Investing Your Money

If you have extra money at the end of each month, you may want to invest your money in such a way that the returns on your investment is maximized.

Most of the smart investors put enough money in savings products to cover an emergency and invest the balance as to maximize the profits.

In order to determine which investments are appropriate for you, please consider the following factors:

• Goals and needs
You may have specific goals and requirements that you want your investment portfolio to fulfill. For example, your children education needs, business expansion, travel plans or retirement needs.

• Occupation
Your occupation also can affect portfolio objectives. For example, does your job provide an adequate retirement plan, or must you fund your retirement from your savings, fixed deposits, saving plans and other investment portfolio?

• Income
Both your absolute income level and your income requirements influence your investment objectives.

• Age
Your age is an important consideration when deciding how much risk to assume. Portfolio assets that are riskier and that will fluctuate more over time may be appropriate for young investors but not for people nearing retirement age.

• Wealth
Investment objectives should take into consideration the assets you hold outside the portfolio. The types of assets you hold would affect the level of risk that you are prepared to accept. Savings, fixed deposits and saving plans are of the lowest risk, this is
followed by putting money in investment grade bonds while investing in equities involve a higher level of risk. In Malaysia, the bond market is less easily accessible by the public and you need significant amounts of money to buy such bonds. Investors interested in investing in bonds can do so through, for example, unit trusts that are linked to such fixed income instruments.

• Time Horizon
An important consideration in setting investment objectives is the time horizon such as 5 years, 10 years, 20 years or even longer. When do you wish to liquidate your portfolio? You need to choose the maturity of the assets you intend to invest in.

• Liquidity
Liquidity is the ease with which you can convert your assets to cash at fair market value. It is essential that you recognize the need to convert your assets into cash at appropriate times.

1. Savings and fixed deposits are most liquid and you can cash out anytime without any capital loss
   
2. Bonds and unit trusts funds are not as liquid as deposits and investors can suffer capital loss depending on market price of the bond or the unit trusts
3. Equity prices are more volatile and the liquidity varies. They should not be considered for short-term investments
4. Properties are generally more illiquid
5. Tolerance for Risk It is important to assess whether you are comfortable with market volatility and the level of volatility you can tolerate.
   

If you do not have enough knowledge about potential investments, you may wish to consult a qualified investment advis0r to advise you on how you should invest your money.