Me in the Star

I came out in the papers recently ... my reporter fren, PL interviewed me about investments ... so you can see from the article below. Only thing ... 1 part was slightly mis-quoted ...

"Properties are good umbrellas for a rainy day. If there is an emergency, I could sell them off"

Property in (only) GOOD LOCATIONS can be good umbrellas ...

But surely I cannot sell them off during an emergency ... the time taken for the money to come in could be months ... so this part was not rightly what I meant ...

B U S I N E S S

Monday October 9, 2006

Low rates make investors turn to other avenues

MALAYSIA is deemed to have one of the highest savings rates in the world. The Department of Statistics said that for the first quarter of this year, gross national savings were 39.7% of gross national product (GNP).

Last year, the savings rate was 37% of GNP compared with 37.3% in 2004.

Besides provisioning for rainy days, what does an average Malaysian do with the additional money of, say, up to RM50,000?

Based on the feedback from several individuals interviewed by StarBiz, stocks and properties remain the favourite investment options.

According to 28-year-old Chan Wan Hong who works in the corporate finance department of a local banking group, the present fixed deposit rates are not attractive and lower than the inflation rate.

Shares and properties, he said, offered higher upside potential despite their higher levels of risks.

“I believe in diversification and not putting all my eggs in one basket. In case of a stock market slump, I can still depend on my other investments,” he added.

Chan prefers to take charge of his own money instead of “putting them into somebody else's hands” such as buying of unit trusts.

“Unit trusts are for those who do not have time to monitor the stock market. Since I do keep abreast with the market, I'm able to manage my own funds,” he said, adding that the unit trust management fees were high.

Corporate events manager Jay Teoh also invests in properties and shares.

He said the appreciation and rental returns could be very high for properties in the right locations.

“Properties are good umbrellas for a rainy day. If there is an emergency, I could sell them off,” he said.

He added that to purchase a property only required a deposit and if the rental was higher than the monthly instalment, “somebody would be paying for the property for you.”

Teoh said stocks selection was based on recommendations by various brokerages as well as research into specific industries.

“I also look at the shareholdings of the company. When a reputable fund holds a significant stake, it shows confidence in the company,” he said, adding that compared with the stock market, “property is still safer.”

An accountant at a foreign accounting firm said she placed her money mainly in unit trusts and investment-linked insurance.

“In terms of rates of return, unit trusts have a better record than banks. Since I have no time to monitor the stock market or specific counters, unit trust is the next best option for me,” she said.

As for opting for insurance, she said the product offered “room for appreciation and flexibility” compared with conventional insurance policy.

“After covering myself with the basic protection, I found the investment-linked policy was quite worthwhile,” she added.

She also has some exposure in real estate investment trusts (REITs) instead of choosing to buy a property herself.

“The cash outlay and liability of owning a property is rather high compared with REITs.

“Besides, REITs allow me to have an exposure in the commercial property market, which I would not be able to do as an individual,” she said, adding that her investment was focused between three and five years.

D. Nair, a manager with Accenture Malaysia who started investing during his college days, said property investment was the most effective in terms of generating returns.

“Even though it is a long-term investment, the appreciation value and the rental returns have been very positive so far,” he said.

He recently withdrew from the stock market, given the lack of time to monitor the performance of shares.

He also invests in unit trusts and investment-linked insurance.

Next week: Investment options for those with up to RM500,000.