We all know investment is the way to grow rich. But, how to get started and what is crucial to master for a beginner? Most importantly, how to invest safe with high return? Here you are! This article is write by the co-founder of Alixco to give you some tips for the question.
There are various ways to invest in Malaysia. And we will be mainly focus on Malaysia's capital market investment (what is capital market). Malaysia has a diverse and open economy, with an overall capital market valuation of RM3.4 trillion as end-December 2020 (end-December 2019: RM3.2 trillion)
What is a safe investment?
Safe investment means investing smartly. Ignorance or negligence in the process will be lead to lose of your hard-earned money and it is not what we want. Hence, it is important to understand the details of what you are investing in.
In Malaysia, the safe investment will never come into place if the products are not regulated and approved by the Securities Commission Malaysia, abbreviated SC, which is a statutory body entrusted with the responsibility of regulating and systematically developing the capital markets in Malaysia.
Other than making sure that investment opportunity is legit and regulated, one must also spend time in the investment info sheet before you made the informed decision in the risk, expected return of investment (ROI), fees imposed during and post-investment, tenure investment, and commitment or frequency of investment whether it is one-time or repetitive.
How to make sure I make a safe and potentially high return investment?
The general rule of high return of investment comes from investing in legit and high-risk investment products. It goes by saying "high risk, high return." The ability to take risks in investment often leads to high profit in investment. For instance, banks guarantee the return on the fixed deposit, and because of its security, the return through FD is low ( i.e. interest rate 2%-3% per annum); P2P platforms like Alixco provided 12%-15% p.a. in return to their investors, with no guarantee of investment; and relative low defaulted rate as low as 0.32% as per date.
You may also check on the investor alert list that has listed in SC's website for unauthorized investment companies/individuals or products
Any unauthorized investment will not be overseen and regulated by SC hence it is unsafe to invest, although it may portrait a very attractive investment proposal or too good to be true return scheme, investors are advised to be putting safety at the first place instead of profit at first.
Another golden rule of safe and high return is a long term value investment. It is also widely known as the investment principle of the greatest investor of all time who is also one of the world richest billionaire, Warren Buffet. Investing in the potential exponential growth either in equity or compound interest over a long period is the safe and high return kind of investment. That can mean do not panic selling when the market is down but hold the investment over some years until it get its optimum and high return. One of the simple and safe of long term value investment in Malaysia can be investing in stock market, mutual fund, or P2P investing for compound interest earnings. Compound interest is the interest that you earn on interest, and it is proven one of the successful investment approach.
"My wealth has come from a combination of living in America, some lucky genes, and compound interest."
Warren Buffett, 2010
The longer you invest in interest-earning investments like p2p financing, the bigger of the profit it can be. The formula of compound interest is as such
The formula for compound interest, including principal sum, is:
A = P(1 + r/n)(nt)
A = P(1 + r/n)(nt)
- A = the future value of the investment/loan, including interest
- P = the principal investment amount (the initial deposit or loan amount)
- r = the annual interest rate (decimal)
- n = the number of times that interest is compounded per unit t
- t = the time the money is invested or borrowed for
Taking Alixco P2P investment as an example, the return of investment for RM 100,000 initial capital with twice compound ( 6 months tenure note) interest per year over 20 years will be RM1,114,000.00. Although the return is not guarantee and is subject to issuer repayment performance; given the platform default rate as of now, which is 0.32%. The return investment of P2P with Alixco is relatively high and safe thanks to the power of compound interest.
To summarise, here are the 10 tips to invest smart, safe with a high return in Malaysia
1. Invest in Securities Commission Malaysia regulated and approved only
2. Diversify into different platforms and different investment products
3. Start with small capital
4. Start young or start now
5. Do you own due diligence with an independent mind
6. Long term value investing
7. Look for compound interest investment opportunities like P2P investment
8. Look for investment platform or products with proven track records
9. Check out SC initiative namely Invest Smart to learn about the investment knowledge
10. Check out Alixco for its high return investment opportunity with 12%- 15% return per annum.
Wishing you a joyful and fruitful invest smart journey!
Greetings from the Alixco P2P Finance team