WE ALL HAVE DREAMS: Some may want to travel the world at their leisure, drive a luxurious car, or live within the opulent walls of a grand mansion. Although envisioning dreams takes no effort, creating a path to reach them is much more complex, as there are endless possibilities and opportunities to seize. Here, I want to look specifically at investing, and more specifically, investing in Malaysia.

If you are like most people and get overwhelmed by the sheer volume of information out there; don’t worry, let this guide your investment journey — from factors you need to consider before investing to the diverse asset classes you can seize in Malaysia’s market. But first, just as every journey commences with a well-defined destination, the key to successful investing starts with a clear objective.

Embarking on an investment strategy without a tangible goal is like setting sail without a compass; your investment decisions need to align with what you want to accomplish. For instance, if you want to travel the world without obligations, most would consider real estate to not be an optimal type of asset as you will need to look into maintenance while you are away. If you are close to retirement and want to protect your savings, then investing in speculative assets such as cryptocurrency or highly volatile stocks might put your life’s work at risk. So, the first step in your investment journey is to determine your objective over the next few years. Then, define asset types aligned to what you want to accomplish.

Evaluate Your Financial Situation

The foundation of successful investing lies in a thorough understanding and optimisation of your financial situation. Start by creating a list of your main assets: cash, stocks or real estate, and liabilities: credit card debt or mortgage, among others. Have them down on paper so it can give you an overall view of your financial situation and potential areas of improvement. For example, what areas can generate cash for you? Do you have an emergency fund? Do you have a high-interest debt that you could refinance?

Once you have a good understanding of your assets and liabilities, it is time to review what you earn and your expenses.

On a sheet of paper, write your income: salary, dividends or rent collection, and on the other side, your expenses: living expenses, mortgage payment or groceries - this list is non-exhaustive. This budget will give you a better scope of where your money comes from and where it goes. It will also help you find potential cost reductions. You can then ask yourself, “Should I cancel my gym membership as I don’t use it often enough?” or “Should we be eating out so often? This is the first step to optimise your financial situation while building a sturdier financial foundation to help you in your investment journey.

Financial Assets

Malaysia has an impressive GDP growth rate of around 5% per year, significantly outpacing Western nations. This growth is a very lucrative investment opportunity for Malaysians, who can directly benefit from it in many different ways by investing in the stock market. For example, you can buy shares of publicly traded companies to receive dividends or decide to sell your shares at a profit if the company grows in value over time. A safer alternative is to buy bonds; you are effectively lending money to public companies or even the Malaysian government.

However, if you don't feel confident because you lack the time to research financial statements or the skill to select individual stocks, there are still other ways to invest in the stock market. For example, you can consider mutual funds through a banker or an agent. The main advantage of going through an agent is that they will select investment opportunities that fit your needs and objectives. However, do note that there are fees charged for that service, which will reduce your returns over time.

Alternatively, you can also invest in an Exchange Traded Fund (ETF). Those assets are designed to track a specific index, meaning you can invest across an entire sector or even the entire economy rather than investing in a single company. This approach circumvents the need for meticulous analysis of individual company financials or competitor evaluations, offering a more accessible route into the market. ETFs also provide the safety of a diversified portfolio, spreading risk across a broader selection of companies rather than placing all your financial eggs in one corporate basket. Thus, whether you're an experienced investor or a novice, ETFs offer an efficient and manageable way to participate in and profit from Malaysia's robust economic growth.

Real Estate

When it comes to real estate investment, many people think about investing in apartments or houses. However, the investment landscape within the property sector is significantly more diverse and dynamic. There are multiple ways to benefit from real estate, whether you decide to buy a condo or rent a garage, a plot of land, or even a commercial area. Before investing, you must carefully do your due diligence, as real estate investment is often a lifetime decision; you shouldn’t trust the agent that is trying to sell you real estate, but all the other factors.

For those who have a smaller capital, you can still benefit from real estate by investing in Real Estate Investment Trusts (REIT). These entities own real estate and deal with tenants; therefore, by investing in REIT, you invest in real estate without having any of the responsibilities of being a tenant. These investments can be made by purchasing stocks, ETFs or mutual funds, offering a range of entry points to fit various investment strategies.

Gold and Other Precious Metals

For those who are looking to diversify your investment portfolio, gold and other precious metals can be a safety net of assets that typically remain stable during economic turmoil. You can buy physical gold from various established institutions such as Maybank, CIMB or UOB. Alternatively, you can buy from agents, investing companies and jewellers, but often with higher premiums, making it a less cost-effective investment route.

When investing in gold, you must ensure that you are buying from a reputable source, as there are many counterfeits around the world. Beyond physical gold, you can still benefit by buying shares in companies that engage in gold-related operations, such as foundries or mines. Moreover, numerous funds offer short-term investment opportunities associated with gold, providing investors with many options that align with their respective investment objectives and risk tolerance.

Go Back To Your Objective

The investment panorama in Malaysia is as rich and diverse as its cultural heritage. From traditional asset classes like financial assets, real estate and gold to newer ways to get into the field through robo-investing, the Malaysian market offers excellent investment opportunities for investors with different risk profiles and investment preferences.

These options may sound exciting to the newbie, but it is essential, even for those who have been investing for a long time, to define and redefine (as time passes) your objectives and what you want to accomplish over the next five to 20 years. Once that is clear, invest in assets that make sense in your overall strategy.

For more investing tips, check out my book, The Complete Investment Guide. You can also meet me during my book launch at Penang Institute on 11 September 2023. Register for this event at pi-investment.eventbrite.com.