# Investment Notes ## Risk Levels Depending on your end goals, how hands on you want to be and your appetite for risk you can segment your investments into different risk levels. ### Low Risk (1.5% - 4% pa) These should generally match or slightly exceed the rate of inflation over time so while you may not be making a lot, you're savings aren't reducing in value. These are also good for mental health. The risk of loss aside, the more you push towards higher and higher returns you start to think more and more about what you can do different to maximize your investments and it can start to spiral. Fixed deposits, retirement plans, precious metals and some low yield unit trusts / mutal funds. You should already have one of these in the form of your EPF which is reportedly performing fairly well in recent years, but it is tied to the government which is... ### Medium Risk (4% - 8% pa) If you are willing to be a little more hands on with where and how you invest. REIT's, Owning property, P2P lending, Currency trading, Collectables (Watches, Action Figures, Coins, Anything rare really.) ### High Risk (8% - 16% pa) Only approach this if you have money to burn, in which case i personally would suggest investing in someone less fortunate, the environment or anything else really. Investing in growing businesses, High growth stocks, Day trading. ### Go Big or Go Home...less (>20% pa) Running your own business... OR getting in at the top of a pyramid scheme. Can be rewarding financialy and even in terms of personal achievement but NOT for the faint of heart. --- ## Considerations ### Term Length Are you looking to save up until you reach a certain value and then use that for a larger purchase or are you just intereseted in saving long term. --- ### Liquidity Do you think you will need to cash out on your investment on short notice? If what you are investing is also part of your emergency fund you want to pick something that is easy to cash out. | Type of Invesment | Liquidity| | -------- | -------- | | Retirement Plans | No | | Owning property or a business | Yes, but slow | | Fixed Deposits | Yes, with penalties for early withdrawals | | Unit Trusts/Mutual Funds | Yes, might have penalties in fine print | | Stocks / REIT's | Yes, in good times are easy to let go off | | Precious metals / Collectables | Yes, in good times are easy to let go off | --- ### Capital Growth vs Dividend Growth Capital growth is when the value of your investment appreciates over time vs Dividend which is the monthly/yearly interest gained. **Capital Growth Examples:** - Owning land - Stocks that appreciate in value quickly (Tesla, Apple, Amazon...) **Dividend Growth Examples:** - Fixed Deposits - Unit Trusts / Mutual Funds - P2P Lending - Rental from property owned --- ### Currency If you are investing long term and you feel certain that your future lies outside of Malaysia then it is a good idea to look at saving in a foreign market. No country is infallible but the possibility of the value of the ringgit compared to the USD or Euro reducing over a long period is strong. It has dropped 30% over the last 10 years. A relatively low risk, low return investment in a stronger currency can end up giving you a decent return. But you do not want to be shifting currencies often so only consider this if you are looking at 10 years or more. --- ## General Tips * If you are investing in businesses, avoid start-ups or any business that hasn't been profitable. You want to look for a business that's operating for at least 5 years without need constant capital injections. Companies that are able to operate and grow solely using the profit they generate are well run and more like to outlast a downturn in the economy. * Be vary of anything that has a referral program attached to it even if seems like a legit program it is likely a pyramid scheme. * Invest in friends and family only if you are ready and willing to burn money or burn bridges. * Take advice but make your own decisions at the end of the day. What's a good investment for one may not be for you or vice versa. * If you have more than you need, give.