You miss 100% of the shots you don’t take: When asked, many people
say they haven’t started investing yet. The most common reasons given are
that the market doesn’t look so good now, they don’t feel ready or that
their friends have told them to wait for a better time.
Here’s our take on this: ‘Later’ might be as good as never. While there’s
never a perfect time, there are ways to start your investment journey and
begin building a portfolio that can help meet your financial needs. Starting
early makes a huge difference on how much you can gain over your
investment journey. In this article, we break it all down for you.
Enjoy the magic
of compounding interest
In short, compounding interest is like a snowball rolling downhill that
keeps getting bigger and bigger. Compounding interest means earning
interest on your money, as well as earning interest on your interest.
It pays to invest early and often: there’s more time to accumulate
wealth, and your wealth also has more time to grow by itself, providing
bigger gains in the long run.
A simple illustration:
Invest RM10,000 with a 3% return
per annum (p.a.), one year later
you’ll have RM10,300 – a profit of
RM300. If you reinvest all of that
at the same 3% p.a., you will
have RM10,609 at the end of the
second year. Money makes
money, and every year, it will
keep doing more!
“Compound interest is the
eighth wonder of the world.
He who understands it,
earns it; he who doesn't, pays it.”
affect you as much
One of the biggest fears is losing money due to inexperience. However,
this is a chicken and egg problem, if you never start, you will never gain
experience or confidence.
It makes sense to start early, and start small. You may make mistakes
at first, but time is on your side. Generally, the earlier you start investing,
the more risks you can take as any losses have more time to recover. Once
you’re older, you have more commitments and therefore, less chances to
fail. We’ve written about ‘time in the market’, you can read it here.
It also helps that investing in unit trusts (a professionally managed
portfolio of various securities) and index funds (follows a market index
such as the US S&P500) are getting progressively easier to do. Just start
there and stay invested to enjoy the gains in the long run.
Remember, bull markets tend to last longer than bear markets.
do what you love
The dream of almost every
working adult: Retire young, have
time for yourself, loved ones and
hobbies. Around the world, this
dream has even become a
movement — just look up Financial
Independence, Retire Early (F.I.R.E.)
F.I.R.E. is a mindset of extreme saving and investment in order to retire
earlier. By living frugally and dedicating a huge portion of income to
investment, the aim is to be able to live off passive income or
The first two letters are the most important: (F)inancial (I)ndependence
— you don’t necessarily have to retire, but you can work on something you
love, rather than something you have to do to survive.
Let us help you
get started today:
No matter how young or how old you are, no matter how much capital
you may or may not have at the moment, it’s never too late. There are
plenty of online learning resources, or you can consult your bank for
At Hong Leong Bank, we’re always ready to help anyone become a
better investor and walk with you step by step as you embark upon your
investment journey. Visit your nearest priority banking centre or bank
branch. If you prefer, click here to start your journey online with HLB
This article is part of Hong Leong Bank’s educational series, called ‘Fresh Take’.
Here, we seek to present you a fresh, unbiased perspective of all matters financial.
We’ll be uploading more educational content moving forward, so do watch out for
the next piece.
In a world that’s awash with information that may be either true, false or
anywhere in between, Fresh Take aims to cut through the clutter, and help you on
your journey as an investor who’s seeking to build a strong financial future.
Please reach out if you need to know more,
or need personalised help.