| FAQs on Investing Your Money |
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What is the practical approach that should be taken before making an investment? |
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Cover your risks by taking an insurance policy � You should prioritise your protection needs by taking up insurance policies to cover your health, disability and properties.
Contribute to retirement savings if you do not already have one. In Malaysia, contribution to the Employment Provident Fund (EPF) is a form of retirement savings.
Pay off your credit card debt first � There is no point in investing when you have a large amount of debt. Your efforts will be counter-productive because your investment returns will be eroded by finance charges incurred on the debt.
Set up an emergency or contingency fund, which can be a 3 months� salary buffer. This can be used anytime in case of emergency but it must be topped up if you happen to use it.
Have a clear and realistic time horizon which will help you plan a suitable investment programme. |
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What is the most important factor in investing? |
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| Understand what you are investing in. If you do not understand where you are putting your money into, it will not help your overall financial planning. Stick to investments that you understand and are familiar with. Stay away from complicated investments that you do not understand as they may result in losses. |
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Do I need to get professional advice before investing? |
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| Generally, you can invest on your own if you understand how to do it. However, you may want to seek the advice of a qualified financial planner for a holistic financial plan. |
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What are factors that can influence returns on investments? |
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The risks involved in making the investment � how risky is the particular type of investment.
Interest rates � the interest rates at the time of investment and the expected interest rates in the future.
Time horizon � the duration of your investment.
Inflation � the inflation rate at the time of investment and the expected rate of inflation in the future. |
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How do I invest in the bond market? |
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| You can invest directly in corporate bonds that are listed on the Bursa Malaysia Securirites Berhad or indirectly through professionally managed bond funds. |
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Can individuals invest in the money market? |
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| Investing in the money market involves large sums of money (e.g. RM1 million or more). Therefore, it is not easily accessible by individual investors. However, individual investors can access the money market indirectly through:- |
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Fixed income unit trusts funds called money market funds, or |
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Individual investors with RM50,000 and above can invest in repurchase agreements (repos) offered by commercial banks. |
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Are there different costs involved for different types of investments? |
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| Yes. You will incur different costs on different types of investments. Find out the relevant cost (standard cost and some possibly hidden cost) that you have to incur when you want to make any investment. For example, in stocks there is always the standard brokerage commission or fees that you have to incur in your transactions. |
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There are some very complicated investments apart from fixed deposits, stocks and bonds? Can I invest in these investments? |
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| Yes. However, make sure you understand them before you invest. Some of these investments could be risky and the changes of losing your money could be high. |
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How do I invest in the stock market? |
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| You can open a Central Depository System (CDS) account with a securities firm (stockbroking) which will give you direct access to stocks in Bursa Malaysia Securities Berhad. You must purchase and sell stocks and shares through a stock broker. With a CDS account, you can also apply for shares offered by companies in their initial public offerings (IPO). Alternatively, you can invest in unit trusts that offer investment in equity funds or bond funds. |
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