Starting your investment journey can be exciting as well as scary. This checklist will help you to start investing in Bursa Malaysia without any mistake.
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”- Warren Buffett
That is unquestionably correct. Isn’t it?
If you start with the right approach in the right direction you can reach the finish line with rewards.
Investment is a skill that everyone is considering now and if you are a beginner you will need proper guidance to start.
Everyone in the modern days wants to increase his earning. Considering inflation, the need for a better lifestyle and retirement plan, child education loan etc, it is a requirement of the time.
When you are a beginner in investing it is a bit difficult to select the best stocks available in the stock market and how to take the first step. There will be many questions that you might be asking yourself or on the internet.
1. Which sector should I choose to invest in?
2. Which investment path should I go?
3. What are the criteria to select the best company to chose from Bursa Malaysia?
4. How to chose a broker or investment advisory services?
But you don’t have to answer all the question together. Multi Management Future Solutions is here for you! Below is the checklist-
KLSE Investment Tips 2019 For Beginners.
Financial planning is to make a strategic blueprint for all your moves in future for your investing journey. To start investing, you have to make a plan so that you don’t drown when things go south in the market. It will work as your backbone.
There are a few things that you have to consider to make a financial plan before investing.
Examine Your Budget:
To examine your budget whether you are doing accurate or not, you can try the 50-30-20 rule. You have to make sure that 50 percent of your budget should go in household expenses including groceries, 30 percent for food, outing, and travel and 20 percent in savings.
If you are managing this efficiently you can plan further to invest your money in the stock market or other investment instruments.
Always Separate Emergency Fund:
An emergency can come without any notice and if you are jumping to investment without any emergency fund you are making fool out of yourself.
But you are not a fool. Are you?
So always keep some amount of money aside for emergency fund before investing.
Make Yourself Debt Free:
Can you swim better with tonnes of the load in your back?
Similarly, you can not become a potential investor of Bursa Malaysia or any other stock market with debt in your head.
Therefore clear all your debt before starting investing.
To make your financial plan check if you are insured, be clear of your investment objectives. Decide whether you are comfortable with monthly investing or lump sum investing.
A financial plan helps you to reach your financial goal, about which I am going to talk in the next section.
There is a lot of difference in investing thinking and investing methods when you invest in college age and when you are a working adult. Your perception towards investment changes with time and experience.
When you are a working adult you think about all kind of risk factors, your loss, and profit plan. For an economical beginning, you must decide what are your personal financial goal. These question will help you decide your financial goal.
1. How much money do you want to invest?
2. How much is your risk tolerance capability?
3. Why are you investing now?
4. Are you here for a long term or short term?
Do not just jump in investing without any planning. Without a proper goal or plan, you might fail miserably in investment journey.
slow and steady wins the race
So take your time to figure out your decent financial goal before investing in Bursa Malaysia.
When you will begin investing in the KLSE stock market you will need a stock brokerage account and CDS (Central Depository System) account for trading. CDS is an account that keeps your Malaysian stocks which you have already bought. It is controlled and maintained by Bursa Malaysia directly, with no link to the brokerage house.
Many brokerage firms also help in opening a CDS account. But choosing a reliable stock brokerage firm can be drudgery. To make your investment journey smooth and productive you should find an authentic brokerage firm or an investment advisory service.
Brokerage firms and investment advisory services mainly differ in the varieties of service they provide and the brokerage fee. Some of the brokerage firms also provide overseas market coverage, analysis reports, and customer service.
You can check the service list on their website or you can also try the free trials they provide for 3-4 days.
You can trade via brokerage firms or the trading account.
There is more than one type of account in the stock market.
Cash Accounts– Cash account is the account in which client pay for all his securities in cash and there is no credit available on his account. In a cash account, you can only buy a long position.
Margin Account– In this, an investor pays for a percentage of securities he purchased by using credit. The brokerage stretches the credit and uses the securities as collateral. In this account, you can buy both a short and long position.
Option Account– In option account client need to share his financial situation, investment objectives, past experience in investment. Option account is not for everyone. Only puts and call is traded-in in this.
You might have heard about the phrase “Don’t put all your eggs in one basket”.
In the stock market, your money is your egg and stock is the basket. When you invest in only one stock or only one variety of stocks you are increasing your risk factors.
There are more than 800 companies listed in Bursa Malaysia in various sectors. You can do research on which sectors are flourishing in the Malaysian economy and invest in them accordingly.
Always choose diversified and strong portfolio to make your investment more profitable. You can also choose to invest in different assets like bonds, gold, and more.
ETFs or Exchange Traded Funds are the listed fund mainly consists of blue-chip stocks, that tracks an index. You can say it is a pool of fund investors for the benefits of all investors.
You can invest in the best companies in Bursa Malaysia by investing in ETFs.
While investing in individual stocks or company you have to understand the company and you have to be aware of the company announcement.
Its totally depend upon the knowledge and interest of you if you want to interest in ETFs or individual stocks.
While investing in Bursa Malaysia as a beginner you have to learn how to evaluate stocks. Even experts sometimes fail to evaluate in a proper way and fails to get good returns.
The stock market is more like an auction where many people participate. Anyone who thinks that this stock worth more than its current price, he can bid a higher price. The stock price is the higher price the buyer is willing to pay and the lowest amount is the seller is willing to pay.
While evaluating stock always check its balance sheet, dividend history, its domestic and global recognition, the rate of return, dividend yield, etc.
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” – Warren Buffett
Isn’t it practical?
Investment is not short-term gratification. You should be patient with stock investing. It’s a skill which takes time to give you a high return.
When you are entering in stock market investing, you should always go for long-term. The stock is the asset with short-term volatility risk which gives a high return on long-term.
This is the checklist for a beginner to start investing in Bursa Malaysia.
We do not recommend you to follow this blindly. Always use your knowledge, your research, and judgment to select any stocks or any investment strategy.
Selecting your first stock can be very intriguing. Your first move usually makes your opinion about the journey. And, your investing path will be profiting and rewarding if you measure your goals and take calculated risks.
There are hundreds of choices for the stocks listed in Malaysia Stock Market, use above checklist before investing in Bursa Malaysia.
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