Personal finance is the process of planning and managing personal financial activities such as income generation, spending, saving, budgeting, investing, and protection.
The main goal of personal finance is to meet personal financial goals – short-term or long-term, retirement plans, or other saving goals.
Thus, to create a financial plan, it is important to differentiate between good and bad monetary decisions.
Steel Investment - Gold
Cryptocurrency Investment
Stock Trading Investment
Real Estate Investment
Fixed Deposit
5 Types of Investments Opportunity
When talking about personal finance, investments are one of the best ways to reach financial freedom.
Do not put all eggs in one basket - meaning do not invest all of your resources into a single thing because you might lose everything. Instead, by having several investments, you may evaluate which investments are better or suits you.
Check out the 5 types of investments that are widely used by most individuals to increase savings and maximize their return of investment.
1.Steel Investment - Gold
If you decide to buy physical gold, you can consider gold bars or gold coins.
Gold bars are an efficient way to invest substantially - it is bigger and hence more expensive.
Gold coins are smaller, convenient and less valuable - need to liquidate some of your investments.
Pros of Steel (Gold/Silver) Investment:
Holds value
You can wear gold jewellery and start coin collections
You can also temporarily pawn physical gold to use as emergency money, and buy it back when you can
Cons of Steel (Gold/Silver) Investment:
A bit dangerous as physical gold can be stolen
Bulky and requires storage space
2.Cryptocurrency Investment
In 2021, the Securities Commission (SC) approved Bitcoin Cash (BCH) as a digital asset in Malaysia. *Take Note: This type of investment is the riskiest of all.
Pros of Cryptocurrency Investment:
High potential returns
Without the need for third-party authorisation, transfers are made quickly over the world
Cons of Cryptocurrency Investment:
Very high volatility and potential overall loss risk
Losses can occur through bitcoin theft or if your password is lost
3.Stock Trading Investment
This type of investment only needs basic investment knowledge such as “buy low and sell high.”
Pros of Stock Trading:
You will be invited to AGMs and will be given lovely door gifts if you are a shareholder
You may sell your stock at any time as long as the market is still open
Cons of Stock Trading:
If a company does poorly, investors will sell. You could lose your entire investment
You must do research in advance to determine how profitable of a company before you buy its stock
Unpredictable, stock prices rise and fall
4.Real Estate Investment
Here are 2 ways to generate income - Flipping or keeping.
Flipping - Buy and Sell
Keeping - Buy and Rent
Pros of Property Investment
Less volatility – Property can be less volatile than shares or other investments
Income – Steady income every month if the property is tenanted
Capital growth – When property increases in value, you will benefit from a capital gain when you sell
Cons of Property Investment
Cost – Rental income may not cover your mortgage payments and other expenses such as quit rent, assessment tax, utility bills, and more
Loss of value – If the property value goes down you could end up owing more than the property is worth
5.Fixed Deposit
Fixed deposit, or commonly referred to as “FD” in Malaysia, is a type of bank savings or investment account that promises the investor a fixed rate of interest. In return, the investor agrees not to withdraw or access his / her funds for a fixed period of time.
Pros of Fixed Deposit
Minimum risk - Guaranteed returns and flexible tenure
Interest is only paid at the very end of the investment period
Safest investment option with steady return and not suffer any loss
Cons of Fixed Deposit
Not be able to withdraw the money for a fixed period of time
Very low interest, but it depends on your amount too
Personal Finance Strategies
Devise a budget
Firstly, you have to devise a budget. This is to avoid you spending all your cash in one time and risk losing them. When you create a budget, you get to save your money and at the same time plan for long-term goals.
Prepare emergency funds
Next, in case anything happens. you need to keep emergency cash funds on the side. For example, medical bills, car repairs, house renovation, day-to-day expenses, and others. If anything happens, you still have a back-up fund to settle it down. The ideal rule of emergency funds is 6 months’ worth of living expenses.
Limit liabilities/debt
This is a key factor to ensure that your personal finance is still within bounds. Several individuals fall prey when it comes to spending. Too much shopping and high debt.
Monitor your credit score
A credit score is basically a number the lenders know about a person’s track record regarding payment ability. By knowing the credit scores, lenders decide if the person is fine enough to be provided with a new loan or a credit card.
Take it easy and relax
Lastly, take it easy and relax. Remember to not overspend and keep aside your cash for emergencies beforehand!
Looking for investment in real estate? From commercial properties to residential properties, we can suggest you the perfect property investment.
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