5 min read I Date: 27 May 2024
Taking the Leap to Start Investing
Investing can appear intimidating to beginners, especially to those who are unsure of where to begin. However, newcomers can overcome this fear through proper education, planning, and a cautious approach.
Understanding the Basics of Investment
Before selecting the right investment vehicle, consider these key factors.
| KEY FACTORS | WHAT IT MEANS? |
|---|---|
| Understanding your risk profile | On Touch 'n Go eWallet’s GOinvest, we categorize risk profiles into three categories: Conservative, Moderate, and Aggressive. You’ll know your risk profile during onboarding and risk assessment.
|
| Know your time horizon | Your time horizon refers to the duration you plan to invest to achieve your financial goals. |
| Investment goals | You should always split your investment goals to short, medium, and long-term.
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| Diversification | Spreading your money across a variety of investment reduces risk and may help you during market downturns. |
Choosing the Right Investment Vehicle
Selecting the right investment vehicle is comparable to selecting chocolates from a gourmet box, where each type has unique attributes and flavors to offer. Here are the various investment options to consider:
- Stocks: Own a part of a company; high potential returns but also higher risk.
- Property: Real estate investments for long-term appreciation or rental income.
- Mutual Funds/Unit Trusts: Diversified portfolios managed by professionals.
- Gold: A hedge against economic uncertainty; less volatile than stocks.
- Fixed Income: Bonds and similar investments offering regular interest payments.
- Money Market: Short-term, low-risk investments for liquidity and stability.
- ETFs (Exchange-Traded Funds): Traded on stock exchanges, offering diversification and flexibility.
- REITs (Real Estate Investment Trusts): Invest in real estate properties through a trust structure, providing regular income.
- Cryptocurrencies: Digital assets known for high volatility and potential for significant gains (and losses).
- Commodities: Invest in physical goods like precious metals, agricultural products, or energy resources.
Familiarize yourself with terms like Bull (upward market trend) and Bear (downward trend). During market uncertainties, fluctuations are normal. Remember, markets rebound over time. Consider investing more during bear cycles to acquire more stocks/units at lower values.
 | Tip: You could also consider Ringgit Cost Averaging (RCA) to steadily accumulate your investments. This investment strategy also eliminates emotional triggers that could affect your overall investment returns. |
Here’s an example of how you could RCA works:
If you invest RM500 every month into a unit trust fund, you allow yourself chances to buy more units when the prices are low and less units when the prices are high, which could reduce your average cost of your investment over time.
Illustration:
| MONTH | MONTHLY INVESTMENTS (RM) | UNIT PRICE (RM) | UNITS BOUGHT |
|---|---|---|---|
| 1 | 500 | 1.20 | 501.20 |
| 2 | 500 | 1.00 | 500 |
| 3 | 500 | 0.85 | 425 |
| 4 | 500 | 1.10 | 550 |
| TOTAL | 2,000 | 0.988 AVERAGE COST PER UNIT | 1976.20 |
What to do next?
Invest via the “Invest” feature to earn up to 8% p.a. reward. New investors will get an additional 1% p.a. Use promo code “INVESTIVAL” by 30 June. T&C apply. Please visit this link for more information.
Disclaimer: You are advised to read and understand the relevant Prospectus, Information Memorandum and/or Disclosure Document including any supplemental thereof and the Product Highlight Sheet (if any) before Investing. Among others, you should consider the fees and charges involved. The registration of the relevant Prospectus, Information Memorandum and/or Disclosure Document including any supplemental thereof and the Product Highlight Sheet (if any) with the Securities Commission Malaysia (SC) does not amount to nor indicate that the SC recommends or endorses the funds. A copy of the relevant Prospectus, Information Memorandum and/or Disclosure Document including any supplemental thereof and the Product Highlight Sheet (if any) may be obtained at our offices, distributors or our website at www.principal.com.my. The issuance of any units to which the relevant Prospectus, Information Memorandum and/or Disclosure Document relates will only be made on receipt of an application referred to in and accompanying a copy of the relevant Prospectus, Information Memorandum and/or Disclosure Document. Please be advised that investment in the relevant unit trust funds, wholesale funds and/ or private retirement scheme carry risk. An outline of the various risk involved are described in the relevant Prospectus, Information Memorandum and/or Disclosure Document. As an investor you should make your own risk assessment and seek professional advice, where necessary. Securities Commission Malaysia does not review advertisements produced by Principal.