Entrepreneur Growth Hub Blog

New to investing and looking for a source of passive income? The best time to start is always now, as the longer you wait the further you'll be from your retirement goals. Contrary to popular belief, you don't need to break the bank in order to get started, you can begin with as little as 𝐑𝐌𝟏𝟎𝟎.

Whilst high-interest savings accounts and EPFs are the common "safe and easy" options, they rarely generate yields high enough to substantially overtake rising inflation rates. On the other hand, getting directly into options, commodities or the property/real estate markets is very cash intensive and may not be suitable for everyone.

So let's take a quick look at 7 alternative investments that don't require a large capital injection:

1.𝐁𝐥𝐮𝐞 𝐂𝐡𝐢𝐩 𝐒𝐭𝐨𝐜𝐤𝐬

Stock is essentially all shares into which ownership of a company is divided, and there are over 40,000 publicly listed companies in the world that allow you to trade their stocks on various exchanges. A blue chip is a globally recognised, well-established, and financially sound company that has historically proven to weather economic downturns and operate profitably in the face of adverse conditions. You can profit from stock ownership either via the dividend paid or from capital appreciation.

2.𝐁𝐨𝐧𝐝𝐬

Bonds are a form of debt security (like an official IOU) issued by companies or governments who want to raise money. When you buy a bond, you’re lending money to the issuer. In return, the issuer promises to pay a predetermined interest rate at specific intervals (e.g. twice a year) plus the principal at the maturity date. However, the cost of buying a bond directly can be very high (min. RM200k), so you're better off buying into a bond ETF or unit trust.

3.𝐔𝐧𝐢𝐭 𝐓𝐫𝐮𝐬𝐭𝐬

Unit trusts are a form of collective investment. They allow investors with similar investment goals to pool their funds to be invested in a portfolio of securities or other assets. A professional fund manager then invests the pooled funds in a portfolio which may include cash, bonds and deposits, shares, properties and/or commodities. In exchange for for having your portfolio actively managed, unit trusts tend to have higher fees than other types of investments.

4.𝐄𝐓𝐅𝐬

An exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity, currency or other asset, but can be bought or sold on a stock exchange the same way as regular stock. An ETF is attractive to investors who like to hedge their bets by investing in diversified assets (so long as it's in the same asset class). It is different to a unit trust because it's passively managed (no fund manager), more liquid and tends to have lower fees.

5.𝐌𝐮𝐭𝐮𝐚𝐥 𝐅𝐮𝐧𝐝𝐬

Mutual funds are very similar to unit trusts, the key difference being that profits generated from mutual funds can be reinvested to obtain additional shares whereas profits gained from a unit trust are passed on directly to the investor.

6.𝐑𝐄𝐈𝐓𝐬

A real estate investment trust (REIT) is a firm that owns, operates or finances income-generating real estate. Similar to mutual funds, REITs pool the capital of numerous investors in order to purchase and manage properties. This makes it possible for individual investors to earn dividends from real estate investments without having to buy, handle or finance whole properties by themselves. REITs are generally divided into equity, mortgage or a hybrid type.

7.𝐂𝐫𝐨𝐰𝐝𝐟𝐮𝐧𝐝𝐢𝐧𝐠

Crowdfunding is the collection of small capital from a large number of individuals to finance a new business venture by utilising the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together beyond the traditional circle. Crowdfunding is generally divided into 2 types, equity and debt, and they basically work the same way as stocks and bonds respectively.

𝐃𝐢𝐬𝐜𝐥𝐚𝐢𝐦𝐞𝐫 - this is NOT financial advice. For any investment decisions, you are strongly encouraged to conduct your own comprehensive research in order to determine what strategy works best for you. Every person's financial goals, investment approach and risk appetite is different. Likewise, all financial institutions and brokers have their own fee structures and trading methods, so please do your homework before you decide to commit.

Stay tuned next week for a more detailed breakdown on each of the alternative investments discussed above.

𝐒𝐭𝐚𝐲 𝐰𝐨𝐤𝐞 𝐬𝐦𝐚𝐫𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬!