Spread the love
You might laugh at the idea of making investments with just RM1,000. You might think, “What can I do with that tiny amount?” Quite a bit, actually. You’ll be surprised at how much you can gain in the years to come if you invest that money right now.
You don’t have to put down hundreds of thousands of dollars to get a healthy return.
Here’s a guide to where you can put your RM1,000 and watch it grow.
Amanah Saham Bumiputera (ASB)
Risk: Low
Returns: 5.5% to 10% per year
Example: If you had put away RM1,000 at the beginning of 2009, it would have grown to RM2,329 by the end of 2019.
ASB is the best unit trust investment option for Malaysian Bumiputeras. It is run by Amanah Saham Nasional Berhad (ASNB), a subsidiary of Permodalan Nasional Berhad that owns all of its own shares (PNB).
It is meant to be a long-term investment. The longer you keep your money invested, the more likely you are to get a better return.
ASB has always had great results, but its distribution rates have been going down over the past few years. Still, its relatively high returns make it one of the best low-risk investments in Malaysia.
Here are some features of ASB:
Low risk: ASB’s price per unit is fixed at RM1 and it has never given a negative return.
No sales or redemption fees
Maximum investment amount: RM200,000
Real Estate Investment Trusts (REITs)
Risk: Medium
Returns: The Bursa Malaysia REIT Index grew 4% in 2019.
Example: If you had put RM1,000 into Sunway REIT at the beginning of 2014, it would have grown to around RM1,400 (including dividends) by the end of 2019.
Want to invest in property but don’t have enough money to buy it outright? Think about investing in real estate investment trusts (REITs). REITs are trusts set up by companies that buy and manage real estate using money from shareholders. REITs invest in all kinds of properties, such as residential, commercial, industrial, and retail properties.
Investors usually like REITs because they pay out high dividends (4% to 8%) compared to regular stocks. You can also profit from them if their value goes up.
Like most long-term investments, you’ll need to invest your money over a long period of time to see any real gains.
Unit trust funds (U.S.)
Risk: From low to high
Returns: Depending on portfolio and funds
Example: If you had put RM1,000 into the Kenanga Growth Fund in November 2014, it would have grown to RM1,299 in November 2019 (29.9%).
Unit trust funds are a type of collective investment. They let investors with similar investment goals pool their money so that it can be invested in a portfolio of securities or other assets. A professional fund manager then invests the pooled funds in a portfolio that may include cash, bonds and deposits, shares, properties, and/or commodities.
If you don’t have much money, this is good news: it means you can invest in a diversified, professionally managed portfolio with (generally) as little as RM1,000. With unit trusts, your return on investment usually comes in the form of income distribution and capital appreciation, which come from the pool of assets that support the unit trust fund.
Investing in unit trusts usually comes with costs like sales charges (up to 5%), platform fees, annual management charges, trustee fees, and other fees. In the long run, these fees can cut into your investment returns. But investing through online platforms like Fundsupermart usually has lower fees.
Use our page to compare the performance of different funds to find the best one to put your money into.
ETF
Risk: Low to high
Returns: Vary depending on the ETF
Example: If you had put RM1,000 into the CIMB FTSE China 50 ETF at the beginning of 2015, you would have gotten an annualised return of 6.75 percent, bringing your initial investment to RM1,386 by the end of 2019.
Exchange-traded funds (ETFs) let investors pool their money to buy a group of stocks, bonds, or other investments. Like stocks, ETFs can give you a return through dividends and capital appreciation.
Similar to a unit trust fund, an ETF is a collective investment scheme that lets you invest in a variety of underlying assets. In Malaysia, you can invest in ETFs.
But, unlike a unit trust fund, it is not actively managed by fund managers. Instead of picking individual stocks or assets to invest in, the fund manager of an ETF tracks or copies the performance of a benchmark index. This means that, unlike unit trusts, the performance of an ETF doesn’t depend on fund managers or their predictions of how the market will do in the short term.
ETFs are great for people who are just starting out as investors because they give you instant access to a diversified group of investments for a relatively small amount of money. ETFs also have relatively low fees (usually less than 1% per year). For example, the MyETF Dow Jones Islamic Market Malaysia Titans 25 has a total annual fee of 0.49%.
Blue chip stocks:
High risk
Returns: Depends on the market and company
Example: If you had put RM1,000 into Public Bank Berhad at the beginning of 2010, it would have grown to around RM2,400 (including dividends) by the end of 2019.
Blue chip companies are well-known and financially stable businesses that sell high-quality, widely accepted goods and services. These companies are known to be able to survive economic downturns and keep making money even when things aren’t going well, which helps to explain their long history of stable and reliable growth.
Many blue chip stocks also pay dividends. They are usually paid out on a regular schedule (quarterly, yearly, etc.). This is good for investors who want a regular income from their stock investments.
But if you don’t like taking risks and don’t know much about stocks, you shouldn’t use them as a short-term investment to make a big profit. This is not investing; it’s just a gamble. Warren Buffett once said, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
You should also avoid making small, short-term trades with stocks. This can lead to high investment costs because of various brokerage and transaction fees. Brokerage firms usually charge transaction fees of 0.05% to 0.5%, with a minimum fee of around RM7 to RM12. This means that if you only invested RM100 and paid a fee of RM10 per transaction, 10% of your investment capital would go to fees!
Crowdfunding/P2P loans
Crowdfunding is another way that businesses can get money to fund their growth or operations. There are a few kinds of crowdfunding, but if you’re an investor with little money, debt-based crowdfunding might be the most interesting to you. Debt-based crowdfunding, also called peer-to-peer (P2P) lending, involves putting together money from investors to lend to businesses.
With possible returns of 10% per year or more, crowdfunding usually gives better returns than bonds, blue chip stocks, and other types of investments. But you’ll be taking on a higher risk as well. Companies that raise money through crowdfunding are usually new or small businesses that are not well-known. There is a chance that they won’t pay back the loan, causing you to lose your money.
Some of the more well-known Malaysian P2P financing platforms are Funding Societies, Fundaztic, and B2B Finpal. In general, these platforms will require you to put at least RM1,000 into your account before you can start investing. However, each campaign that you lend your money to may have a lower minimum.
Robo advisor
Does investment jargon make your temples hurt? Wish you could just give your money to someone and have them invest it for you?
If so, you might want to consider investing through a robo advisor. Robo advisor platforms use algorithms to take care of your investment portfolio. When you sign up for a robo advisor platform, you’ll fill out a questionnaire that asks about your risk tolerance and how long you want to invest for. The platform will then use certain algorithms to automatically invest your money (usually in ETFs) and sometimes rebalance your portfolio based on how the market is doing.
Robo advisors are good if you like to set it and forget it when it comes to investing. They also have lower management fees (below 1%) than unit trusts, which will eat up less of your possible profit over time.
In Malaysia, two robo advisor platforms are Stashaway and MYTHEO. Stashaway doesn’t have a minimum deposit requirement, while MYTHEO needs a minimum of RM100 to get started.
Invest for the long run.
No matter what you choose to invest in, it should have a long-term focus. So, you won’t lose a lot of money to trading fees on a small amount of money invested, and you may get a higher return on your money.
Most people who are struggling to save money to invest should remember that it can always be done over time. You can put more money into your investments as and when you have the money. If you keep at it over time, you’ll gradually build up a pretty safe and diverse investment portfolio. It’s always best to start early!
This article was first published in July 2014, but it has been updated for freshness, accuracy, and completeness
source from iMoney
Spread the love
