Everyone is asking what is a good investment to go into in today’s world of uncertainties. With the launch of the recent investment vehicles like the Sukuk Simpanan Rakyat and Amanah Saham Malaysia (ASM) which promise 5% annual returns, many Malaysians have rushed in to buy the units. They are indeed good investments in times when fixed deposits stand at 2% per annum, and at best 3% per annum on some promotional rates.
So if you have missed out on buying the Sukuk Simpanan Rakyat and Amanah Saham Malaysia units, what then do you plan to invest in so that you do not keep your cash idle?
I read the latest issue of Fundsupermart which has an interesting article that suggests 4 ways to invest to earn a steady stream of passive income. I find the 4 asset classes suggested to carry a good mix of risk appetite as a way to divest an investment portfolio. If you are more risk averse, you may want to choose what you regard as safer investment vehicles but if you are gamed for a little more risk, then go for it wisely.
Here are the four suggested asset classes put forth by the article in Fundsupermart which are relatively low risk in nature which will give you some reasonable returns and dividend over time.
1. Money market funds
2. Bond funds
3. REITs
4. High yield dividend stocks
Money market and bond funds are generally low risk investments as they place money in relatively safe debt instruments like commercial papers, treasury bills, fixed deposits, government and corporate bonds, etc. Returns on these investments won’t be very high as can be expected, since lower risk assets tend to offer lower returns. But when you average out the returns of all the instruments put together, you could potentially see better returns than the 2% fixed deposit rate.
REITs and equities are a little more volatile and hence more risky. But the idea is not to speculate on them to make your profit, but rather to reap steady payouts of good dividend and also on the growth of the stocks over the long term. The returns on them should be higher than the less aggressive funds above.
I think the suggested asset classes are quite sound. For someone like me who have no idea what to invest in right now, this seems like a good mix of a portfolio to get into. A note of caution for those who subscribe to the suggestions above, do exercise some caution when picking the funds or stocks to go into. Don’t just jump into the first money market fund of REITs you come across. Do a little bit of homework into each asset class to determine the rate of return and risk trade off that you are comfortable with.
What are you thoughts on the suggested asset classes above? Do you have more suggestions on what to invest in now?
{ 2 comments… read them below or add one }
Now might not be the right time to acquire REITs because i do anticipate the property industry to drop a bit further in the next quarter esp when more businesses are forced to close down (thus lowering the profit for the REIT focusing in office buildings and shopping complexes). Rentals might also be down since they focus more on high-end residential units.
Just my opinion
Bond fund and money market fund won’t do well also but relatively better than equity. We’re actually seeing a rebound for the equity, but I doubt it’s going to last long esp when the result from the current quarter is coming out soon. Best to acquire after that. For now, I’m on passive mode
Thanks for sharing your insights,Alvin. I guess the market is very unpredictable at the moment. Just never know when is the best time to buy in. But I suppose if you average down your purchases over time, anytime could be a right time provided we aren’t buying at peak, and we’re definitely not in peak at the moment.