1. FIXED DEPOSIT
What is a Fixed Deposit?
A fixed deposit, which is also known commonly as FD in Malaysia, is a type of bank account where you actually deposit a certain amount of money for a fixed time and a fixed rate of interest. Also, the investor should agree that he/she is not allowed to withdraw or access their funds until the fixed tenure. In a fixed deposit, interest is only paid at the very end of the investment period.
How does it work?
As you open a fixed deposit account, there are plenty of options given for you to choose your ending period of time for your funds. When you select a tenure, you are deciding to put your money away and not touch it for a period of time (one month, three months, six months, one year, etc.). Each tenure consists of a predetermined interest rate therefore the interest rate varies with the term you choose.In a fixed deposit, interest is only paid at the very end of the investment period. Since the investment term and interest rate are fixed, you can easily calculate the interest you will earn at the end of any fixed deposit investment.
What are the types of Fixed Deposit?
- Short-term fixed deposits.
- Long-term fixed deposits.
- Foreign currency fixed deposits.
- Junior fixed deposits.
- Senior citizens’ fixed deposits
2. INVESTMENT-LINKED PLAN
What is an Investment-Linked Plan?
ILP is the type of life insurance policy which is a combination of protection and investment. However, unlike whole life insurance, an ILP is often described as a plan that can do it all. Besides that, an Investment-Linked plan allows you to withdraw some amount of money from your account value during your financial needs for a specific period of emergency and also to top withdraw the payout to your dependents if anything unexpected happens to you. Unfortunately, these returns are not guaranteed and will ultimately depend on how the fund performs.
How does ILP work?
In an ILP, the premiums that you pay are used to buy two important things which are your life insurance protection and investment units in investment-linked funds. These units are then held on your behalf, until you decide to sell them off in return for cash.
In addition to it, your returns from the ILP are not guaranteed and would be based on the performance of the fund. Based on factors such as the fund’s historical performance and risk classification ,you can choose your sub-funds according to your preferences. You can also switch funds or make a lump sum investment top-up when holding on to your ILP.
There are two main types of ILPs:
Single premium ILP: A single, lump sum premium payment for the ILP.
ILPs with single premiums are eligible to be purchased under the CPF Investment Scheme using your CPF Ordinary Account or CPF Special Account.With a single premium ILP, while there are initial sales charges and fund management fees, your premium is used to purchase units and there is likely to be no deduction in units for insurance coverage.
Regular premium ILP: A recurring and ongoing payment for the ILP.
An ILP also offers life insurance coverage, providing a lump sum payout upon death or total and permanent disability (TPD). Part of your ILP premiums will go towards paying for this insurance coverage.Regular premium ILPs on the other hand, could require the sale of units to pay for the rising insurance coverage charges.
3. UNIT TRUST
In simple terms, unit trust funds are a form of collective investment. The process works by allowing investors with similar investment goals to pool their funds to be invested in a portfolio of securities or other assets. Together with it, a professional fund manager then invests the pooled funds in a portfolio which may include cash, bonds and deposits, shares, properties and/or commodities.
Lets say ,i f you have little capital then it will give you the opportunity to invest in a diversified, professionally managed portfolio with generally a minimum amount of RM1,000. Despite the fact that, with unit trusts, your return on investment is withdrawn in the manner of income distribution and capital appreciation, derived from the pool of assets supporting the unit trust fund.
Besides this, investing in unit trusts is not as easy in the manner of cost because it usually involves costs like sales charges (up to 5%), platform fees, annual management charges, trustee fees and other charges. These charges can eat into your investment returns over the long run. However, investing via online platforms like Fundsupermart generally incurs lower charges.
4. INVESTMENT PROPERTY
What is an Investment Property?
An investment property also known as the real estate property is purchased with the intention of earning a return on the investment neither through rental income nor the future resale of the property, or both. This property may be undertaken by an individual investor, a group of investors, or a corporation. An investment property can be a long-term investment or a short-term investment. The term investment property may also be used to describe other assets an investor purchases for the sake of future appreciation such as art, securities, land, or other collectibles.
How to invest in a property?
1.The first step is to determine how much capital you have decided to invest for property. This is important for you to secure a home loan. Apart from that, an effective and tested way to determine your purchasing power is via the Debt to Service Ratio (DSR). DSR is a measure of your debt against your net income and the prudent benchmark is that your debt should not exceed 70% of your net income.
2. The second step is to choose the types of property:
- Residential Property
Residential real estate is all single and family-type buildings while Apartments, flats, duplexes all come under residential properties.
- Commercial Property
Commercial real estate is anything lent to run a business.Hotels, godowns, startups make up for commercial real estate.
3. The third step is to determine the types of Duration of Investment preferably to your choices according to the situation:
- Short-term Investment
Short-term investments are typically within 1-3 years where the assets can be converted into cash or can be sold.
Short-term investing offers flexibility to the investor as they do not need to wait for the security to mature in order to get cash. Besides that, the investors can make substantial profits in a very short amount of time and it is less risky as money invested per transaction is substantially lower.
- Long-term Investment
Long-term investments are assets that an individual or company intends to hold for a period of more than three years. Long-term investments include stocks, real estate, cash, etc. Long term investing is less time-consuming as investors do not need to monitor markets for small fluctuations on a daily basis. Long-term investors are subject to transaction fees less frequently.
Insurance is described as, the policy owner pays some amount of money, in financial terms, it is called premium, to the insurance company. This payment is done in various forms according to the preferable tenure which is by monthly, quarterly, half-yearly or annually.. In return, the insurance company undertakes to protect you, by compensating you for: damage or loss of what you have insured. In simple terms, insurance helps you manage your risk and therefore it is also called a risk management system, where the risk is transferred to another party.
The 3 most common types of Malaysian insurance are:
This is basic insurance which is important to every individual as it covers the cases of illness or injury due to an accident or illness. This insurance covers all the medical expenses and if necessary, hospitalisation cost which can be quite overwhelming if you do not have the fund readily available. This is the most critical insurance that everyone needs. Children or teens who still live with their parents and under their care, they may have a policy which covers them.
There are numerous types of medical and health insurance covers offered in Malaysia, here are a few:
- Medical Card or Hospitalisation and Surgery Cover
- Critical Illness plan
- Hospital Income Insurance
2. General Insurance
General insurance protects our assets and valuable things such as homes, cars and other possessions. It is compulsory to get general insurance during the purchase of our first car or motorcycle. Also, if you have bought a house with a loan from the bank, the bank will require you to purchase a house owner or fire insurance. The most popular types of general insurance are:
- Travel Insurance
- Personal Accident
- Vehicle Insurance
3. Life Insurance
Life insurance is a policy that pays out a sum of money insured to the beneficiaries upon the death and also critical illness or permanent disability of the person insured. You should strongly consider life insurance when you start earning more than you spend and you have responsibilities such as spouse or kids. These are the most common types of Life insurance plans.
- Whole Life Insurance
- Term Life Insurance