Top Low-Risk Investments in Malaysia

Are you looking to invest your money to keep your growing funds safe from the unpredictable volatility of the markets? Nearing retirement? Or simply want to keep your funds safe? What are the options available to you in Malaysia? In this article we look at the best and safe low-risk investments in Malaysia.

Employees Provident Fund (EPF)

EPF is perhaps the most popular investment vehicle among Malaysians because it is a safe place to park your money and get a return.

Benefits Of Investing In EPF

Here are some of the key benefits of investing in EPF for those who are looking for stable long-term returns with comparatively less risk involved.

• Steady returns: with around 5%-6% annual returns on average, EPF can be a good source of passive income.
• Guaranteed Minimum Dividends: EPF promises a minimum annual dividend of 2.5% for conventional accounts, which is attractive for risk-averse individuals.
• Security: Being run by the government, EPF is backed by the Malaysian government of Malaysia and hence one of the safest investments available.

How to Contribute to EPF

You can contribute to the EPF in two ways:

• Through Employment: If you are employed, both you and your employer contribute a portion of your salary to the EPF automatically.
• Self Contribution: For freelancers or those who just want to add to their savings, the EPF allows contributions of up to RM60,000 a year through the Self Contribution scheme. Those not employed can also contribute through the EPF i-Saraan initiative.

The many options to contribute to your EPF makes it a viable plan for both employed and self-employed people to look to build their retirement fund.

Amanah Saham Bumiputera (ASB) & Amanah Saham Malaysia (ASM)

Managed by Permodalan Nasional Berhad (PNB), ASB and ASM are two unit trust funds that provide Malaysians with a good investment opportunity to grow their wealth at low risk.

Returns on ASB and ASM

6.0 ASB & ASMLTR. ASB is reserved for Bumiputera investors while ASM is open to non-Bumiputera investors. Both funds have been delivering decent returns but in general, ASB will have slightly higher returns for Bumiputera investors. Here’s a table for the returns from the last few years.

These funds don’t have sales charges, unlike many conventional unit trust funds, allowing you to keep more of your returns.

High-Yield Savings Accounts

If you want a super safe investment, a high-yield savings account is a great option. These accounts are easy to open, and offer rates higher than regular savings accounts, letting you earn more on your cash without extra risk.

How to Maximize Returns with High-Yield Savings Accounts

While not as high as that of other investments, the returns on a high-yield savings account are greater than those for a regular savings account. Examples:

Maximise your returns by ensuring that you fit the requirements, like maintain a certain balance or spend a specific amount on your credit card.

Money Market and Cash Management Funds

Simply put, money market and cash management funds are unit trust funds that invest in treasury bills, certificates of deposit. Just take a pick from low risk assets names.

Similarly, these funds offer a safe investment with slightly higher returns compared to fixed deposits, with a ready liquidity option available.

In contrast to fixed deposits, you can pull out your funds anytime with no penalties!

Bonds as Low-Risk Investments

Another alternative is bonds, another low-risk option, which involves lending money to a government or corporation that pays you interest in return. Bonds are usually less risky than stocks, but they still are not without their risks, especially in lower-rated bonds.

Types of Bonds for Low-Risk Investors

For low-risk investors, government bonds are typically the safest investment. Sovereign bonds (issued by the government) tend to be the safest, since they are backed by the government’s credit. Municipal bonds and corporate bonds are also low risk if they are issued by stable, high-credit-rated bodies.

Here’s a look at some popular bond funds you can find as Malaysian investors:

Why should you invest here?

Low-risk investments are ideal for anyone whose:

• Capital preservation: You’re approaching retirement or need to access your funds in the short-term.
• Choose stability: These investments provide predictable returns, which is advantageous if you’re risk-averse or just don’t want to deal with the head-spinning volatility of the stock market.
• Find a way to diversify: “You need low-risk investments in your portfolio to provide stability while you take higher risks with everything else.”

If you need access to your capital quickly, or if you prefer hi-liquidity options for your investments, low-risk investments such as EPF, ASB, high-yield savings accounts, money market funds as well as bonds are among the best investments in Malaysia.

By mixing and matching low-risk investments, you can grow your money on the sly, avoiding much of the ups and downs of the market. But if you need ready access to cash, or if you’d like to have a little fun with your investments, you might like the instant credit offered by AmanahKredit.

FAQ

How does the EPF work?

Guaranteed deferred funds of life insurance companies. EPF (Employees Provident) Fund, where the employees and employers are required to contribute a certain percentage of their salary with a guaranteed minimum return of 2.5 percent per annum, and with possibly higher returns based on the type of account.

What are the benefits of investing in ASB or ASM?

What is ASB and ASM? They are government-endorsed unit trust funds with pretty attractive returns and no sales charges. One of them is for Bumiputeras and the other one is open to all Malaysians. Definitely good steady returns with little risk.

Are bonds a safe investment?

Bonds or government of Malaysia bonds are safe investments no doubt. In essence they pay out a fixed return every 6 months for a period of time. Nothing can be more low risk than this, although the risk increases depending on who issues the bonds!

What is the difference between low-risk and no-risk investments?

Low-risk investments still have a minimal chance of losing your capital, but the chance is minimal, as with government bonds or EPF. No-risk investments are, in general, those where your principal is guaranteed, such as a fixed deposit or extra high-yielding savings account with deposit insurance.