Mutual Funds are a great investment vehicle and it has been around since the 1920’s but it only gained its popularity after the decline in banking interest rates in the 1990’s. This was when mutual fund companies started to look for new countries, industries and companies that were seeking for investments. Mutual funds are on a high growth around the world and no difference here in Malaysia. Data clearly shows us that in the year 2000 unit trust companies in Malaysia had a Net Asset Value (NAV) of 43.3 Billion. In the year 2006, the NAV of unit trust companies in Malaysia rose to 121.78 Billion. 11 years later, in 2017, the NAV of unit trust companies in Malaysia stands at 381.34 Billion. As you can see in the graph below, the NAV is on the high rise and it will continue to grow.

1. What Are Mutual Funds?
A Guide For Malaysians

2. Mutual Funds are a great investment vehicle and
it has been around since the 1920’s

3. However, it only gained its popularity after the
decline in banking interest rates in the 1990’s

4. This was when mutual fund companies started to look
for new countries, industries and companies that were
seeking for investments.

5. Mutual funds are on a high
growth around the world
and no difference here in
Malaysia.

6. NAV represents the exact or actual units all the unit trust
companies own. So in 2000, the total units made available to the
public are 43.3 Billion Units. In 2006, the units made available to
the public are 121.78 Billion Units and in 2017 (as I write this
article) 381.34 Billion Units are available for the public.

7. What is the single biggest
problem in Mutual Fund
Investments in Malaysia?

8. There are abundant of information on the Mutual Fund
as an investment vehicle, but most Malaysian’s still do
not fully understand this investment vehicle. The lack of
understanding and knowledge about an investment
vehicle, puts an investor at a great risk.

9. Would you invest in something that you are not sure of?
Would you invest because your friend, neighbour,
brother in law invested? Would you put all your faith in
the advice of a unit trust agent?

10. There are countless amount of investment vehicles out
there and each one serves a purpose. Property, Gold,
Crude Oil, Stocks, Bonds, REIT, Mutual Funds and now
newer options are made available via crowd funding.

11. Each of these investments have their entry criteria,
each have a different set of rules, each have their
purpose and as an investor, you need to decide which
investment fits you.

12. Investing in Mutual
Funds

13. Mutual funds is an investment vehicle. It is not the only
investment vehicle. But what makes mutual funds very
attractive to most people, it’s because the entry cost is
much lesser than properties, crude oil and gold. However,
mutual funds have its own costs, fees and certain rules to
play by just like any other investment vehicle.

14. Let us go back in time to the 1980’s. That was the era
where everyone relied on their fixed deposits accounts. In
that era, money deposited in banks earned interests in the
range of 5% to 6% per annum. You may be shocked to
learn that in 1982, the interest paid out was at 9.75% per
annum

15. This was the era where if we had RM10,000 in the bank,
the bank will reward us with RM500 interest per annum.
And in 1982, the banks would have rewarded us with
RM975.

16. In summary, if RM10,000 is invested in 1980 and over the
20 years, the investment would grow to RM29,735.19.
Total interest earned (profits) are RM 19,736.19. That
money is earned without lifting a finger

17. If RM10,000 is invested today and after 20 years, the value
of the investment would grow to RM19,076.04. The profit
stands at RM9076.04 comparing to the 1980’s, where the
profit stood at approximately RM19,000. Almost a
RM10,000 difference.

18. In the 80’s, the word investing was reserved for the rich.
The poor and the middle class had no access to most
investment vehicles, and almost all of them found
investing to be too complicated – best to stick with: Get a
job, then get a part time job, save money in the bank,
retire, continue working.

19. Today the whole world is changing and changes are
happening at a very high speed. The rules of yesterday
wont work today

20. We see phones in toddlers and also in senior citizens,
something that no one would have imagined 20 years ago.
Today is the era of uncertainties.

21. This is the era where most people have more doubts than
ever, would we have a job tomorrow, or would it be
replaced by a mobile app like the taxi drivers. What will
the cost of education be in 10 years? Could you afford
university for your children?

22. Understanding
Mutual Funds

23. Investing in mutual funds for the right reasons, can be very
lucrative. Investing in mutual funds for the wrong reasons, would
make you frustrated and a hole in your pocket.

24. As every game, there are rules. To
win – to ensure you profit from your
investments in Mutual Funds, you
need to understand how it works and
work with a consultant who
can guide, advise and help you focus
on optimizing your investments

25. For investors like yourself, who are reading this blog, wanting
to know more about investing in mutual funds, you seek
knowledge and to understand it. You are the ones would be
benefit immensely from it.