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The Magic of Compounding Dividends

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Lately, I did some reading on retiring in Malaysia. From which, I discovered:

  1. One in three Malaysians don’t have a savings account.
  2. 86% of Malaysian urban households do not have savings.
  3. 68% of EPF members aged 54 had savings amounting below RM 50,000.

Extracted from ‘Malaysians not saving enough for retirement’, The Star Online dated May 4, 2016

It’s a shocking revelation.

Clearly, it is a calling for all to assess our current financial positions and to plan ahead for our retirement.

Since 2011, the EPF has achieved commendable financial results and thus, enabling dividend payouts of above 6% a year. However, with continual rise in living costs, I believe we need to do more for ourselves than just placing money into our EPF accounts.

Let us assume. If you are 25 years old and have just landed your first job, how would you prepare for your retirement?

1. Start a Part-Time Business?
(Great idea especially if you are enterprising, driven and have the persistency to work it out. Your small business could be grown into a multi-million dollar empire.)

2. Invest in Properties
(Great idea if you have large amount of capital or if your parents are willing to ‘donate’ the down payment for your property.)

3. Invest in Stocks
(Great idea for people starting off with lower capital. Need time to learn, practise and master investing skills to boost success.)

In the absence of business ideas and huge capital, I believe many would choose to start by investing in the stock market with intentions to achieve both capital appreciation and dividend yields.

The magic of compounding dividend

Thus, I’ve decided to build simulations to find out whether one can retire comfortably through stock investing. This simulation assumes the following:

  1. Invest solely to achieve 6% in Dividend Yields a year.
  2. Dividends received are to be reinvested back to achieve 6% in Dividend Yields a year.
  3. Hold stocks over the Long-Term (With Little or No Short-Term Trading).

Investor A

  • Age: 25
  • Invest RM 10,000 a year until age 55.

Figures in RM

PeriodTotal New Capital InvestedTotal Dividends ReinvestedTotal Accumulated AmountDividends At Age 55
30 years300,000538,017838,01750,281

 

Notes:

  1. Investor A has invested a total of RM 300,000 in new capital into stocks that pay above 6% in dividend yields.
  2. During the 30-year period, Investor A would receive a total of RM 538,017 in dividends. From which, Investor A has chosen to reinvest them back into stocks that pay above 6% in dividend yields.
  3. In total, Investor A would have accumulated RM 838,017 by age 54.
  4. At 6% dividends, he would collect RM 50,281 in dividends. This works out to be RM 4,190 in monthly income to fund his retirement.

Investor B

  • Age: 35
  • Invest RM 10,000 a year until age 55

What if you’ve realised the power of compounding dividends later than Investor A?
Figures in RM

PeriodTotal New Capital InvestedTotal Dividends ReinvestedTotal Accumulated AmountDividends At Age 55
20 years200,000189,927389,92723,396

Notes:

  1. Investor B has invested a total of RM 200,000 in new capital into stocks that pay above 6% in dividend yields.
  2. During the 20-year period, Investor A would receive a total of RM 189,927 in dividends. From which, Investor B has chosen to reinvest them back into stocks that pay above 6% in dividend yields.
  3. In total, Investor B would have accumulated RM 389,927 by age 55.
  4. At 6% dividends, he would collect RM 23,396 in dividends. This works out to be RM 1,949 in monthly income to fund his retirement.

Clearly, there is a clear distinction between Investor A and Investor B. The magic of compounding dividends works in favour of investors who appreciate the wisdom and decide to invest early.

However, you may wonder, ‘What if, at age 35, I decide to invest more than RM 10,000 a year. Does it help to catch up years of not being invested?’ It seems logical. After all, most would have more income as a result of job promotion.

Thus, here’s a simulation of Investor C.

Investor C

  • Age: 35
  • Invest RM 20,000 a year until age 55

Figures in RM

PeriodTotal New Capital InvestedTotal Dividends ReinvestedTotal Accumulated AmountDividends At Age 55
20 years400,000378,039778,03946,682

Investor C has invested a total of RM 400,000 in new capital into stocks that pay above 6% in dividend yields.Notes:

  1. During the 20-year period, Investor A would receive a total of RM 378,039 in dividends. From which, Investor B has chosen to reinvest them back into stocks that pay above 6% in dividend yields.
  2. In total, Investor B would have invested RM 778,039 by age 55.
  3. At 6% dividends, he would collect RM 46,682 in dividends. This works out to be RM 3,890 in monthly income to fund his retirement.

Still, despite investing more, Investor A would derive more dividends than Investor C when they hit age 55. This is because Investor A has started investing earlier than Investor C.

And, that is the ‘Magically Power of Compounding Dividends’.

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

Achieving Financial Freedom with Ringgit Cost Averaging

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Lately, I’ve done some research on Ringgit Cost Averaging. Here’s what I found:

  1. It’s a technique where a fixed amount of capital is used.
  2. The investment is made on a regular basis. It could be monthly, quarterly, semi-annual or even on a yearly basis.
  3. The investment is made regardless of its price fluctuations.

For example, if you intend to invest in a stock,

  1. You will buy less quantity of shares of a stock if the stock price is high;
  2. You will buy more quantity of shares of a stock if the stock price is low; and
  3. Over time, you’ll have an average cost per share of a stock which is lower than your highest transacted price and higher than your lowest transacted price of the stock.

So, is this a good technique of investing?

It would depend on the situation. After all, we investors are individuals with different backgrounds, financial standing, preferences and investment goals. Suffice it to say, Ringgit Cost Averaging is not a one size fits all method.

If Ringgit Cost Averaging is giving you a headache, then let me share two crucial, yet often neglected factors about Ringgit Cost Averaging.

1. Quality of Investment

Ringgit Cost Averaging is based on a strategy of accumulating sound investments.
Let us take stocks as an example. This strategy works better if we accumulate shares in a company that grows profits consistently but at the same time is in high demand in both good and bad market conditions.

Meanwhile, it would be less practical for us to use this strategy to buy shares in a company that continuously incurs losses and suffers from low demand in the market.

2. Human Emotions

Ringgit Cost Averaging requires determination, patience and discipline. Your discipline will be severely tested when there is a period of continual decline in the price of your investments. When this happens, it is important to keep your emotions in check to prevent you from making rash decisions.

For instance,

Screenshot of Bursamarketplace.com

  1. The above is a price chart of a stock listed on Bursa Malaysia. As an investor focusing on Ringgit Cost Averaging, you are committed to invest in the stock on a quarterly basis, starting from Point 1 (January 2014).
  2. The stock’s lowest trading price was Point 11. This is lower than the average cost of your stock purchase made since Point 1, meaning an incurred paper loss on the stock price.
  3. When this happens, would you still be motivated to continue your plan to accumulate shares of the stock above, at Point 9, 10 and 11?

Most likely, you’d be disappointed and would be questioning the soundness of this investment technique. It seems ridiculous to continue the pursuit of this strategy if it is not working.

So, should I not consider Ringgit Cost Averaging as a viable method for investing?

Hold your horses!

Let us think about from a more practical perspective. Here, I’ve incorporated the Ringgit Cost Averaging investment technique into a simple and workable 5-step strategy which should theoretically help any working man or woman achieve financial freedom and retire comfortably in Malaysia.

Let us assume:

  • You are 25 years old.
  • You plan to retire at 55.
  • You are able to set aside RM 1,000 a month for investing purposes.

Step #1: Set a Target

The first step is to set the targeted returns that we intend to achieve from our investment. It has to be specific and measureable. This will help us to narrow down our search for stocks that would fulfil our target. For instance, we may set:

Dividend Yields = Above 6% a year.

Note: Let’s put capital gains aside as the ups and downs in share price are based on market conditions beyond our control.

Step #2: Build a Watch List

Next, we’ll build a watch list of 10 – 20 stocks that can pay good dividend yields. How would we find them? It’s easy. Often, they share the following characteristics:

  • These stocks grow profits consistently;
  • They are cash-rich; and
  • They pay dividends amounting to more than 80% of their annual earnings. (Dividend Payout Ratio > 80%).

Step #3: When Should I Buy?

For this part, we’ll need to monitor the prices of the stocks listed in our watch list. We should buy the stocks if the:

1. Dividend Yield > 6% a year.

Dividend Yield = (Annual Dividends per Share / Stock Price) x 100%

2. Stock price is starting trend upwards.

Basically, there are 3 different types of price trends. They are uptrend, downtrend and sideways trend. These movements are also known as Simple Moving Average or SMA. You may read more on SMA here: http://www.investopedia.com/terms/s/sma.asp. Eager to learn more? Try to read up on basic technical analysis tools such as the SMA-Crossover Method to help you identify the stock’s current price trend.

Step #4: When Should I Not Buy?

We may consider holding back on investing if:

1. Dividend Yield < 6% a year

Dividend yields are low when stock prices are high. Thus, by holding on to this rule, we would avoid buying shares when they are overpriced, reducing our risk of making investment mistakes.

2. Stock price is moving on a downtrend.

Let us say, in a specific month, we have already set aside RM 1,000 a month to invest. But, we couldn’t find an ideal investment.

In this case, we would just place the RM 1,000 into a designated account until the emergence of a new investment opportunity. If this situation continues, resulting in the accumulation of more than RM 5,000 in investable capital, you may also consider opening a 3-month or 6-month fixed deposit account to earn some interest.

What’s The Difference between a Traditional and Improvised Ringgit Cost Averaging Method?

By following the first 4 steps mentioned above, our stock portfolio will differ from someone who practises the traditional method of Ringgit Cost Averaging. The main differences are illustrated as follows:

1. Investor A (Traditional Ringgit Cost Averaging)
Investor A religiously sets aside RM 1,000 a month to accumulate shares in one company, known as Stock A.

2. Investor B (Improvised Ringgit Cost Averaging)
Investor B also sets aside RM 1,000 a month to invest. He invests based on the first 4 Steps mentioned above.

 

MonthInvestor AInvestor BMonthInvestor AInvestor B
1Stock AStock A7Stock ARM 1,000
2Stock AStock B8Stock AStock C
3Stock AStock A9Stock AStock B
4Stock ARM 1,00010Stock AStock D
5Stock AStock B11Stock AStock A
6Stock AStock C12Stock AStock B

One year later, Investor A would accumulate lots of Stock A shares. Meanwhile, Investor B has built a diversified stock portfolio consisting of Stock A, Stock B, Stock C and Stock D. Investor B also has an extra RM 2,000 set aside to capitalize on future investment opportunities.

Thus, the first 4 Steps mentioned above are to accentuate the core strengths of Ringgit Cost Averaging while reducing the negative impacts which may arise from this technique. The similarities and contrasts between the two are highlighted below:

 

TechniqueTraditional Ringgit Cost AveragingImprovised Ringgit Cost Averaging
CapitalFixedFixed
StockSelectionFixed onOne StockWider Selection.

 

Invest in stocks that fulfil

iInvestment criteria.

PricePrice changes are not taken into account.Buy if stocks are Cheap.
RiskFixed at

 

One Stock

A Diversified

 

Basket of Stocks

ResultAccumulation of

 

shares in a company where

average dividend yield

and capital gains

are uncertain.

Accumulation of

 

a basket of stocks

that pay

above 6% a year in

dividend yields

Step #5: Start Early

Ringgit Cost Averaging favours investors who start early. From the above Steps, if you are 25 years old and choose to:

  1. Set aside RM 1,000 a month to accumulate stocks that pay 6% in dividend yields; and
  2. Reinvest your dividends to accumulate more stocks that pay 6% in dividend yields.

By age 55, you would’ve invested a total of RM 1.02 million which could generate RM 61,018 a year in dividend income. This works out to about RM 5,085 in monthly income!

 

New Capital InvestedRM 372,000
Dividends ReinvestedRM 644,970
Total InvestmentRM 1,016,970
Dividends at Age 55 (Annual)RM 61,018
Dividends at Age 55 (Month)RM 5,085

Meanwhile, if you choose to start at age 35, you would’ve invested RM 479,550. From this, your portfolio will potentially generate RM 28,773 in dividend income, which is equivalent to RM 2,398 a month.

New Capital InvestedRM 252,000
Dividends ReinvestedRM 227,550
Total InvestmentRM 479,550
Dividends at Age 55 (Annual)RM 28,773
Dividends at Age 55 (Month)RM 2,398

 

Thus, starting as early as possible is a fundamental aspect of Ringgit Cost Averaging.

On that note, Peter Lynch, former manager of the Magellan Fund at Fidelity Investments (the fourth largest mutual fund and financial services group in the world) said:

“In the long run, it’s not just how much money you make that will determine your future prosperity. It’s how much of that money you put to work by saving it and investing it.”

So, are you willing to put in all the effort required to save, invest and grow your money? If you are, what are you waiting for? Start young, start now, and start TODAY!

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

Should You Boost Your EPF Savings With Unit Trust Investments?

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This article is sponsored by Securities Commission Malaysia, under its InvestSmart initiative

Effective 1 January 2017, the Employees Provident Fund (EPF) has revised the quantum for basic savings  from RM196,800 to RM228,000. The amount will be set as the minimum target for EPF savings when members turn 55 years old.

EPF revised the amount in light of the rising cost of living, longer life expectancy and a higher inflation rate. The new quantum is benchmarked against the minimum pension for public sector staff, which has been raised from RM820 to RM950 per month for 20 years upon reaching the age of 55.

However the new quantum only refers to the basic savings considered sufficient to support a member’s basic retirement needs.

Is the new quantum enough to sustain you through retirement?

EPF provides wider pension coverage than countries such as Indonesia and India; in terms of pension contribution rates, Malaysia is the world’s fifth highest. Despite this, Malaysians are still likely to exhaust their entire EPF savings five years after the first withdrawal.

unit trust

 

Alarmingly, those with RM50,000 saved in EPF will likely exhaust the entire amount in five years! One contributing factor is the low salary structure in the country, where 89% of the working population earn less than RM5,000.

Also affecting individual EPF contributions is the option to reduce the statutory contribution rate from 11% to 8%. This option is available from March 2016 to December 2017 only. 

On paper, the new quantum of RM950 per month looks sufficient. But this is only true if every single sen is spent on basic needs.

The harsh reality is that Malaysians spend 31.2% of their disposable income on food and food away from home, 23.9% on petrol, housing and utilities, and 14.6% on transport. Life after retirement is expensive! After taking all these lifestyle factors into consideration, RM950 might actually not be enough! What can you do about it?

Enter, EPF-approved unit trusts

One way to boost your chances of retirement survival is to grow your EPF contributions at a quicker rate. Did you know that EPF contributors can invest a portion of their savings into unit trust funds?

The scheme provides members with an option to enhance their retirement savings by placing a portion of their EPF savings in Account 1 to be invested in unit trusts or through private mandate managed by appointed Fund Managers Institutions (FMI) under the EPF Members Investment Scheme (EPF-MIS). However, contributors will need to have higher savings in their EPF accounts to participate in the EPF-MIS.

These funds need to achieve a three-year simple average consistent return rating of 2.00, sourced from mutual and hedge fund analytics provider Lipper, which has a scale of 1 to 5.

To invest or not to invest – that is the question

In February 2016, EPF announced a 6.40% dividend rate for 2015, with a total payout of RM38.24 billion. It was 0.35 percentage points less than in 2014, which was at 6.75%.

Whether the dividend was satisfactory depends on a few factors but in today’s volatile market, only a handful of funds can match the performance shown by EPF, given that it’s a capital guaranteed fund. Additionally, the guaranteed minimum rate of 2.5% makes EPF a secure long-term investment, especially for retirement savings.

There are a few ways to calculate dividends but the pressing question is: should one just rely on EPF dividends or make a portion of the savings “work harder” through unit trust funds?

Well, a simple comparison was done between the EPF dividend and top performing EPF-approved fund Kenanga Growth Fund.  It was found that Kenanga, based on the conservative historical annualised dividend rate of 8.00% still outperformed the historical dividend rates of EPF.

 

Remember: investing in unit trust funds come with additional fees and charges. For example, the Kenanga Growth Fund charges a 2% initial fee (based on FundSupermart discounted rate) and an annual expense ratio of 1.59%. The goods and services tax (GST) is also charged on these amounts. These eat into your returns, so instead of a 13% return over 1 year, it would be lower. However, the bulk of the fees are charged in the first year – the returns start picking back up and making up for the costs easily over the next couple of years.

Of course, leaving your money in your EPF account is certainly less risky, but you may risk not building enough of a nest egg to fund your golden years. Therefore, withdrawing a sum from your EPF savings to invest in a unit trust fund is indeed a good way to boost your retirement savings.

How it works

 

  • Effective January 1, 2017, members are allowed to invest up to 30% of excess savings, compared to the previous 20% limit.
  • Use the basic savings guide to determine the amount permitted to be transferred for investment under the scheme.
  • Members must also be below 55 years old at date of application.
  • The minimum amount of investment under the unit trust mandate is RM1,000 while for the private mandate, it may require a larger sum of money.
  • Once members fulfil eligibility, they can choose their desired funds. Of the 336 funds listed under the scheme, 220 funds are qualified to be offered for period 2015/2016.
  • Members are not allowed to withdraw any amount from the money invested through the FMI.
  • EPF will release its control on the invested amount by the FMI when a member reaches age 55 or has made full withdrawal under leaving the country, incapacitation, pensionable employees and death withdrawals.
  • Claims or resale of the invested units will be managed by the member or next-of-kin directly with the FMI.

Sources: The Star and EPF.

 

The rule of thumb for investing is to start as early as possible, and this also applies to EPF-approved unit trust funds. Unit trust investments are known for their long-term value; usually up to five years or longer.

For EPF members, they have the added advantage of being able to familiarise themselves with the track record of appointed fund managers before making their decisions.

Perhaps the first step you can take is to monitor your EPF contributions and growth. Obtaining the latest statement can be done online through i-Akaun at myEPF website.

Alternatively, members can obtain their statement via EPF kiosks or visit any EPF branches.  So, are you going to boost your retirement funds by shifting some of your EPF money into approved unit trust funds? The answer starts with you!

Image from The Money Maverick.

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

How-to: Match Your Unit Trust Investing with Your Risk Appetite

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This article is sponsored by Securities Commission Malaysia, under its InvestSmart initiative

When it comes to successful investing, the smart investor will only consider potential returns after first considering the risks involved. There are many levels of risk. In the lowest spectrum of risk, products such as fixed deposits may give you guaranteed potential low returns, while products such as Futures and Options usually sit at the far end of the spectrum – highly risky, but with the potential of offering higher returns.

investment risk

The above diagram represents a simplistic view of several common investment products and their risks. In this article however, we are going to take a closer look at the inherent risks involved in unit trust funds:

Lower risk

Money market funds

Money market funds offer lower risk, and also lower returns as these funds invest in low risk money market instruments. However, they do carry the risk of being affected by interest rate changes.

WHO?
This Money Market Fund would be best suited for those who are looking to grow their emergency fund without risking their principal. These funds are also very liquid, making it easier to withdraw the money when there is an emergency.

 

Fixed income funds

Slightly higher up the risk chart are fixed income funds. These funds are usually made up of government securities, corporate bonds, and money market instruments.

Like its name suggests, an income fund aims to provide investors with regular income payments, but with less emphasis on capital growth. Fixed income funds can also help diversify an investment portfolio.

WHO?
This is a good tool for those who need regular income, such as retirees or those who need some help in boosting their passive income. It’s ideal if you’re looking for a little more returns and are willing to accept less security on your funds as well since they are more susceptible to market movements than the more secure money market funds.

Moderate Risk

Balanced funds

In balanced fund investments, investors are exposed to stocks, but with the risk being mitigated because a portion of the fund will be allocated to debt securities like bonds.

The objective of a balanced fund is to achieve the perfect balance of safety, income and capital appreciation by adopting a general strategy of investing in fixed income and equities. It is typically done by allocating 60% of the investment into equities, with the balance of about 40% remaining in fixed income.

WHO?
Balanced funds are recommended for first-time equity investors as they would get a taste of investing in stocks while still mitigating their risks. It’s also a great opportunity for investors who have always been very conservative to explore slightly riskier investments with potentially higher returns.

High Risk

Global/International equity funds

Equity funds are generally considered high risk but global or international equity funds mitigate some of this risk because they dive into different markets, which can help mitigate country-specific risks. The main difference between the two? A global fund invests in different countries including your home country, while international funds only invest in other countries.

WHO?
Investors who wish to delve into equity or other high risk investments, but wish to avoid specific market risks. These funds offer some great options for tapping into countries with potential for rapid growth. However, try to use these with other investments in other markets in order to benefit from its country risk mitigation aspects.

 

Equity funds

In theory, equity funds can generate higher returns compared to lower risk investments like fixed income funds, such as government bonds and cash.

However, equity funds are considered riskier or more volatile as they invest almost entirely in an equity market. There are different types of equity funds with different levels of risk, but equity funds should always be seen as risky investments.

WHO?
If you are an investor seeking aggressive capital appreciation and have a high risk tolerance, equity funds should be right up your alley. Interestingly, although high in risk, equity funds should still be in most investment portfolios but with allocations adjusted according to risk profiles. These would be ideal funds for those who want to have growth in their portfolios but have also taken steps to mitigate the risks accordingly.

Conclusion

When creating your portfolio, always determine the percentages to be allocated to stocks and bonds, which should reflect your tolerance for risk and ability to handle major market downturns. Your portfolio should also include all types of stocks, whether large or small, growth or value, domestic or international, dividend- or non-dividend payers as well as lower risk bonds.

Remember, always choose to allocate more assets in lower risk funds, and less on high risk funds. This will help create a well-balanced portfolio and reduce overall investment risk.

Happy investing!
 

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

Making Leverage Work For Your Investment

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This article is sponsored by Securities Commission Malaysia, under its InvestSmart initiative

Leverage in the context of investments simply means borrowing capital for an investment, and expecting the profits to be amplified.

For example, if Steve would like to venture into the business of selling milk, he would first need to purchase a cow. Having inadequate cash reserves, Steve decides take a loan to make the purchase. The cow subsequently produces milk, which is sold. The sales then generate enough money to cover the interest of his loan, and eventually make profits.

This is a simple way of understanding the power of leverage. Most Malaysians use leverage for real estate investments, but the same concept can be applied to share trading and other investments as well.

Borrowing money to make more money

If used wisely, leverage can be a powerful investment tool. Savvy investors could borrow money to purchase shares to drive higher returns. Here’s a simple depiction of how leverage can be beneficial to your investments:

leverage

Leverage allows you the potential to gain significantly more returns as you don’t have to commit a large amount of cash to an investment. This means you don’t have to commit more capital into a single investment, and choose to use the fund to further diversify your investments.

Your best friend and worst enemy

The appeal of maximised gains through a seemingly small capital outlay may sound like a dream come true for any investor. However, in reality, things don’t always go according to plan.

There are many advantages to using leverage in your investments, especially if you have the knowledge and skills to do so effectively.

The first advantage of leveraged investing is the potential for higher returns. Based on the example above, the 12% return definitely pales in comparison to the 59% return obtained through the use of leverage.

Secondly, leverage allows you to control a larger investment through a small initial outlay.

Finally, the third advantage to using leverage is in minimising exposure to loss. With the additional cash obtained through financing, you could diversify your portfolio, significantly reducing your risks. Conversely, without leverage, you’d have all your eggs in one basket.


© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

Here’s How To Evaluate Your Unit Trust Fund’s Performance

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This article is sponsored by Securities Commission Malaysia, under its InvestSmart initiative

Hold or sell? Buy or wait? These are important investment decisions for every investor.

However, one thing is certain – investors should not base their decisions on emotions, or worse, rumours, but on the fund’s performance over time. Therefore, the funds must be regularly evaluated.

Unit trust investments, like any other investment, do not guarantee returns. This means that your principal value can fluctuate according to changes in the market. As such, it is imperative that you examine the performance of your funds regularly.

Fund evaluation is a good barometer of a fund’s performance over the years and how well it is managed. It allows you to chart the progress of your funds, and should be done regularly.

Here are three ways you can evaluate the performance of your unit trust funds:

1. Calculate the total returns

A unit trust fund’s performance can firstly be measured by its total returns. A fund’s total returns represent the change in the value of an investment in the fund. Total returns can be identified in two ways – cumulative total returns and average annual total returns.

Cumulative total returns take into account the rise or fall in the fund’s unit price, while assuming that the income and capital gains distribution are reinvested into the fund. On the other hand, average annual total returns refer to compounded total returns, which are measured on an annual basis. Total returns, compounded over time, can really magnify.

When evaluating a fund’s performance, one of the best approaches is to compare the total returns of similar or correlated funds over the same period. For example, an equity fund would be best compared with another equity fund that invests in companies of a similar business nature. A bond fund would be compared to other funds with a similar maturity period or credit rating.

However, it is important to ensure that the fees and charges are deducted from the total returns for a more accurate figure. This figure only addresses the fund’s total returns against its peers in a specific period, without considering its unique individual risk.

So, where can you find this information? It is usually available in a fund’s annual prospectus or semi-annual report.

unit trust

Sample page from a unit trust fund’s prospectus

2. Compare a funds performance against its benchmark index

Another way to evaluate a fund’s performance is to measure it against a benchmark index. Unit trust funds investing in Malaysian equities typically evaluate their progress by benchmarking it against the FBM KLCI Index.

A fund is considered to have outperformed its benchmark index if the fund’s returns are higher than its benchmark.

As benchmark indices are well-established and commonly used to represent current market conditions, comparisons with it are widely accepted as a fund evaluation method. Comparing your fund’s performance against its benchmark will also show you the value-add brought by your fund managers.

Lookout!
For this fund evaluation method, you need to compare the performance of your unit trust fund against related peer funds. Reason being, although your funds may perform well against the corresponding benchmarks, they also tend to outperform other related funds.
graph 2

Sample page from a unit trust fund’s prospectus

3. Consider performance relative to risk taken

One way to measure this is by looking at the Sharpe ratio – also known as the reward-to-volatility (risk) ratio – which measures a fund’s historical risk-adjusted performance. The higher a fund’s Sharpe ratio, the better the returns generated per unit of risk taken. In other words, when you compare two funds of a similar nature, the fund with the higher Sharpe ratio would have generated more returns for the equal amount of risk exposure. A higher Sharpe ratio also indicates consistency in returns generated.

As it is complicated to calculate the Sharpe ratio of a fund using the mathematical formula, you may want to refer to your unit trust agent or unit trust fund performance rankings that are available online or in print.

unit trust

Sample page from an online unit trust distribution website

Conclusion: Be an informed investor

Unit trust fund rankings or ratings, and other methods of evaluating a fund’s performance only enable you to compare the performance of your unit trust fund with other funds. Unfortunately, many investors often misinterpret these evaluations as recommendations, when they are not.

Before you invest in a fund, it is imperative that you equip yourself with the necessary information and knowledge to make informed decisions. Request for the fund’s prospectus from your unit trust agent (or obtain it online), and read it thoroughly to understand the fund’s goals, risk factors and performance records.

Always keep in mind that a fund’s past performance is not a reliable indication of its future performance; a more accurate indicator would be its long-term track record. Reason being, in the long term, financial markets and economies globally will go through various cycles. Investors should therefore consider how different unit trust funds perform over various time frames to gain a better understanding of how funds react under different market conditions.

Although fund evaluation methods provide insight into a fund’s performance and can assist investors with their investment decisions, it is not failsafe. You will still need to do your due diligence on the funds in which you are considering to invest. You also need to match your investment goals with the fund’s ability to perform within a stipulated time frame, and the level of risk you are willing to take on.

Image from Financial Planning for Canadians

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

5 Reasons Why We Should Consider REIT as a Long-Term Investment

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Meet Tom.

Tom is a sales engineer. He has been working since graduating from a local university three years ago. From which, Tom is able to save up a sizeable sum of RM 30,000 as he is careful in spending.

However, just like many who are in their late-20s residing in the Klang Valley, Tom remains doubtful of achieving his dream of owning a property before turning thirty. Property prices seem to rise faster than his ability to save money.

COMIC - REIT

Out of Reach

Today, it is common for a tiny unit of condominium to be priced at RM 500,000 in the Klang Valley. If Tom is interested, he needs to prepare at least RM 70,000 for the down payment, stamp duties and legal fees for the property purchase. The amount would be higher if Tom intends to renovate and furnish his property.

Plan B: Invest in REITs

Needless to say, Tom could not afford to buy a RM 500,000 condominium. Presently, if you are reading this and your situation happens to resemble Tom’s, I have good news for you. There is another viable option for us to invest in properties.

The option is known as Real Estate Investment Trusts (REITs). The concept is simple and here’s how it works:

  1. Investors (like us) place money into a REIT in exchange of its units. Thus, we become unitholders (or shareholders) of a REIT.
  2. The REIT would use investors’ money to buy investment properties. They include shopping malls, office buildings, industrial buildings, hotels and even hospital buildings.
  3. From which, the REIT would derive rental income from them. Upon deducting expenses, the net income received by the REIT would then be distributed to unitholders (like us).

Affordable & Convenient

Today, we can buy and sell units of REITs conveniently like shares as REITs are listed on stock exchanges. This includes Bursa Malaysia. The minimum amount of units to be bought and sold is set at 100 units per transaction. Thus, unlike physical properties, we can invest and participate in future profits generated from commercial properties which are worth billions with as little as a few hundred Ringgit.

Before investing, it is important for us to understand that REITs are structured to be long-term investments. They are not primarily designed for short-term trading gains. In this article, I would share 5 reasons why we should consider REITs as long-term investments. They are:

#1: REITs pay out Regular Distributions

All REITs listed on Bursa Malaysia pay at least 90% of its realized income to its unitholders. They are known as income distributions. Most would declare and pay out income distributions on a quarterly basis. Just a handful of REITs choose to distribute income on a half-yearly or on an annual basis. Since its introduction, most REITs have been producing steady stream of passive income to its unitholders.

#2: Diversified Pool of Tenants

REITs which own a portfolio of properties would derive income from a diversified pool of tenants. Let us take shopping malls as an example. A shopping mall derives income from leasing out retail spaces to hundreds of tenants such as Starbucks, McDonalds, H&M, Uniqlo, and so on and so forth.

If one of the many tenants decides to end its lease, the shopping mall would continue to derive income from its remaining tenants. There provides income stability to the shopping mall. In a way, it is a distinctive advantage over owning and renting out a condominium unit to a tenant. After all, the owner would receive no further income once the tenant decides to move out from his condominium.

#3: Benefiting from Long-Term Leases

There are REITs which own properties where the lease agreement structured is long-term. The period can be as long as 10 – 15 years. This means, if you own units of the respective REIT, you would receive regular income distributions from these properties for a very long time. Again, it adds income stability to the REIT which is also another advantage over renting out a condominium unit to a tenant for 1 – 2 years.

#4: Increase Income with Rent Reversions

Once a lease agreement expires, a REIT would try to renew the lease agreement with its existing tenant for the designated property. Often, these agreements are renewed at a higher rate as compared to its existing rate due to inflation and rise in property value. This would contribute to growing income distributions to unitholders who are holding onto the REIT over the long-term.

#5: Increase Income with New Property Acquisitions

This is a form of leverage for Tom who is unable to afford to buy a physical property due to his financial position. Investors who have weaker financial standing are able to leverage on a REIT’s financial position which is stronger to acquire new investment properties. This would also contribute to growth in income distributions to unitholders.

Which REITs should I buy?

Just hold your horses for a moment.

There are more to consider before investing in REITs. First of all, there are 17 REITs listed on Bursa Malaysia. You may want to ask yourself the following questions:

  • How do I assess the financial results of a REIT?
  • What’s my dividend yield for investing in REITs?
  • Tax considerations for Investing in REITs
  • When do I buy and sell REITs?
  • How do I start building a complete REIT-based portfolio that generates steady passive income?

These questions are helpful to further enhance profits from investing in REITs while reducing unnecessary risks from investing in bad ones.

This article is sponsored by Securities Commission Malaysia, under its InvestSmart Initiative.

Securities Commission MalaysiaInvestSmart

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

How to Invest in Stocks like a Pro

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Recently, Tom bumped into Jerry (his college mate) while strolling in a shopping mall. They decided to have coffee together. Here is how their conversation went.

Tom began with, ‘Hey bro, what brings you here?’

Jerry replied, ‘Annual General Meeting (AGM), bro. I was attending the investor’s AGM for ABC Bhd. It was held at the convention centre just now.’

 

Tom nodded and said, ‘Wow. I didn’t know that you are into shares. How long have you been ‘playing’ shares?’

Jerry smiled. With glee, he replied, ‘Well Tom, I have been a shareholder of ABC Bhd for the last 3 years. It’s a long-term investment. Personally, I’m not one of those who ‘plays’ shares. After all, those who play shares are often not the type of people that would attend AGMs.’

Tom asked, ‘So, how’s it is performing?’

Jerry replied, ‘Well, it’s pretty decent so far. In addition to capital gains, I have been collecting some duit kopi (dividends) on a quarterly basis for the past 3 years.

Tom asked, ‘Wow, that’s great. Honestly speaking, I’ve been thinking about investing in the stock market. However, I’ve often hesitated as I think stock investing is risky. Since you’ve been in the markets for quite some time, how do you reduce risks from your stock investments?’

Jerry replied, ‘It’s simple. Just think like a banker when you invest in stocks.’

Tom exclaimed, ‘What do you mean, Jerry?’

Jerry explained, ‘For a start, banks derive interest income from lending money to people. However, banks do carry the risk of lending. This is because not all borrowers will fulfill their loan obligations. So, banks practise risk management policies to filter customers who can service their loan from bad customers who couldn’t. You can apply the same principles in stock investing.’

Curious, Tom responded, ‘Really? I didn’t know that. How does it work?’

Jerry continued, ‘Tom, do you have mortgage payments?’

Tom answered, ‘Yes, I have one for my own residence.’

Jerry said, ‘When you applied for a mortgage, did the loan officer ask for your particulars?’

Tom answered, ‘Yes. They wanted a lot of documents. I gave them my photocopied IC, bank statement, EPF* statement, pay slip, CCRIS* score and income tax statements’.

Jerry explained, ‘Do you know why your banker needs your IC?’

Tom answered, ‘Is it because they want to know who I am first before lending money to me?’

Jerry nodded. Then, he continued with, ‘How about your pay slip and income tax statement?’

Tom answered, ‘I think the banks want to know where I am working, how I made my money, and whether I am servicing other loans before lending money to me. But Jerry, where is this heading? How does it relate to stock investing?’

Jerry answered, ‘Everything. In a way, investors are like bankers. Stocks are like customers who intend to borrow money. Before investing, an investor would ask for a stock’s annual reports, quarterly reports and investors’ presentations. This is because, an investor wants to know:

  1. What business or sector is the company involved in?
  2. Who are the customers?
  3. How much profit is it making?
  4. What is the current debt level of the company?
  5. What is it going to do to make in the future.

Taking out a pen and a piece of paper, Jerry drew the following diagram:

No.BankersStock Investors
1Lend MoneyInvest Money
2Interest IncomeDividend Income
3CCRISBalance Sheet
4Pay SlipIncome Statement
5Income TaxIncome Statement
6Profiling CustomersProfiling Stocks
7Avoid Bad CustomersAvoid Unprofitable Stocks

 

Jerry continued, ‘From this, investors are able to separate stocks that are financially solid from mediocre stocks that are not. As a result, investors would reduce their risk of making bad investments as they avoid investing in stocks that display continuously poor financial results.

Impressed, Tom commented, ‘Wow! This is amazing. I’ve never viewed stock investing in this manner.’

‘But Jerry, I have another problem. You know I’m not good with maths. I don’t know how to read financial reports. Where do you think I can start learning about stock investing?’

Jerry replied, ‘I’m glad that you asked. Did you know that InvestSmart, an investor empowerment initiative by the Securities Commission Malaysia (SC) organises stock market and unit trust seminars for retail investors?’

Jerry continued, ‘The seminars aim to encourage members of the public to take control over their finances so that they can be responsible for their own future and wealth, equip investors with the knowledge, skills and tools needed to exercise good judgement and discretion in making investment decisions and encourage more informed retail participation in the capital market. To find out more, you may log on to ‘www.investsmartsc.my

*EPF: Employees Provident Fund

**CCRIS: Central Credit Reference Information System

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

Getting Started In Unit Trust Investing

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securities-commission-malaysia      invest smart

 

To most Malaysians, the term “unit trust investing” involves a few simple steps where one deposits money into a fund, and then patiently waits for an increase in value while forgetting about it. If only it were that simple, right? Well, the good news is unit trust investing is indeed not that difficult, and in this infographic we are going to show you how to get started!

With hundreds of unit trust funds to choose from, how would you go about making an investment decision? As a general rule, always remember that unit trust funds work best as long-term investments. By understanding the nature of each fund and evaluating your own risk tolerance, you can select funds that provide either a regular income stream or capital growth, or a combination of both. By spreading your investment amongst different trust funds, you can create a unique unit trust portfolio that controls risks and generates potential returns. Now let’s get started!

 

https://www.imoney.my/articles/getting-started-in-unit-trust-investing

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].

Invest Chat 101: Is There a ‘Lazy’ Method to Start Investing?

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On a slow and relaxing weekend, Mike was on a casual outing at the mall, browsing t

On a slow and relaxing weekend, Mike was on a casual outing at the mall, browsing through some investment books in his favourite bookstore. Suddenly, someone gently patted his shoulder. Mike turned around, and to his surprise was greeted by Peter, a former schoolmate he had not seen for almost 10 years!

After a quick exchange of pleasantries, they headed over to the bookstore’s cafe to catch up on old times. This is how their conversation went:

Peter: ‘So Mike, what were you checking out on the shelves?’

Mike replied, ‘Well, I’m just searching for some books on investing in the stock market. I’m an active investor, but every time I walk into a bookstore, I feel that there is plenty more for me to learn!’

Impressed, Peter said, ‘Sounds good. How long have you been investing?’

With a smile, Mike answered, ‘Well, it has been a few years. If I remember correctly, the stocks I bought at the time cost me quite a bit but were fundamentally strong.’

Peter asked, ‘That’s interesting. So, has is it been performing up to your expectations?’

Mike answered, ‘Well, it’s been okay, so far. In addition to capital gains, it has been giving me some dividends on a regular basis. What about you, Peter?

Jokingly, Peter replied, ‘Haha, I wish! No, I never really got into it despite being interested!’

Mike asked, ‘Why not? Come on, what’s stopping you?’

Peter replied, ‘Because it seems like a lot of hard work and effort! I have a demanding job that requires me to work from 9am to 7pm. It seems too troublesome! How I wish there was somewhere to park my money and let it grow without the hassle of research and homework (laughs).’

Mike answered, ‘Well, you’ll never get anywhere in investing if you do not start! And on the bright side, there are a few options available for lazy investors such as yourself (grins)!’

Peter exclaimed, ‘Really? What would that be?’

Mike answered, ‘First, have you considered putting your money into a unit trust fund? It’s simple. You put the money and the fund manager will take care of it for you, basically investing it.’

Peter replied, ‘I see. But, how do I pick the right fund manager?’

Mike answered, ‘Well, that’s where you will need to do some shopping around first, just like here in the mall! After all, there are many financial institutions offering hundreds of unit trust funds in Malaysia alone. Different funds are catered to different types of investors with different appetites for risks and expectation for rewards. If you do decide to invest in unit trust, you should also find out their sales charges and annual fees before investing.’

Peter listened attentively. Then, he said, ‘Okay. It looks like I will have to do some research on unit trust funds.’

Mike answered, ‘Nevertheless, if unit trust investing is not your cup of tea, how about checking out Exchange Traded Funds or ETFs?’

Peter asked, ‘What exactly is an ETF?’

Mike replied, ‘Well, to put it simpler terms, do you know about our Kuala Lumpur Composite Index (KLCI)?’

Nodding his head, Peter answered, ‘Oh yeah, that I do! It’s always featured in the newspapers and financial media. Something about FTSE Bursa Malaysia KLCI, am I right?’

Mike continued, ‘Correct! Do you know that you can invest in the KLCI through an ETF?’

Intrigued, Peter replied, ‘Really? How would that concept work?’

Mike continued, ‘Peter, it is simple. ETF is an open-ended investment fund listed and traded on a stock exchange, combining the features of an index fund and a stock. For instance, the FBMKLCI-ETF is designed to track the performance of our very own KLCI. This means that investors are given exposure to the 30 largest public listed companies on Bursa Malaysia without actually having to directly buy shares from each of the 30 companies. Instead of holding onto a few stocks or bonds, investors can use ETFs for exposure to a diversified basket of investment products. Are you still with me?’

Peter asked, ‘Totally! An ETF is like having a portfolio basket of different eggs, and each egg is a listed company! So, how would I go about buying these ETFs?’

Mike continued, ‘Well, units of the FBMKLCI-ETF can be bought and sold just like the shares of any public listed companies on Bursa Malaysia. In a manner of speaking, it offers a cheaper alternative to unit trust funds and at the same time offers investors a unique method of buying individual shares in the 30 largest public listed companies in Malaysia.’

Peter replied, ‘You know, that all sounds very good. I’m definitely going to check it out.’

Mike added, ‘Peter, there is also one other option if you’re looking beyond ETFs.’

‘Do Share!’, said Peter.

Mike answered, ‘Well, there are Real Estate Investment Trusts (REITs). It is an option for the average retail investors to invest in a portfolio of commercial properties worth billions of Ringgit.’

Impressed, Peter asked, ‘That doesn’t really make sense. Buying property but without having the capital? How does that work?’

Mike answered, ‘You are both right and wrong, Peter! Of course, there is capital involved and it’s collected from a bunch of retail investors such as you and me. For a start, REITs invest and lease out a portfolio of investment properties. These properties could be shopping malls, office buildings, factories, warehouses, hotels and even hospital buildings. REITs pay out regular dividends to unitholders via the rental proceeds from leasing out these properties.’

Peter said, ‘That sounds easy. It’s kind of like a unit trust fund, but with properties. So, how do I go about investing in REITs?’

Mike answered, ‘Again, it is so simple. They are listed on Bursa Malaysia. We can buy and sell units of REITs just like the shares listed on Bursa Malaysia.’

Peter asked, ‘Any examples?’

Mike answered, ‘Yes! Fact of the day, we are now actually drinking coffee in a property owned and managed by a REIT.’

Peter exclaimed, ‘Really? This mall is a property owned by a REIT?’

Mike laughed, ‘Yes! This mall, which is located in a garden city near a valley is owned and managed by a REIT! If you buy units of this REIT, you would be deriving rental income from tenants who are occupying this mall.’

Peter was impressed. After a long pause, Peter replied, ‘This is amazing. I didn’t really know that small investors such as ourselves can profit from mega properties. It looks like I’ve got plenty more to learn about investing.’

© Securities Commission Malaysia (SC). Considerable care has been taken to ensure that the information contained here is accurate at the date of publication. However no representation or warranty, express or implied, is made to its accuracy or completeness. The SC therefore accepts no liability for any loss arising, whether direct or indirect, caused by the use of any part of the information provided. The information provided is for educational purposes only and should not be regarded as an offer or a solicitation of an offer for investment or used as a substitute for legal or other professional advice. For enquiries regarding sharing, republishing or redistributing this content please write to: [email protected].