5 Low-risk Investment Products for New Malaysian Investors

Over the years, investing has become easier and more accessible. A lot of experience and education have been poured into the field, along with refinement of the field’s processes; as such, you can now go into investing with both eyes open, picking and choosing the level of risk you are willing to expose yourself to.

If you strongly prefer to err on the side of caution, why not start by putting your money into several low-risk products? You’re still diversifying, and the low-risk factor gives you that added protective feeling while you get comfortable with expanding your portfolio at your own pace. Here are five easily-accessible low-risk investment tools Malaysians can tap into:

1. Amanah Saham Nasional Bhd (ASNB)

Amanah Saham Nasional Bhd (ASNB) is a subsidiary of Permodalan Nasional Bhd (PNB). ASNB manages a product called Amanah Saham Bumiputera (ASB), which is a share trust unit that has a fixed price fund of RM1 per unit that aims to help Bumiputera investors in Malaysia ease into investing. Each investor is eligible to invest up to a maximum of RM200,000.

ASB is an opportunity for Bumiputera investors from low-income backgrounds to save for the future and to build up low-risk, long-term investments.

ASB has several benefits:

● No initiation fee: you can join for free;

● Low management fees: is ASB’s annual management fee of 0.35% per annum;

● Fixed returns;

● Easy to liquidate and withdraw: both online and in-person withdrawal facilities are available;

● ASB shares can be used as collateral to apply for overdraft facilities; and

● ASNB offers options for people who have no funds at the moment but who want to begin investing anyway.

Alternatively, all Malaysians are welcome to invest with ASNB under Amanah Saham Malaysia (ASM), another of their products . This unit trust has the same low-risk investments that provide regular returns strategy as ASB; however, ASM has a lower dividend return record, has a higher annual management fee of 1%, and the number of available shares are limited.

2. Employees Provident Fund (EPF)

The Employees Provident Fund (EPF) was established in 1951 as a resource to help Malaysians save up for their retirement, and has remained a mainstay in the landscape of the Malaysian workforce.

It is one of the more comprehensive investment funds, as any individual who is employed in Malaysia, self-employed Malaysian citizens, and business owners who employ both Malaysian and non-Malaysian residents can make contributions. Members not only enjoy annual dividends on their retirement savings, but also have access to many withdrawal options and benefits.

One very recent and significant example of this was how the EPF authorised withdrawals to members who were negatively financially impacted by the COVID-19 pandemic. As an EPF member you may:

● Contribute more than the statutory rate towards your EPF savings;

● Voluntarily make contributions to the EPF account of your spouse, children, or parents;

● Register for the Tabung Haji (Pilgrimage Fund) Hajj Registration (if you meet the criteria);

● Apply for incapacitation withdrawal due to incapability to work (within criteria);

● Withdraw a death benefit payment (within criteria); and

● Enjoy EPF withdrawals and returns on investments that are tax-exempted.

3. Skim Simpanan Pendidikan Nasional (SSPN-i)

Skim Simpanan Pendidikan Nasional (SSPN-i) is a savings plan designed by the National Higher Education Fund Corporation (PTPTN) to help Malaysians save for higher education purposes. It has been through a few iterations for improvements to encourage parents and guardians to put aside money for their children’s education.

SSPN-i Plus is the latest iteration, with more flexible takaful contribution payments and a more comprehensive coverage. It uses a monthly commitment savings concept, where the amount of savings and takaful contributions payment depends on the package selected (with six different packages to choose from, where the lowest commitment package is RM30 per month).

SSPN-i Plus is also Shariah-compliant, and has been approved by the Islamic Banking and Financial Institution of Malaysia (IBFIM). Parents and guardians can look forward to many benefits with SSPN-i Plus:

● Tax assessment relief (on a per year basis);

● No health check needed to qualify;

● Death/permanent disability (accident) allowance;

● Competitive dividend rates;

● Exemption from income tax;

● Beneficiaries in the event of death includes spouse and up to three children;

● Takaful benefits for 36 critical illnesses;

● Hospital admission allowances;

● Eligibility to apply for PTPTN financing;

● 24-hour coverage worldwide; and

● Security of savings guaranteed by the government.

4. Fixed Deposit Account

A fixed deposit (FD) account gives you a fixed rate of interest, depending on how much money you invest in the account, but it restricts you from having access to the money for a fixed period of time. Depending on the bank you choose, they may offer different terms for their FD accounts. The length of the term (one month, one year, etc) varies, and has a predetermined per annum interest rate attached. The longer the term you choose, the higher the interest rate accrued.

If you withdraw the money before the term ends, you could lose all of the interest. This is why most people who can open an FD account will choose the longest term available within reason, or will choose to have multiple FD accounts of different terms, and set them to automatically roll over so they can take advantage of compounding interest.

It can be useful to have accounts with different term limits, as banks do sometimes offer promotional rates which can give you higher returns if you are in a position to take advantage of them.

5. KDI Save

Kenanga Investment Bank Bhd (KIBB) – the largest independent investment bank in Malaysia – initiated Kenanga Digital Investing (KDI) as an innovative financial tool to transform the current investment landscape in Malaysia. KDI Save is KDI’s savvy improvement product to the typical FD and savings accounts, offering all the benefits of FDs with none of the downsides. KDI Save gives you fixed returns while accumulating daily interest, and gives you a higher rate than a regular FD account (now at up to 3.5%!) – and unlike other products, you do not have to trade-off between flexibility and better rates.

You can start saving with KDI Save from as low as RM100 without any penalties for early withdrawal – which also makes this an ideal option for growing your short-term savings. Whether you are saving up to buy plane tickets to Europe, to pay for a grand honeymoon, or just looking for a way to make your money work for you while you wait for other opportunities, KDI Save is your ideal short-term option. And if you happen to need emergency funds, you can tap KDI Save quickly, with no penalty or loss of interest.

Invest in a low-risk environment with KDI Save today by signing up online or download the Kenanga Digital Investing app on the Google Play or Apple App Store today!