2022. A new start for many of us, albeit with battle scars aplenty.
Although our economy is slowly getting back on its feet, it still looks to be a slow climb. In 2020 alone, the majority of Malaysian households experienced a decline in income, with 20% of households from the M40 group moving to the B40 group. By the middle of 2021, a whopping 60 percent of households have received government assistance.
How do we move forward and learn how to make better financial decisions this year? What’s the best way of protecting ourselves, whilst growing our finances at the same time?
Taking Charge of Our Future
One of the best ways to build wealth over time is to invest. Unfortunately, the combination of a gender pay gap and lack of confidence in investing puts women at a disadvantage when it comes to matters relating to our financial well being. The FinanceBuzz investing habits survey found that women are less likely than men to have started investing, with only 66% of women investing, compared to 76% of men.
If you’re thinking of dipping a tentative toe into the financial world, we’re here to help. Our Financial Wellbeing series with Julian Ng, the co-founder of Malaysia’s first homegrown robo-advisory platform, Akru, aims to help families improve their financial planning and make better investment decisions for better financial stability in 2022.
Financial Wellbeing: Part 1
How to Invest in a Pandemic
In a recent makchic‘s sharing session on Instagram, many of our #makchicmumtribe expressed concerns over the state of their finances (following a cash-strapped past two years), expressing a desire to learn how to utilise their money wisely.
Here are some key questions that were raised on the topic of investments, and Julian’s answers:
I want to invest but I’m afraid I will end up losing all the money. As someone new to investment, where do you think I should start? If I can only set aside about RM200 a month, what is the best thing I can do to grow that?
Julian: Chances are almost zero that you will lose all your money in a diversified portfolio. You might experience short-term losses but over the long-term your investment will grow. Investing passively in a robo-advisor is the best way for newbies (or experienced investors) where no amount is too small to invest.
With everything being digitised, your financial planner can now be a robot too! Choose the right robo-advisor, and reap the benefits of having your investment portfolio automated by algorithms on a digital platform, and personalised to your situation, individualised investment goals and risk levels. And the best part? You get to avoid all the pain points of investing, such as the need for stock market decisions, currency conversions, or doing the maths of risk-returns and allocation!
“I am not sure if I should consider putting some money on the platform. What are the factors to consider and how would I know which one is right for me?”
Julian: Some of the factors to consider for a robo-advisor should include:
1) Very low cost;
2) Global diversification;
3) The ability to set up different financial goals;
4) Passive investing (not buy-sell-buy-sell-buy); and
5) Being able to invest any amount.
Investing in stocks is thought by many as the way to make quick and big bucks. In fact, if you end up with the wrong strategy, this will be far from the truth. As a famous statistic goes, 90% of traders fail to make money when trading the stock market! Over time, 80% of traders are said to lose, 10% break even and only a mere 10% make money consistently. It’s probably not a good idea to bet on being in that top 10%, unless you are (super) confident of what you are doing.
Here are some of Julian’s thoughts on the matter:
“How should I diversify my investment? I want to know how to start buying and selling shares, but it’s so daunting. Any tips on how to start?”
Julian: Buying/selling shares is not for the fainthearted and is not necessarily needed if you just want to plan your financial life. You just need to buy into ready-made portfolios that fit your goals. A robo-advisor can do that for you, in a way that Grab can plan your transportation needs. But to answer your question, I discourage buying/selling shares simply because most of us don’t have the time to do it right.
“Many people are often conservative in nature and prefer placing their funds in fixed deposits (FDs). Do you think this alone is a good way to invest? If not, what are the limitations of FDs?”
Julian: FDs will fail to protect you from inflation. Even a conservative person should at the very least invest in a portfolio that is predominantly global bonds, with some global equity which will give higher returns over the long term than FDs. This combined portfolio will provide returns that will exceed rising prices of our imported goods, that are being bought with a decaying ringgit. Inflation really eats into livelihoods. As for the young person, FDs are a total loss proposition.
The takeaway for our #makchicmumtribe? Robo-advisors are straightforward- you can invest like a pro, with no experience needed. If you have ever held back from investing due to any of these common reasons- high fees, lack of experience, low investment amount, accessibility – this 21st century invention will be your knight in shining armour.
We hope that this answers some of your burning questions regarding investing, and also provides some handy tips on how to invest during a pandemic. Stay tuned for next month’s topic – where Julian will be answering questions relating to debt and how to get out of it – in the next instalment of makchic’s Financial Wellbeing series with Akru.
This is a sponsored post by Akru.
Akru is Malaysia’s first homegrown robo-advisory platform, providing an always-on, easy-to-use product in your pocket, and empowering you to invest in diversified portfolios with exposure to global investments. If you are interested to know more about how Akru can help you begin your investment journey, sign up here.
Get RM20 in your account by using our MAKCHIC20 promo code when you start investing with Akru. Using this code helps support makchic.com.
Disclaimer: makchic may earn a small commission through the referral link above, without additional cost to you.
