Savings Accounts and Fixed Deposits offer investors a safe and secure means of parking their surplus funds while also providing a small quantum of growth. However, the main criticism of such investments is their small growth factor which mostly does not keep pace with inflation.
Market Linked Investments provide investors with the potential for enhanced returns and have proved attractive to a growing base of customers who are willing to accept the risks associated with them. Here, we will try and list the main types of market linked investments available in Malaysia:
These provide investors, especially small investors and those that do not have sufficient time to properly study the markets a chance to invest in stocks, shares, bonds and other capital-market instruments. Their professional management, high liquidity and small entry requirements (starting from as low as RM100) make them attractive to investors. There are hundreds of Unit Trust Funds with a variety of investment themes: predominantly equity, predominantly fixed income, balanced between equity and bonds, Asian markets etc.
Real estate investments, done wisely have the potential of providing exceptional returns through appreciation. However, even entry-level investment is prohibitively high keeping them out of reach of most investors.
Such investors can look to invest in REITs or Real Estate Investment Trusts, a collective investment vehicle which pools money from investors and uses the pooled money to buy, manage and sell real-estate assets like commercial and residential buildings or lots or land and other real-estate related assets like shares in real-estate companies.
Their shares are traded on the stock exchange making them highly liquid and governmental incentives like not having to pay stamp duty on property purchases and RPGT (Real Property Gains Tax) on selling property have added to their attractiveness as an investment option.
Investors with a Central Depository System account and a trading account with any stockbroker in Malaysia can invest directly in Capital Markets instruments like shares, bonds and derivatives. Before doing so, it would be prudent on the investor’s part to gain a through knowledge of such instruments as investing in such potentially high-return instruments is associated with higher risk.
Exchange Traded Funds consist of stocks, bonds or commodities based on an index. Generally there are three types of ETFs: equity ETFs, fixed income ETFs and commodity ETFs. They are open-ended investment funds that are listed and traded on the Bursa Malaysia. They offer investors exposure to a geographical region, market, industry or sector, commodity such as gold or oil or even a specific investment style such as growth or value. ETFs have the advantages of diversified exposure, cost effectiveness, simplicity and transparency.
Malaysia also offers a raft of Islamic investment options. The Islamic equivalents of Unit Trusts, REITs, ETFs and Capital Market instruments like Sukuk bonds and Islamic shares listed on Bursa Malaysia and the Bursa Suq Al-Sila’, an Internet-powered Islamic commodity trading platform provide one of the world’s widest range of Shariah-compliant investment options.