TheInvestor’sBuffet

Securities Industry Development Corporation3, Persiaran Bukit Kiara, 50490 Kuala Lumpur

Tel : 03 6204 8889 Fax : 03 6204 8298www.min.com.my

Investor’s

Buffet

Many people know how to earn money but not how to build on it. It is often said that the rich get richer while the poor get poorer. The reason is because the rich invest their money, making it grow, while the poor consume money, which means spending it away.

Contrary to popular belief, investment is not only for the rich. In fact, it can be very crucial for an average wage earner who has limited income and financial commitments, but wants to achieve his goals in life. Such goals include buying a house, sending his children to university in 10 years time and retiring comfortably in 20 years time.

In order to achieve your goals within a certain timeframe, saving money alone may not be enough. You need to invest. But with so many investment products out there, you might be overwhelmed by the sheer number of choices! It is almost like standing in front of a huge buffet spread! You have so many choices of entrées, sandwiches, finger food, main meals and desserts that you barely know where to start.

So, in order to be able to enjoy your whole dining experience, or in this case, your investing experience, you should wisely survey the opportunities that are served to you before making an informed choice of investments. At the end of this leaflet, you will be able to identify the steps you should take before making a wise investment decision and embarking on an investing adventure.

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ABOUT US

SECURITIES INDUSTRY DEVELOPMENT CORPORATION (SIDC), the leading capital markets education, training and information resource provider in ASEAN, is the training and development arm of the Securities Commission, Malaysia (SC). It was established in 1994 and incorporated in 2007.

SIDC has been delivering professional excellence formore than 15 years. We organise training programmes for Malaysian and foreign regulators, company directors and market professionals as well as conduct public investor education seminars on wise investing and investors’ rights.

We develop and facilitate training both locally and internationally through a range of programmes and activities, including conferences, seminars, and workshops. In collaboration with the SC, we develop examination questions and modules and conduct licensing examinations as part of the licensing regime for Malaysian capital market intermediaries.

For more information, visitwww.sidc.com.my and www.min.com.my.

This financial literacy programme is supported byCapital Market Development Fund (CMDF).

Copyright strictly reserved © SECURITIES INDUSTRY DEVELOPMENT CORPORATION

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The following would be the buffet choices of a wise investor :

Just as how you would glance through the buffet table to know what is being served before you decide on your first dish, you should do the same before you make your investment choice. Know what investment products are on offer.

The Malaysian capital market offersa variety of the following investment products :

i. Stocks and shares (equities)

ii. Unit trusts

iii. Bonds

iv. Warrants

v. Derivatives i.e. futures and options

Apart from that, there are also non-capital market related investment assets of bank savings, property, insurance and collectibles.

You should only make an investment decision when you have fully understood the product and are totally satisfied that it is suitablefor you. Remember, your investment products must match your financial situation, investment objectives and risk tolerance.

Starters ordesserts?

A

Buffet dining is offered in various locations ranging from your posh 5-star hotel to your neighbourhood seafood restaurant. How do you decide where to go?

When it comes to investing, you would be faced with the same situation of choice-making. Do you invest in unit trusts or just go with stocks?

Where toeat?

C

There are different types of eaters out there queueing up for the buffet spread. There would be those who would just pile their plates with the most unique looking delicacies and there are those who would stick to the usual rice and fruits, not wanting to risk their taste buds by trying anything different.

This is similar to investing. A wise investor should choose one or more of the above investment assets not just to suit their goals and amount of capital available, but also to match his own risk tolerance.

It is important for you to discover whether you are a “risk-taker” or “risk-adverse” type of person. This is essential in planning your investment plan to determine if you are to pursue an aggressive, moderate or conservative investment approach. In short, know your appetite before you enjoy the buffet spread. Just as how you would manage your stomach to fill up on your favourite dishes, investment includes a whole lot of financial planning and management too. This includes a worthy consideration of capital, risk, possible profit (or loss) and etc. For example, if you cannot deal with high risks, you might want to exclude derivatives in your spread as it is a high risk investment.

Adventurouseater orconservativenibbler?

B

1. Read the reviewsDo not book a table until you have asked around and read the reviews on how good the buffet spread is. You would not want to end up disappointed with the array.

The same goes with investments. Do not put in your money until you have read and understood all relevant information regarding the investment.

For stocks, you must analyze the company’s annual reports, prospectus and other relevant statements. Be sceptical of rumours and hot tips from friends, especially if you cannot explain their choice by rational reason.

For unit trusts, you should always read the fund’s prospectus and annual report. Scrutinize the company’s fund performance and investor’s risk profile over time, as well as the management of the company before you make your decision.

2. Buffer your belly!If you are going for a late buffet and you are already very hungry, be sure to eat something light to act as a hunger buffer so that you do not end up getting a gastric attack before you are even able to enjoy the buffet. This way, even if you decide to eat elsewhere after realizing that the spread offered is not that great, you would not be at the point of starvation before you move on to your next dining venue. Similarly, before you embark on an investment programme it is advisable for you to have a cash buffer of between six to nine months’ expenses. This is to ensure that you have sufficient funds in reserve in case of financial difficulties.

Whicheverchoice youmake, youshould first

do thefollowing :

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3. Wait for moreThere are people who would not

mind queueing up for long periods of time for a particular dish in a buffet line. Similarly with investments, you must have the sustaining power to hold your investments for longer periods. It is common for short-term irregularities to occur in the course of your investments, but bear in mind they will usually even out in the long run.

4. A little bit of everythingTry a little bit of everything; do not

restrict yourself to one dish only.

In investments, the same concept applies. Do not put all your eggs in one basket. You should not bank in all of your investments in just one product. For example, if it is equities, diversify across different companies and sectors; if it is unit trusts, invest in several types of funds instead of just one.

This is the best way to minimize your risk because the loss made by some investments can be cushioned by the gains made in other investments.

risk

Lastly, investing is something thatcan give you great satisfaction,

just as much as (perhaps even more!)eating a wonderful buffet spread would.

However, a wise investor will alwayspractise the above to ensure they are

well-informed and protected.

5. Feel free to change your mindSometimes your favourite cal buffet might not be up to your expectations. If that happens, feel free to go to a different restaurant that can satisfy your taste buds.

With investments, you should not be afraid to swap one investment for another if the investment product is not suitable with your objective or if it does not give the expected returns. Review and monitor your investments regularly to ensure that they are still relevant to your financial goals. If there is a need to restructure your investments, then make your switch!

6. Beware of cheap promotionsBeware of cheap buffet promotions that sound too good to be true. For example, if you are paying RM10, do not expect a 5-star hotel buffet spread served.

With investments, there are many out there promising quick profits or sky-high returns. Remember, the higher the gain on investments, the higher the risk involved!

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5 Have a cash buffer of six to nine months’ expenses before you embark on an investment programme.

6 Minimize your risk by diversifying your investments across different companies and sectors.

7 Review and monitor your investments regularly to ensure that they are still relevant to your financial goals.

8 Be wary of companies that guarantee sky high profits or promise high returns with no risk.

The Wise Investor’s

Recipe for Success1 Know what investment products are out on offer. The Malaysian capital market offers a variety of investment products such as stocks and shares, unit trusts, bonds, warrants and derivatives i.e. futures and options.

2 Identify your risk tolerance level.

3 Read and understand all relevant information with regards to the investment. Get as much information as possible from reliable resources. Don’t rely on tips and rumours.

4 Investment is for medium to long term. Hold on to your investments for longer periods of time.

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