How my interest in investment began
I’ve been putting off this type of content for months. Wasn’t sure whether I’m ready to start. Nonetheless, we need to start somewhere after all. 😄
Investment is something that I hold close to my heart. Ever since I read Robert Kiyosaki’s Rich Dad, Poor Dad at the tender age of 14, it is something I’ve been reading up a lot on. Heck, growing up I was constantly waiting to read his latest book – as well as the latest Harry Potter. When I went to the United States in November 2003, I hung out at Barnes & Noble. One which I bought was The Motley Fool Investment Guide For Teens.
Upon returning to Malaysia, I convinced my father to help me open up an account at OSK Investment. I never used this account to trade. Despite that, I constantly receive their emails. Last year, was when things changed for me. I decided to dabble in the stock market.
Paper Investment Portfolio as of 3 July
As you read on, I would like to emphasise that I do not represent these brands. I do not act as their agent. In addition to that, my approach is based on my personal evaluation and assessment. You may need a different approach to your investment. It is best for you to speak to a qualified professional financial advisor or financial planner. My experience does not constitute professional advice; you will need to do your own due diligence, studies, and evaluation.
This morning I decided to reconcile my paper investment. I’ve been figuring out the best way to track the performance. Admittedly, I wasn’t as diligent. The last time I updated the spreadsheet was in November 2022.
Nonetheless, what I’m glad to share is that my overall portfolio – which included my EPF contributions – surpassed the RM100,000 milestone. This milestone is an arbitrary round figure which seemed nice. As you may see from the pie chart, 87.3% are kept in the Employees Provident Fund.
Overview of Investments
For the purpose of my paper investment spreadsheet, I have five categories of investments:
- Unit trust
- Retirement
- Equity
- Real Estate Investment Trust (REIT)
- Debt Investment
Unit Trust
Per the Federation of Investment Managers Malaysia (FIMM), unit trusts are collective investments where investors sharing similar investment objectives pool their funds into a portfolio of securities or other assets. For technical purposes per the definition given by FIMM, categories 1, 2, and 4 above are essentially unit trusts. These are managed by various fund houses: Amanah Saham Nasional Berhad (ASNB), Public Mutual, and even the EPF.
Yes, while strictly speaking, the EPF is a statutory body with a mandatory contribution for employees, it manages the contributions by investing in various vehicles to maximise returns for contributors. EPF invests in various asset classes spanning equity (stocks including blue chips), government bonds, and property (think Kwasa Damansara, Bukit Bintang City Centre (BBCC), and the Battersea Power Station among others). It is governed by the Employees Provident Fund Act 1991.
Unit trust fund houses, on the other hand, are private entities that establish unit trusts through trust deeds. That is why you may see one fund house with multiple funds. Take, for example, Public Mutual. Based on their website, they manage 166 unit trust funds, 5 wholesale funds, and 9 private retirement scheme (PRS) funds with a total Nett Asset Value (NAV) of RM95 billion. Among their funds are the Public Global Select Fund, Public Ittikal Fund, and Public Ittikal Sequel Fund. With regard to legislation, unit trusts fall under the purview of the Capital Market and Services Act 2007.
Public Mutual is where I park most of my unit trust investments. Specifically:
- Public Strategic SmallCap Fund (PSSCF);
- Public e-Cash Deposit Fund – Class A (PeCDF); and
- Public e-Islamic Cash Deposit – Class A (PeICDF).
I also have an account with Amanah Saham Bumiputera (ASB) and Amanah Saham Nasional (ASN). Thanks to Touch ‘n Go eWallet mechanics, I also have some small, transactional holdings in its GO+.
Retirement
For retirement, these are schemes that are locked until I am 55 years old. One of them was briefly mentioned above: the Employees Provident Fund. The other scheme is the Private Retirement Scheme (PRS) under the administration of the Private Pension Administrator (PPA) and handled by participating fund houses.
EPF contributions are mandatory. An employer does not have the right to withhold or refuse payment per s41, Employees Provident Fund Act 1991. Because of its mandatory nature, I often find it amusing when employers list EPF as ‘benefits’. In fact, refusal to pay contributions owed to employees results will, upon conviction, face imprisonment of up to 3 years or be slapped with a fine of up to RM10,000 or both (see s 41(2), Employees Provident Fund Act 1991).
Conversely, the PPA is the central administrator for PRS. It is approved under s 139C, Capital Markets and Services Act 2007, “to perform the function of record keeping, administration, and customer service for members and contributors in relation to contributions made in respect of a private retirement scheme”. Unlike the EPF, investing is not done by the PPA. Instead, it is done through approved fund houses.
Despite being managed by private fund houses, a PRS contributor cannot withdraw their contributions unless they attain the age of 55 years old. Pre-retirement withdrawals would result in an 8% tax penalty. PRS is designed to force employees to expand their retirement investments. Unlike the EPF, PRS contributions are voluntary. Both employees and employers may contribute to the employee’s PRS. Employers that do are eligible for a tax deduction beyond the EPF statutory rate.
Both PRS and EPF contributions are protected from creditors in insolvency proceedings. This added layer of security allows for better retirement planning for the contributor.
Let’s move on to my portfolio. As I’ve mentioned earlier, 87.3% of my investments are parked with the EPF. I have also invested in the PRS funds provided by Public Mutual. These are:
- PRS Strategic Equity Fund (PRS-SEQF)
- PRS Equity Fund (PRS-EQF)
Equity
Equity is just my way of saying “stock market investment”. There are two ways I make these investments:
- Nominee Account: I purchase shares through a broker or another party. Rather than having the share registered in my name, it is registered under the nominee’s name. Nonetheless, I still enjoy the dividend payouts (albeit a slight delay) and am able to vote as a shareholder after making a request to my broker.
- Direct Account: Direct accounts are where shares are purchased from Bursa Malaysia under my name. Dividend payment goes directly into my bank account upon remittance. When it comes to the AGM invitation and annual report, the materials will be addressed to me directly.
The nominee accounts I have are:
- Rakuten Trade: https://www.rakutentrade.my/
- Maybank Trade: Accessed via your Maybank2u
- Public Bank’s eTrade: Accessed via your Public Bank Internet Banking
On the other hand, my direct accounts are provided by:
- CGS-CIMB iTrade: https://itradecimb.com.my/
- Kenanga Investment: https://www.kentrade.com.my/
- HLe Broking: https://www.hlebroking.com/v3/default.aspx
- RHB Tradesmart: https://www.rhbtradesmart.com/web/index.html
Despite having multiple accounts, my investments are rather limited. When I went to InvestSmart organised by the Securities Commission last year, I took the opportunity to open up and activate my direct brokerage accounts.
From my equity holdings, here is the portfolio distribution:
My shares holding consists of:
- Cahya Mata Sarawak Berhad (CMSB) held via Rakuten Trade;
- IBRACO Berhad (IBRACO) held via Rakuten Trade;
- Kenanga Investment Bank Berhad (KENANGA) held via Rakuten Trade;
- Paramount Corporation Berhad (PARAMON);
- Bina Puri Holdings Bhd (BPURI);
- Petra Energy Berhad (PENERGY); and
- Sunway Bhd (SUNWAY) held via Maybank Nominees.
Real Estate Investment Trust (REITs)
REITs are actually pretty common. A number of properties throughout the Klang Valley are owned by REITs. In principle, REITs are essentially unit trusts. Unit trusts – at least how laypersons perceive it – invest in local or overseas share markets. REITs, on the other hand, invest in real estate. One may invest in REITs through their brokerage accounts.
Here are some well-known properties and their REITs:
- Menara Axis, Petaling Jaya (Axis REIT)
- Quattro West, Petaling Jaya (Axis REIT)
- Wisma Academy, Petaling Jaya (Axis REIT)
- Wisma Kemajuan, Petaling Jaya (Axis REIT)
- Holiday Villa, Langkawi (AmanahRaya REIT)
- SEGi University, Kota Damansara (AmanahRaya REIT)
- HELP University, Jalan Semantan, Kuala Lumpur (AmanahRaya REIT)
- SEGi College, Subang Jaya (AmanahRaya REIT)
- Gurney Plaza, Penang (CapitaLand Malaysia Trust)
- Queensbay Mall, Penang (CapitaLand Malaysia Trust)
- Sungei Wang Plaza (CapitaLand Malaysia Trust)
- East Coast Mall, Kuantan (CapitaLand Malaysia Trust)
- Vista Tower, The Intermark (AmanahRaya REIT)
- Petronas Twin Towers (KLCC REIT)
- Menara 3 PETRONAS (KLCC REIT)
- Menara ExxonMobil (KLCC REIT)
- Mid Valley Megamall (IGB REIT)
- The Gardens Mall (IGB REIT)
- Pavilion Kuala Lumpur (Pavilion REIT)
- Pavilion Elite (Pavilion REIT)
- Intermark Mall (Pavilion REIT)
- Da Men Mall, Subang Jaya (Pavilion REIT)
- Sunway Pyramid (Sunway REIT)
- Menara Sunway, Kuala Lumpur (Sunway REIT)
- Sunway Putra Hotel (Sunway REIT)
- Sunway Putra Tower (Sunway REIT)
For me, my exposure to REITs is quite limited. It is confined to the Amanah Hartanah Bumiputera (AHB) which is administered by Permodalan Hartanah Bumiputera (PHB). Transactions involving AHB, unfortunately, can only be done through Maybank.
Debt Investment
The final category is debt investment via Funding Societies. This is a different asset class compared to the others I’ve shared above. Rather than investing in equity (or stocks) directly or indirectly via unit trusts, I invest in financing notes (i.e., debt). This means I do not hold any equity in these firms that took out the financing from Funding Societies.
Funding Societies is Southeast Asia’s largest SME digital finance platform which offers short-term financing to SMEs in Malaysia, Singapore, Indonesia, Thailand, and Vietnam. These financing are made through investments by both retail and institutional investors. Following the launch of its Islamic financing facilities, Funding Societies offers both conventional and Shariah-compliant investment notes.
Here are snapshots which provide an overview of my investment on the platform.
Investing on Funding Societies was a fairly recent venture. I opened an account when I started as the Senior Executive, Public Relations & Content, at the company. My first deposits were done on 19 April 2022 (RM100) and 28 April 2022 (RM200). This was the thinking: if you want me to promote my product – albeit via PR and Content – I must know what I am promoting. Thus, my move to invest through the platform. I must add a disclaimer: as of 16 June, I ceased to be an employee of Funding Societies. Therefore, I do not speak for the company nor the brand. I am but an individual investor.
I currently have RM1,400 deposited in the platform. This has been invested and re-invested in financing notes cumulatively to RM7,000.00 across 37 different notes.
Since I started investing on the platform, I received RM116 in nett income. Based on the platform’s calculation, my annualised portfolio performance is 10.87% p.a..
As an investor, we have several options to invest in:
You may choose to invest in Business Term Financing, either Accounts Receivable or Accounts Payable Financing, or Guaranteed Investment Notes. Personally, I am a fan of investing in Accounts Receivable Financing Notes and Accounts Payable Financing Notes. These are really short term notes (think 30-, 60-, 90-day investments). Normally, I don’t invest more than RM200 in a note.
In selecting the notes, I mostly check the factsheet provided in the system. It would tell me how much facilities the SME has taken out with Funding Societies, the credit score, and their financing record. My approach could be quite tedious. Take the screenshot above as an example: not many will have the discipline or patience to shift to almost 80 factsheets!
If you are interested to explore the platform, I’d like to invite you to sign up using my referral link: http://promo.fundingsocieties.com.my/referral-program/?r=l1a87ifm.
Final Word
As I wrap this entry, I would like to say that my investment journey is but a short one. I’ve made mistakes and gains. On the top of my head, my approach to investment are:
- Buy and hold for returns, not appreciation;
- Conduct as much due diligence as possible – financial, marketing, press coverage, news report etc;
This is a first for me. I look forward to updating you on my portfolio performance soon. Perhaps at the start of Q4 2023.
