Progressive Investment plan – Overview

Investment is the term given to purchase a good/ an asset to generate an income not for today’s consumption but for tomorrow’s asset creation. Good investment planning paves a way to turn your dreams and aspirations into reality.

Progressive Investment Plan

Progressive Investment Plan is a 2-in-1 investment program that gives you the opportunity to find the investment that meets your financial personality and objectives. Here, funds are divided equally depending on the duration of each investment plan, where one part of the fund is invested in equity and the others remain in time deposit on a monthly basis.

Progressive investment options in Malaysia

There are a wide variety of investment options available in Malaysia. Let us take a look at it in detail.

Fixed Deposit

Fixed Deposits or Time Deposits offer a fixed and guaranteed rate of return on your investment. Almost all banks in Malaysia offer these types of accounts. Fixed deposits offer significantly higher interest rates than savings accounts while minimizing the risk associated with other high-risk investment products.

Unit Trust

Unit Trust is a form of collective investment that allows investors with similar objectives to pool their funds for investment. These provide small investors a chance to invest in stocks, shares, bonds and other capital-market instruments. Their professional management, high liquidity and small entry requirements make them attractive to investors. Unit trusts enable investors with limited time and knowledge to take advantage of the higher returns from the capital markets.

Gold Investment

Gold forms another great investment avenue. It has been an asset since the beginning of mankind’s evolution and across cultures. So, it is not surprising that gold is a favoured asset here in Malaysia as well. Gold investment can be made either in physical form or by means of “paper gold”. Physical Gold investments can be made by buying gold jewellery, gold coins, gold wafers and gold bars from jewellers. Investing in paper form is via Gold Investment Accounts of some banks.

An important point that investors should be aware of is that there will always be a difference between the selling and buying price of gold. This difference represents the profit for the Gold Trading organization. So, if you wish to ensure a profit make sure that the price at which you are selling is higher than the price at which you bought the gold.

No one can predict when the market rate will rise or fall and it depends on the market conditions. So invest a fixed sum of money regularly over a fixed period regardless of market conditions. These investment plans helps you to Invest progressively to manage market volatility.

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Market Linked Investments

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

Market Linked Investments

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:

Unit Trusts

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.

REITs

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.

Capital Markets

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.

ETFs

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.

Islamic Investments

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.

Investment Options in Malaysia

Malaysia, a burgeoning Asian economy, is a healthy investment environment, especially in the light of the recent changes. There is a wide range of investment options available today,

Investment Options in Malaysia

Fixed Deposits

They come in three main flavours: the conventional, guaranteed-return FDs, Foreign Currency fixed deposits for the investor who is prepared to take exchange-rate risks for higher returns and the various Islamic deposit products. They offer higher returns than savings accounts.

Unit Trusts

Unit Trusts are a collective investment vehicle where many investors pool in their funds for capital market investment. They enable investors with limited time and knowledge to take advantage of the higher returns from capital markets.

These funds offer investors a bouquet of benefits including professional management, high liquidity, diversification of assets and affordability (minimum amount required to participate is as small as RM100).

Unit trusts invest predominantly in equities, predominantly in debt instruments or in a balanced combination of equities and debt. Investors can also have the choice of investing in local or global funds and in specialized funds (e.g: those that invest in particular industries etc) and in Islamic Unit Trusts that are managed in line with Shariah prinicples.

REITs

A Real Estate Investment Trust or REIT also pools money from investors and uses the pooled money to buy, manage and sell real-estate assets like commercial and residential buildings/lots/land and other real-estate related assets, including shares in real-estate companies.

REITs give small investors the opportunity to invest in real estate with the added advantage of liquidity. Although REITs are structurally similar to Unit Trusts, their shares are traded on a stock exchange giving investors a highly liquid investment.

As REITs own rental properties and as rent is a consistent source of income, investors can potentially look forward to steady and consistent returns. The government has given REITs a number of incentives. These include not having to pay stamp duty on purchasing a property and not having to pay Real Property Gains Tax (RPGT) on selling property. These have added to REITs’ attractiveness as an investment option.

Exchange Traded Funds (ETF)

An ETF is a pool of assets that is traded like a stock. The assets pool can comprise equities, bonds, fixed income instruments, commodities etc or a mixture of all these. They are open ended funds, listed and traded on stock exchange(s) thus providing investors with the easy liquidity associated with stocks.

Most ETFs track an index, i.e., they try to hold the same securities that comprise the index in the same proportion, thus reflecting the performance of the index as closely as possible. Such ETFs generally have lower management costs than Unit Trusts.

There are a number of equity, fixed income and Sharia-compliant ETFs (Malaysia introduced Asia’s first Shariah-compliant ETF) listed on Bursa Malaysia.

Capital Markets

Investors who have the confidence and the know-how can also invest directly in capital market instruments like equities, bonds and derivatives (futures and options). All that is required is a Central Depository System account and a trading account with a stockbroker for buy-sell transactions.

Bullion (Gold & Silver)

Gold and Silver form another great investment avenue. Malaysians have the option of investing in gold and silver in physical (bars, coins, gold bullion coins issued by Bank Negara etc) and paper form.

Investing in paper form is via Gold/Silver Investment Accounts of some banks. The account balance is measured in grams of gold/silver rather than in terms of a currency. This allows you to make deposits when prices are low and withdraw funds at a profit, when prices rise. You can even opt to receive physical gold/silver instead of cash when you withdraw funds.

Private Retirement Scheme (PRS)

The Private Retirement Scheme provides an additional opportunity for Malaysians to plan towards their retirement via the various pension funds under the PRS. Tax relief of up to RM3,000 is also available on an individual’s contribution towards the PRS. Employers will also be given a tax deduction on contributions to PRS made on behalf of their employees, of up to 19% of the employees’ remuneration.