Investing has become an effective approach in Malaysia to build a strong financial future. Money can lose value due to factors like inflation, but learninig how to start investing provides an opprtunity for your funds to grow and achieve larger goals.
Here's our take: A successful investment journey is not just about investment size, but about informed decision-making and strategic planning. In this article, we'll answer some common questions that often arise for new investors.
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How much money should I invest?
The first step in your investment journey is to determine how much of your income should be allocated towards investments. A general guideline is to allocate 10% - 15% of your income for investments. This practice allows you to balance your current financial obligations with future aspirations.
"Paying yourself first" is a personal finance approach that prioritizes savings and investments while promoting a frugal lifestyle. It involves allocating a portion of your income to investments before covering bills or other expenses, while still meeting debt obligations. This approach treats savings and investment goals as non-negotiable expenses, ensuring their growth before discretionary spending.
This concept is crucial in investment planning as it leverages the power of compound interest Regular contributions, even if small, can accumulate and grow exponentially over time – creating a solid foundation for your financial future.
What should I consider when
crafting an investment plan?
The principle of asset allocation is paramount in crafting a successful investment plan. It involves distributing your investments across different asset classes such as stocks, bonds, or money market funds.
Striking the right balance allows you to capitalise on growth opportunities while safeguarding against potential losses, ultimately ensuring a well-rounded portfolio that can adapt to varying market conditions and align with individual risk tolerance and financial goals.
The allocation mix is determined by factors like your age, risk tolerance, and investment goals. Here’s how it can vary for:
Young
Adults
Often lean towards growth-oriented assets, capitalising on the luxury of time to weather market fluctuations
Mid-career
Professionals
More likely to adopt a balanced approach, diversifying your portfolio to manage risk
Near
Retired
Typically a more conservative allocation that aims to preserve capital and generate steady income
Additionally, a regular savings plan can serve as the backbone of your investment journey, particularly for beginners. These plans involve automated contributions at regular intervals, instilling discipline and consistency in your savings and investment habits. This aligns seamlessly with the concept of dollar-cost averaging, where you buy more units when prices are low and fewer units when prices are high, ultimately reducing the impact of market volatility.
Where do I start?
For novice investors, exploring various types of investment options can be overwhelming. A good place to start is using our Financial Personality Quiz to help uncover your financial strengths and preferences. Based on your results, you will receive recommendations for investment products that align with your financial management ideas, needs and behaviour.
Once you have a clearer understanding of how you view and manage money, you may feel more comfortable exploring your options further and making your first investment.
Which investment product should I go for?
Hong Leong Bank offers a wide range of investment products that can suit a diverse range of financial goals and risk profiles. Among the investment products offered, investing in Unit Trust stands out as an ideal starting point due to the lower barrier of entry (minimum of RM50 to start investing) and expert management it offers.
If you’re looking to dive deeper into understanding Unit Trust, check out our curated series of articles covering topics such as what it is, how it compares to Exchange-Traded Funds (ETFs), and how to read a fund fact sheet.
As you progress on your investment journey, you can consider other investment options tailored to your evolving financial needs.
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.
New to the bank? Scan the QR code below to apply for an account before you begin investing with us.
