Short answer: I don’t know. 

Why? 

This is because I find its answers are not as simple as the question asked above. I don’t think it is a responsible act to say, ‘You should be investing into stocks or unit trust or real estate … etc’ as each of us are uniquely different and thus, will invest very differently from one another. 

By asking the question above, I believe that you have a strong desire to find out how best to grow your wealth but you have no clue, no game, and no plan. This is because if you have a game plan crafted out, you will have a clearer direction as to how best to invest your RM 200,000 to attain your financial aspirations. 

So, the answer lies in your ‘Investment Game Plan’. 

But, yet again, how do you craft one if you have no clue what it looks like. Here, I’ll share 5 key factors to consider beforehand that will influence how you could be investing your RM 200,000. They are as follows: 


1. Age 

Let’s say, we have two investors: John and Jesse. 

John is 30 years old and Jesse is 60 years old. Both of them reside in Malaysia. 

John has the choice to invest in a property priced RM 800,000 (25% Rule) for he is able to obtain a 35-Year mortgage worth RM 720,000 to finance the property.
On the other hand, Jesse could only obtain a maximum loan tenure of ten years as the maximum loan tenure given is up till 70 years old. 

As such, John’s mortgage instalment is RM 2,976 a month while Jesse’s monthly mortgage instalment is RM 7,120, assuming their interest rate is 3.5% per year. 

It is a difference of RM 4,144 a month. 

So, it is more affordable for John to invest in real estate as compared to Jesse as John is younger than Jesse. 


2. Income Levels

Let’s continue on with John and Jesse. 

John earns RM 10,000 per month while Jesse is a retiree who relies on interests from FDs and dividends from EPF for income. In this case, I will say John has the option to be more adventurous with his investment portfolio than Jesse as he is able to recover back his RM 200,000 in 20 months if he loses it due to a mistake in investing. 

For Jesse, it may be better for him to focus on preserving his RM 200,000 for he may not have the capacity to earn the money if he loses it. 

With that being said, I’m not advocating John or anyone to be aggressive and to be reckless when investing money. Adventurous doesn’t mean stupidity. 

Here, the word ‘Adventurous’ refers to one having the options to invest in many other asset classes such as businesses and real estate that would catapult one’s wealth to the next level but they involve taking on risks, debt, time, effort … etc to make them successful. As a matter of fact, this leads us to our next point: 


3. Personality 

Here are a couple of questions: 


Are you by nature an enterprising person? 

Do you enjoy setting up businesses, creating products, or working with people? 

Do you prefer to have control and ‘a say’ over your investments? 

Or, do you prefer to manage your investment portfolio passively? 


As you can see, different people would have different answers to the above and thus, will invest differently. For instance, if you are enterprising, most likely, you would look into starting an enterprise. If you enjoy working with people, maybe you will rope in your friends to set up your next business or work on your brand new million-dollar real estate deal. If you wish to have a say in your investment, you may invest in a company that has great potential for growth and request to have directorship or a controlling stake in the company. 

The above are examples of people who are active investors. 

But, there are people who prefer to be passive investors. For instance, you may build a stock portfolio where you buy and accumulate shares of businesses that are highly profitable. You rely on the directors and its management team of the businesses to continue to grow and expand your wealth for you’ve relinquished control over your money and your say to these businesses (stocks) and you find it okay to do so for regular dividend income and compounded wealth. 

So, who are you as an investor? Are you an active or a passive investor or both? 

Well, if you ask me, I can be both. For instance, I enjoy creating online products with KCLau to make business income. In this sense, I’m an active investor. Then, I enjoy hunting for real estate deals personally but would prefer to leave behind the renovation and tenancy-related stuff to my property manager. In this sense, I’m partially active and passive. Also, I enjoy reading annual reports to find nice dividend stocks and would love to buy them if the management teams are solid and trustworthy. In this sense, I’m a passive investor. 

So, I have a good mix between the two. 

Not everyone is created the same. You have to understand your personality and invest accordingly. 


4. Returns 

Here’s my question to you: ‘What do you invest for?’ 

If your answer is ‘to make money la, abuden’, perhaps, it is helpful for you to do some study and soul searching. 

In general, ‘to make money’ for most people refers to having capital gains or an amazing amount of profits in a short period of time. Inevitably, this thinking has led many people into stock trading, forex trading, option trading, bitcoins … etc to make quick bucks. Regrettably, most made losses and were left confused and distraught from their experiences. 

To be fair, most don’t know what they have gotten themselves into. 

In addition to capital gains, there are a lot more objectives as to why one would invest his or her monies. They include: 


a. Passive Income (Rent, Dividends, Interests, Royalties … etc) 

b. Hedge against a Depreciation of RM against other major currencies.

c. Phantom Income (Financial Benefits via tax, debt, and entity advantages)


Usually, for savvy investors, capital gains are often regarded as a bonus, an icing on a cake. It is not the entree of a full course meal. Thus, before you make your next investment, ask yourself if the investment is able to offer you the following types of returns as stated above, including capital gains. 


5. Risk 

Risk is a big word and there are many angles to approach this. 

Here, I’ll focus on the view where risk comes from ‘not being knowledgeable on an investment’. 

In light of this, if you ask me, ‘Is it a good time to invest in Airasia?’ and you lack the knowledge of how many planes it has, how much it made / lost for the past five or ten years, its future growth plans … etc, then I would say, ‘You are a risky investor because you don’t know what you are doing.’ 

It is the same for real estate and businesses. If you are looking to buy a piece of property in Subang Jaya and you have no knowledge about the property and its locality, then, I would view you as a risky investor. 

So, it is not about what type of investment. But rather, it is the investor. Do you have the right mindset and investment skills to thrive in that asset class? Here, I would reckon that if you don’t have, it is best to refrain from investing into it till you acquire the necessary set of skills to be good at it. 

In other words, the more knowledgeable you are, the lesser the risk and as well as the more returns you will reap from the investments. 


Conclusion: 

So, how should you invest your RM 200,000? 

My answer is simple. It is to understand yourself, who you are, what you intend to achieve in life, how much returns you are expecting and how knowledgeable you are in that investment. 

If you don’t have the above sorted out beforehand, most likely, you will forever be asking, ‘How should you invest your money?’ and thus, leading you to chase the wind when investing all of the time. This is not helpful in building long-term wealth sustainably as you don’t have an endgame in mind before investing. 

Moral of the Story: Have a Game Plan before Investing. Cheers!


Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 450+ Financial Articles featured in KCLau.com in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with KCLau.com. Co-Founded DividendVault.com, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

    1 Response to "I Have RM 200,000 to Invest. Where Should I Invest My Money?"

    • kenny-learns-to-write

      thanks Ian Tai

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