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Monday, May 25, 2015

What to Invest with RM5000?

Since the start of April with the GST kicks in, many people are complaining about the hike in prices of goods. But instead of just complaining, why not do something about it to cope with the inflation?

Well, few weeks ago, Ms. Tan was asking on what are the investment options available in the market with the amount of RM5,000. Before going into details on what are the options for RM5,000, let's have a look at the risk and return among all the different investment types. High risk high return, and that's how return is directly proportional to risk.

So to narrow down to what RM5,000 can invest, here is a list of it.

1. Fixed Deposits (FDs)
Yes, that's the least to do. But surprisingly, many would still be putting money in savings account instead of fixed deposit. The lowest risk of all, hence the return is low which ranging from 3% to 4%. Bigger investment amount and longer time horizon could vary the return too. With the coverage of Perbadanan Insurans Deposit Malaysia (PIDM) up to RM250,000, which including principal and interest, FDs are really attractive for it's safeness. Unfortunately, the return could barely cope with inflation.

2. Unit Trust
The most popular investment vehicle with many different providers from both government and private fund houses. Basically it is a pool of fund, managed by appointed fund manager to invest into different categories of investment vehicle depending on the fund objectives. So with fund manager to manage, the cost of investment is higher relatively, whereby it includes the sales charge, switching cost and annual management fees. Good thing about unit trust is that initial investment amount could be as low as RM100 and it is also diversified into different sectors so that the risk exposed is lowered.

Buying shares and becoming one of the shareholder of the public listed company is probably the best thing to do, but buying the right company at the right price is also the hardest thing to do. Warren Buffett once said that treat it like buying business, so buy quality companies when they are undervalued. Buy not to sell high one day, but buy to own it and let the goose lays the golden eggs that could feed you for life. However, this would required a lot of effort in researching to find the quality companies.

4. Gold & Silver
Commodities such as gold and silver could be one of the investment vehicles with RM5,000 too. With the gold investment account offered by banks, it is affordable more than ever with the minimum initial purchase as low as 1 gram. However, the price fluctuates a lot too as it is very much depending on the demand and supply. The investment return will be purely relying on the difference between buying price and selling price, no interest payout and definitely not insured by PIDM.

Basically that's it, the very basic investment vehicles for beginner. RM5000 is not a big sum but definitely it is enough to kick start and reach out your first step in investment. No matter which investment vehicle you choose, just remember to always know what you are investing into. As there's no easy way to earn big money, when things are too good to be true, you gotta stop and beware of scams!

As a Licensed Financial Advisor, I believe everyone should have a financial plan! You need to know financially, where you are going to, where you are currently at and what's the gap in between. Think about it, with all the financial goals being written down and calculated, when you put all of your income and expenses, assets and liabilities, investments, taxes, inflation and rates of return into a financial plan, it gives you the whole picture of what your future would be.

You will not only find out if you are saving or investing enough each month, but also how much of return you will need to reach your financial goals. Many people are earning or investing very aggressively, but after completing their financial plan, we find out they have had enough or they really just need a much lower return. It just does not make sense for them to be so aggressive and risky, especially if they are approaching to retirement.

Well, like the rule in 7 Habits of Highly Effective people.. always...

Earn, Save, Invest, Repeat!
Till then. ;)
If you have better investment vehicles, feel free to let me know too!
(Provided it is legal and not those Ponzi scheme)


  1. That's great info. So far I have only tried FD and unit trust. FD erghh the return is not worth the waiting though I made good money on unit trust I'm not ready to go into shares as I have no knowledge in it, gold seems like that's the in thing now perhaps I should try that too

    1. Well remember the rule of thumb, always invest in what you understand!

      How to Start Planning Financially?


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