KCLau's Money Tips Forum

[xansa]

Hi all, I am a newbie here.I would like to gain financial knowledge from all of you in this forum.

May i know what is the type of investment that we have in Malaysia?
I heard about money market fund,index fund,ETF,etc....
But i get confuse with these type of investment.Can someone from this forum can give the explanation from each of this investment type?

Thank you

[KCLau]

Hi Xansa,

There are so many types of investment available in Malaysia. I would categorize them according to risk-return.

Start from low risk:

Bank savings
Fixed Deposit
Endowment insurance
Investment-linked funds
Unit trust - from fixed income, bond, index to equity
REIT
Stock market
Commodity
Real estate
Businesses

and many more such as land-banking, precious metal etc.

I guess the list is endless!

[guest]

KC,
Thank you for the explanation....

What is money market ,index fund and ETF?
Is it all the above investment are categorize in Unit trust or different each other?
Sorry, still confuse

[KCLau]

What is money market ,index fund and ETF?
Is it all the above investment are categorize in Unit trust or different each other?

Unit trust is in fact a medium that let investor invest in asset class that they can't invest directly.

Money market is very short term investment. Large amount of money is being put in the bank and reap a return calculated daily. The return is normally lower than FD.

Index Fund is unit trust fund that buy only index linked shares. In Malayisa, there is a set of shares in Bursa Malaysia that make up the Composite Index. The companies included are Telekom, Maybank and some other blue chip companies.

Exchange Traded Fund (ETF) - An ETF is a fund which tracks a particular stockmarket index and which can be traded on an exchange like a share. - Not available in Malaysia. But very popular in US.

[wthong]

Hi KC,

As far as i know, ETF is available in Malaysia now namely FB30ETF, and MYETFBJ listed in our Bursa Malaysia.

On the other hand, I would like to understand from you on Gold investment. I notice lately that
Public Bank has launch a Gold Investment Account. What's your perception on this investment type ?
Is it a right time now since Gold prices have been in the peak now ??

Thanks!
"small investor"

[KCLau]

As far as i know, ETF is available in Malaysia now namely FB30ETF, and MYETFBJ listed in our Bursa Malaysia.

Thanks wthong for the enlightenment.
I do know someone who invest in gold. I will contact him. Hopefully he can give us some opinion here.

[ggeatweb]

I think that the Public Gold Investment Account is one of the the easiest way to get exposure to the gold market. The difference between the buying and selling prices is about 4%, which is lower compared to Maybank (7%). However this is still high, because for comparison, in Singapore banks the difference is only 0.3%! Unfortunately, last I read only sg citizens and permanent residents are eligible.

Alternatively, there's a Gold ETF listed in the Singapore stock exchange, (Street Tracks Gold, SGX Ticker: GLD 10US$). Last I checked its price was $88.84. You can buy that ETF through your stock broker just like any other stock.

However do note that one of the reasons people buy gold is because of safety. In that sense, owning physical gold (like Kijang Emas) is the best bet. By 'buying' from banks it's not real gold but 'unallocated gold'. This means that your ownership of gold is a liability to the bank, like a normal cash savings deposit. It's just a trust/agreement that they will pay you when you demand for it.

Just like a savings account, there is a risk of a 'run in the bank' where everyone withdraws their money during a banking crisis. Since some of the money has been lent out already, there isn't enough cash reserves to give to the 'latecomers'. Bank Negara guarantees the deposit to a certain amount (probably RM100k?), so that amount of cash is safe. However, bank negara doesn't guarantee the gold. If the bank goes bankrupt you don't get your gold.

Take this risk into consideration! The huge inflation caused by the federal reserve is finally showing it's ugly signs, especially when the money they print has now gone to commodity/food speculation. Rising prices causes governments to ration and suppliers to hoard, causing shortages. Shortage of food makes people hungry and all havoc breaks loose. We are living in uncertain times, although I think Malaysia as an agricultural country may not feel it that badly.

My guess is that gold will go higher as inflation gets worse. The current correction looks like a good buying opportunity. For house owners, it will be good to refinance all your BLR-pegged loans to a fixed rate (now at historic lows of ~5.7%), as I think that the BLR will be rising in the near future due to inflation.

This is just my opinion, so do your own research. At times like this we probably need to think with our guts as well

SG.

[KCLau]

Thanks SG for your generous opinion! It is very insightful.

For house owners, it will be good to refinance all your BLR-pegged loans to a fixed rate (now at historic lows of ~5.7%), as I think that the BLR will be rising in the near future due to inflation.

For now, most home loan packages are tied to BLR. Probably home loan provided by AIA and ING are fixed like last time.

I think that the Public Gold Investment Account is one of the the easiest way to get exposure to the gold market. The difference between the buying and selling prices is about 4%, which is lower compared to Maybank (7%). However this is still high, because for comparison, in Singapore banks the difference is only 0.3%! Unfortunately, last I read only sg citizens and permanent residents are eligible.

I never realize that the cost is so high! 7% is even higher than unit trust service charge. What's the reason bank charge such a high fee?

In that sense, owning physical gold (like Kijang Emas) is the best bet.

Where can we purchase this 'Kijang Emas'?

Once again, thanks SG for your info and advice.

[wthong]

Hi SG,
Thanks for the info.

Hi KC,
The Kijang Emas can be purchased from Maybank
http://www.maybank2u.com.my/promotions/goldcoin.shtml


wthong

[KCLau]

The Kijang Emas can be purchased from Maybank
http://www.maybank2u.com.my/promotions/goldcoin.shtml

Thanks a lot