Low-risk investments, often the cornerstone of a well-rounded financial portfolio, offer a balance of security and steady returns. Such investment options are favoured for their lower potential of capital loss and ability to provide modest gains.
This blend of safety and consistent performance makes them a wise choice for investors, particularly in uncertain economic times. With this in mind, here are seven options for investors to consider this year.
Government bonds
Government bonds offer security for investors, who essentially lend money to the government. In return, they are promised fixed interest payments over a specified period, as well as repayment of the principal upon maturity.
Malaysian government securities (MGS), for example, offer long-term bonds with fixed-rate coupons (the annual rate at which income is guaranteed) and lump-sum repayment upon maturity alongside semi-annual coupon payments.
Meanwhile, callable MGS – introduced in 2006 – provide the government with an option for early redemption, thereby enhancing flexibility.
Fixed deposits
Fixed deposits are ideal for those seeking secure and predictable returns. Investors benefit from a guaranteed interest rate by depositing a fixed sum in a bank account for a predetermined period.
This investment is particularly suitable for short-term financial goals, such as saving for a home down payment or educational expenses. While they offer lower returns than long-term investments, their safety and predictability are unmatched, making them an excellent choice for conservative investors.
Trust funds
Trust funds – notably Amanah Saham Bumiputera (ASB) and Amanah Saham Malaysia (ASM) – are a popular low-risk investment opportunity.
Managed by Amanah Saham Nasional Bhd, these cater to different population segments: ASB is exclusively for bumiputera individuals, while ASM is open to both bumiputera and non-bumiputera investors.
The appeal of investing in ASB and ASM lies in their low-risk profile, in which the likelihood of losses is minimised and annual dividend returns consistent. These features make them attractive for investors seeking stable and reliable avenues in Malaysia.
Blue-chip stocks
Blue-chip stocks in Malaysia have become more accessible to a broader range of investors thanks to fractional share trading (FST). This method enables the purchase of high-value stocks in smaller, more affordable amounts.
For example, instead of buying a standard lot of 100 units at RM130 per share, totalling RM13,000, investors can purchase just one share at RM130. FST significantly lowers the entry barrier to stock-market participation, especially for the younger generation.
However, as with traditional trading, investors must conduct thorough research, understand the company’s fundamentals, and be mindful of market fluctuations before engaging in fractional share trading.
Islamic investments
Islamic investments are guided by syariah principles and thus provide a distinctive avenue for low-risk and ethically compliant investing.
A notable example is Tabung Haji, a unique investment vehicle designed for Muslim investors. It offers the dual benefits of annual returns in the form of dividends and bonuses, and the opportunity for haj savings.
Other syariah-compliant options include stocks and sukuk (Islamic bonds), which cater to those seeking both financial prudence and religious adherence in their investment portfolio.
Real estate investment trusts (REITs)
REITs offer an affordable and liquid means of investing in the real-estate sector, which is traditionally accessed through property stocks or direct property ownership. These trusts allow investment in large-scale commercial real estate at a fraction of the cost of purchase.
REITs listed on Bursa Malaysia require minimal initial investment, are more liquid than physical properties, and provide steady income from rent paid by tenants. Investors benefit from the professional management of these assets.
Additionally, all REITs seeking listing on Bursa Malaysia must comply with the Guidelines on Listed Real Estate Investment Trusts under the Capital Markets and Services Act 2007, ensuring regulated and quality investment opportunities.
This structured approach makes REITs a compelling option for those looking to diversify their portfolio with real estate, without the complexities of direct property management.
Gold and precious metals
Gold and precious metals have long been dependable options for investors globally and in Malaysia. These assets typically hold their value and even appreciate during economic uncertainty and inflation, providing a hedge against market volatility.
They are an essential part of a diversified investment portfolio, offering a buffer against fluctuations in other asset classes.
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