazy complicated/hassle) seem to be buying ETFs on Bursa, or using robo-advisor platforms like Stashaway.
However, both has their drawbacks where ETFs on Bursa does not track tried and tested US index like the S&P 500. Robo-advisors do get our hands on US index funds, but it’s fees are still a far cry from the ultra low cost index funds available in US (it almost cost nothing at ~0.04%!).
I guess if we are left to settle, we should be grateful that robo-advisor fees are much more affordable than unit trust fees, while giving us access to index funds/ETFs internationally. That gap in fees vs low cost index funds in US will eventually add up over the long term but hey, if it’s the best we got now…I’ll take it lol.
Can’t be too demanding since fintechs like Stashaway already makes our lives easier/automated, while bringing international ETFs closer to home, I guess it’s worth the fees.
Would be interesting to hear your thoughts if there are any other effective passive investing mediums for Malaysians that can provide similar reliability/simplicity like index funds, thanks!
Thanks for dropping by. There are a few other options:
1. There’s a Malaysian ETF that tracks the US Stock Market. However I think the tracking error and fees aren’t great.
2. You can sign up with an international broker and buy ETFs in the UK that track the US Stock Market. I say UK because I believe the withholding tax on dividends is less (15%) than the US ETFs (30%).
But yeah, a bit more complex. I’d argue robo-advisors fall into a nice sweet spot between cost and convenience at this moment — and are probably the better choice for most people.
Hi Mr Stingy,
Planning to open a Rakuten Trade Account with your referral code if you have any.
Unfortunately I don’t have one, but please go ahead without me!
This is a great article with lots of information. Thank you for giving a detailed explanation on all kinds of investment. I would like to have suggestions on you on which investment shall i go for. I am currently a student but I do have some savings in the bank, about 5k, which is the best to go for?
You could start with something like a robo-advisor: https://www.mr-stingy.com/invest-robo-advisors-malaysia/
Just to note, there’s no such thing as a “best” investment. It’s all about what type of investment you’re comfortable with.
Hi Mr Stingy,
Great article you have here!
Care to share how we find out new AS funds availability? I browsed through its website and many others, but came up short of that info.
When you mention new AS funds availability, do you mean when the government launches new funds? If so, they’ll always make huge announcements in newspapers/websites etc.
If you’re talking about existing funds but units available for sale, unfortunately you’ll either have to go to the Amanah Saham website or to a PNB branch.
Extra income for all
Your article is really helpful. I was browsing through https://www.imoney.my/share-trading and because I’m really new to this, I don’t understand what it’s showing me.
Can you explain to me the 3 columns of details they are showing like:
RM100k and below
RM7 – 0.1%
Also, how do I know which bank to choose? Is Rakuten good? I googled and read someone’s complaint about it and that he had a difficult time withdrawing out.
Hi, the RM 7 is the minimum brokerage fee charged. It’s either that or 0.1% of the trade amount.
From my experience, Rakuten is pretty good so far. Best to give it a try and experience for yourself. All the best!
Have you ever explore trading options (US) as a way to generate monthly income? If yes, what are your thoughts on this?
Hi Li Sa,
I haven’t done this before. My perspective is unless you’re a sophisticated investor, it would be extremely hard to make money from this.
How do you keep track of all the investment that you made? All the transactions done daily\monthly, and all the tools\apps involved?
So I currently just use a very primitive spreadsheet to track this. Would be nice if I had an app to do it, but I haven’t had time to really explore this yet.
Hello Aaron! Any updates regarding this? 🙂 Much appreciated if there are!
Mmmmm most of what’s here is exactly the same as now. What kinda updates were you looking for?
Hi Mr Stingy, what are your thoughts on Financial Horse’s dislikes towards Stashaway? Do you think it’s still worth trying out anyway or should we be extra careful of investing using S.A?
As a rule of thumb, everyone should be careful with their investments. Also, Financial Horse doesn’t just dislike StashAway. He has another article where he writes what he likes about StashAway: https://financialhorse.com/stashaway-2/. In summary, I generally agree with his conclusion: if you’re someone new or don’t want to get into the difficult, nitty gritty of investing — StashAway is probably a good product for you.
If you’re a sophisticated investor (and have lots of alternative options, e.g. you’re based in Singapore, unlike in Malaysia where our options are much more limited), then StashAway may be a bit too simple for your liking.
Thanks for your inputs and for the super-newbie-friendly post!
This is such a great guideline for beginner. Thank you for it so much! Do you have any recommendations & tips for the youth (early 20s) who wanted to start investing?
Thanks so much. Here, I hope this one helps!
Thank you so much for the article! It helps a lot 🙂 Just wondering, do you have any suggestions and tips for the early 20s who wanted to start investment?
Here, I hope this one helps!
Thanks for providing such a comprehensive article! May I find out more about the global market investment? Understand that we can invest in overseas market if we open a global trading account in Malaysia, but I believe the transaction charges might be higher. Do you recommend to engage an oversea broker (e.g. US brokerage firm) to access US market? If yes, do you know which platform to go to? Thanks!
Thanks for your kind words. I’ve not really compared overseas brokerage firms to local international brokers, as I’ve found the process to be more intimidating than I’m comfortable with. For overseas stuff, I’m really most comfortable with putting my money into Stashaway, and letting them run things…
Hi nak tanya pasal p2p. Jika tak keberatan boleh kongsi berapa jumlah pelaburan awal. Setakat JUN 2019 adakah ianya memberi pulangan yang baik dari pelaburan asas.
Terfikir untuk melabur ke dalam pelaburan yang baru ini. Harap dengan sedikit bantuan dari tuan boleh pergi lebih jauh.
Apapun terima kasih atas tulisan yang membina.
Terima kasih Nizam. Pelaburan awal minimum RM 1,000. Lepas itu pelaburan minimum jadi RM 100.
Biasanya pulangan antara 10 – 14%. (Tapi tiada “guarantee.” Ada yang untung dan ada yang rugi.) Kalau nak cuba make sure baca website P2P betul-betul dulu supaya selamat. All the best!
Hope to read more about Hellogold from you. As I have no background in financing, I can’t go too critically into understanding how well is Hellogold. So far it’s great. I just can’t imagine any drawbacks and that keeps me on edge.
I think Hellogold is great in the sense that it allows convenience — people to buy and store gold easily. The drawback to it is comparatively, the charges are slightly more expensive i.e. you could find cheaper ways of doing it. Of course, there are pros and cons to everything, and it’s great that they provide an option.
Thanks for the info. Funny I used to be in the industry and investing or more accurately ‘speculating’ in stock market was very natural. 15 years later…. I am so risk averse it doesn’t makes sense and reading too much makes it worse. Anyways bit by bit.
Thanks for dropping by Lyrika. All the best!
Thanks for this amazingly helpful article. It’s brilliant!
What would be your advice on investing to hedge against a local economy, like Malaysia, crashing? Diversifying into other global markets? Or am I just being paranoid?
Thanks for your kind words! Yeah, definitely diversifying to other global markets. A super-simple and cheap way to do this would be using robo-advisors! https://www.mr-stingy.com/invest-robo-advisors-malaysia/
Hi Mr Stingy,
You my man, are brilliant! Thanks for sharing this out complete with its pros and cons, it takes dedication, passion, and a desire to educate to be able to write what you have written.
I’m quite a noob myself who’s finally managed to save up some money after a few years of working — looking to make my money go the gym and grow some muscles of their own now. I’m particularly interested in the P2P investing platform as I’ve been exposed to Fundaztic and MFS recently. Will be careful to not put everything into one basket definitely.
Keep up the good work and thanks for sharing this article. I too, am slowly developing my “stingy” side :p.
Thanks Azlan for dropping by and your kind words,
Hoping the investments work out for you and all the best! Feel free to drop by if you have any questions!
Perfect to hear,but can someone invests in a very good business deals here?What kind is the best business deals here.?
There’s no such thing as a “best” business deal. Instead, I think everyone should invest in something that’s suitable for him/her.
Just to share a concept of brokerage fee, to take advantage of the rates.
I assume DIY investor start with small amount. Below the figures you need to consider.
Online cash upfront rate is 0.1% or RM8 minimum.
If you buy kacang putih amount total RM3000.
You pay RM8, which is ~ 0.27%. (if you sell also another 0.27%)
To make use of 0.1%, the minimum deal you do is RM8000.
Online Collaterised rate is 0.42% or RM28 minimum
If you buy a total of RM3000, you pay RM28, which is 0.93% (if sell also another 0.,93%)
To take advantage of the 0.42% rate, you have to deal an amount of RM6667.
Share me your thoughts.
Thanks for the tips man. Really appreciate the effort to put it out so clearly!
Hi Mr Stingy!
Thanks for the article. Just wondering, u include cryptocurrency, but left out fiat currency.
Is it because it’s ‘Fiat’?
No, it’s just because FDs / Bonds / Unit trusts etc. are all forms of fiat currency investments.
Was looking for articles on this for the past few weeks, since I’m just 22 and a newbie in this, and finally found this site. It is really great and so helpful. Thank you so much !!
Thanks Tanesh for the kind words. All the best ahead!
Hi there Mr Stingy,
Great blog! Love reading your blog together with some other great blog (ringgit oh ringgit, dividendmagic etc). Very informative. Please keep educating & supply us with all this knowledges that we will not find in school/uni.
Personally, for the average Joe out there, just invest in Asb. Try your best to maximise the quota of rm400k. With almost no risk, no service charge and average of 7% return per year = no brainer!
For me, the best investment I’ve ever made in my life is no other than crypto during late 17/early 18. Made fortune on altcoin (xrp 😉) during the last bull run. Now its time to rebuild my portfolio and that p2p & robo look really exciting. Thanks for the info. Gonna learn about this new type of investment while hodling my crypto bag!
Thanks for dropping by. Yeah, ASB is like the ultimate investment tool (just that many of us out there have no access to ASB :'( ). Glad to hear you’ve made good profits during the last bull run. All the best ahead for 2019 and beyond!
Thank you for the articles! this is so useful for newbie like me, reading alots of information but don’t know where to start with.
Thanks Nikki. Hope you’ll get off to a good start in investing!
This is absolutely informative. Wasn’t aware some even exist but the conventional and of course bitcoins etc. Thanks mate. I love this site…
Thanks Ben. Really appreciate it!
i love this article, contemplating in purchasing a real property and to get hooked up with that hence started to do some research in other types of investment there is here in Malaysia.
good knowledge sharing here. Thanks!
Thanks Sue! Really appreciate your kind support…
Hi, Mr Stingy. Are you based in Malaysia? What do you do with Luno as there’s no withdrawal allowed now, but only to convert to Ethereum.
Yes, I’m based in KL! You?
Withdrawals with Luno have been ongoing since March 2018. So you can definitely withdraw your money if you want. The only thing that’s pending is deposits — but with the Securities Commission looking to regulate the industry in Q1 2019 — hopefully that clears up soon!
With the collapse of Peer to Peer lending in China like PP Miao, a state backed company, how safe we are in Malaysia even we have 6 approved companies by SC?
As far as I understand, in China many of the P2P lenders started up even before regulations came into play. It’s different here in Malaysia: we had firm regulation and licenses issued, before any of the companies could start operating. So I expect it to be safer here.
That being said, of course high returns comes with higher risk. Would never ask anyone who wants 14-15% returns to put in all their money there. Maybe just a portion of the portfolio which can accept higher risk?
Im a newbie investor here . Can you guide me how to create the account as im very interested on REIT in your articles . Hope you can contact me thru the my details below as I need a teacher to start investing in the future . Thanks
I think this article would really help: http://dividendmagic.com.my/the-complete-guide-to-reits-in-malaysia/
Hi Aaron, I’m a new freshman in investing. Found your site by accident few days ago and you provide all good yet transparent info! A great blog to follow 🙂
I’m thinking to start in REIT but in some other blogs they mention that we would need a brokerage to purchase. Can you write a post on brokerage? Eg. What is brokerage? Top brokerage in Malaysia, etc.
Appreciate your hard work and sharing! Keep this up.
Appreciate your kind words and support. I don’t think I’ll be running any brokerage content soon, but perhaps this website will help you?
Thanks for the effort in breaking it down the DIY, very easy to digest!
Thank you so much. Truly appreciate it.
Straight forward , easy to digest and very useful article for someone like me.
Thanks a lot Aishah!
A very good article
Thanks Kenneth. Appreciate it!
One more avenue that you can advise your reader to invest via timesharing like East West One palm oil plantation scheme which approved by SSM. However, there are failure too like Golden Palm Growers Bhd, the second case in Malaysia.
Thanks Lim — haven’t heard of this before. Do you have any links where people can find out more and maybe sign up? Thanks.
You can it at SSM website on the list of companies under investment scheme.
I personally like P2P Lending very much, it has help me to generate passive income. I am using 3 platforms now, B2B Finpal, Fundaztic & Funding Societies.
Hi SP — thanks for sharing, and glad to hear it’s working for you! Any defaults so far?
Hi Mr. Stingy. Reading P2P seem interesting for investment. When you said losing money, do you meaning losing all my money invested?
I haven’t actually looked too deeply into whether it’s possible that you will lose all your money (or maybe just a portion?) if the company defaults on its payments. However I’m sure the Securities Commission has drafted out a very reasonable guideline. Just haven’t had time to fully investigate yet. If anyone knows — please share!
Just want to share. If one wants to invest in gold or silver, they may try to buy it from Public Gold. There, you will get physical gold or silver at affordable price. They even have this GAP (Gold Accumulative Program) where you can open an account with them and deposit RM100/month. Whenever you have enough amount to but, say 1g of gold (it’s RM177/g at the moment), you can just go to the nearest branch and convert your saving to a physical gold. Do not worry as they are Shariah compliant and they hold to the concept “Beli Emas, Dapat Emas”.
Thanks for sharing!
I super love this article. Thank you for taking the time to compile this super informative article. I felt so ‘liberated’ knowing that there are other investment options that are easy and doable with less hassle compared to buying properties etc.
Thank you for being so kind!
Well done! A comprehensively researched and written article, I know, I’ve clicked thru some of the links.
Definitely a good guide for those who want to DIY, which many young people start to do as they take charge of their financial destiny.
One note about risk/reward is that its important for people to recognise that the market is not a computer simulation where dialing risk one way or the other will magically dial the reward commensurately. Risk is priced because the more unknowns the product has, the more market will put a premium on it. The more we study about a product and the more we know about it, the risk for that product comes down for us.
I would also suggest a financial advisor that act as an middleman offering a range of risk/reward products should be sacked. Instead get a financial advisor precisely because of what this column does and signifies, impart knowledge to reduce our risk in the market.
Thanks Heng for dropping by here and your astute advice!