KUALA LUMPUR: THE idea of investing may be daunting to some people. Investing is different from saving because it involves a greater level of risk and there is no guarantee that you will get your money back.
As investing comes with the risk of losing out on initial capital outlay generated from savings or debts, it requires effective strategies to make profits.
Good investments are backed by detailed research and analysis to minimise risks.
Therefore, investing is actually an active pursuit, requiring an investment of work and time.
Why the trouble when there is a smarter and easier option of putting money or savings in safer hands such as in Permodalan Nasional Bhd (PNB), Malaysia’s biggest fund management company.
Investing in Amanah Saham Nasional Bhd’s (ASNB) unit trust products relieves investors from worries.
PNB pools funds to obtain a wider spread of investments, which enables greater returns with diversified risks.
As a fund manager, it makes decisions and invests on investors’ behalf in a variety of investment strategies.
The fund manager invests in fundamentally strong companies, including those in the FTSE Bursa Malaysia KLCI (FBM KLCI), FBM70 and/or FBM100.
ASNB, a wholly-owned subsidiary of PNB, currently manages a number of unit trust schemes such as Amanah Saham 1Malaysia, Amanah Saham Bumiputera and Amanah Saham Wawasan.
Affin Hwang Investment Bank Bhd head of retail research Datuk Mohd Nazri Khan Adam Khan said PNB has a proven track record. It has delivered consistent investment returns from capital appreciation and dividend incomes.
“The yearly dividend by PNB has always been above the average return of all unit trust funds available in Malaysia.
“The 7.25 per cent dividend for the last financial year was good despite the softer market sentiment,” he said.
For a fund manager, corporate governance plays a vital role in ensuring the long-term sustainable performance of funds.
Nazri Khan said PNB has been committed to effective and transparent corporate governance in running its fund management business.
When all is said and done, investing, unfortunately, is not in the “DNA” of Bumiputeras.
Nazri Khan said poor savings and investing culture still prevails among most Malaysians, especially the Bumiputeras. “Savings rate in Malaysia is among the highest in Asia, but in terms of voluntary savings, it is still very low.
“ With Bumiputeras making up 68 per cent of the total population in Malaysia, only 20 per cent invest in equities or unit trusts,” he said.
He said investment-savvy interest is skewed more towards the urban people and middle-income and above earners.
The other reason why many Bumiputeras are not investing is that they still lack in financial literacy education.
“To invest, you need the baseline knowledge and this is lacking among Bumiputeras. Investment in education is more important than investment in equities.
“You can get the knowledge needed by attending seminars or roadshows organised by government agencies or any other relevant organisations,” he said.
Nazri Khan said roadshows and seminars could work because Bumiputeras like the idea of having a mentor.
“This is because Bumiputeras have high compliance culture, in which they tend to follow people whom they look up to,” he said.
Nazri Khan said the high-income gap is also the reason behind the poor investing culture among Bumiputeras.
“The income gap between Bumiputeras and the non-Bumiputeras has been doubling every year,” he said.
Nazri Khan said there are various initiatives set by the government under the Eleventh Malaysia Plan on empowering the Bumiputera community.
The initiatives include empowering Bumiputera human capital, increasing Bumiputera effective control and sustainable corporate ownership as well as enlarging the share of Bumiputera wealth ownership.
Others include empowering Bumiputera Economic Community and strengthening delivery effectiveness of Bumiputera-oriented programmes.
Meanwhile, Nazri Khan said Generation-Y has the tendency to invest aggressively.
“The Gen-Y is more interested in investing directly in the stock market and foreign stocks with the likes of Apple, Facebook and Google,” he said.
“PNB could take this opportunity to provide creative products that are better suited to the tastes of Gen-Y,” he added.
Investing in ASNB’s unit trust products is beneficial to everyone. One of its advantage is the ability to generate passive income.
Nazri Khan said investing in ASNB’s unit trust products would be a good way to have passive income — income received on a regular basis, with little work required to maintain it.
Passive income, which is closely related to the concept of unearned income, could be additional income for full-time employees.
Investors only have to invest over a longer period of time and the power of compounding interest will grow their money to generate solid savings.
Therefore, investors need to invest for the long term and not be easily swayed by the market sentiment, which most often is not the true picture.
Nazri Khan said this is why PNB set up some mechanism (reserves in financial accounting) to protect investments from the consequences of unknown losses.
“The consistent returns by PNB every year are explained by these reserves. PNB will consider reducing some amount from the profits during buoyant market to make a significant top-up on the total returns gained during bearish market,” he said.
The public, especially Bumiputera investors, have the ability to invest even more with the presence of institutions such as ASNB.
ASNB also offers facilities such as salary deduction schemes and online banking to make it much easier for people to invest and make investing part of their lifestyle.
Investments in ASNB’s unit trust products can start with as low as RM10 per month.