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How to start investing

Investing may help you grow your money to get the future you've always dreamed of.

But all investment comes with risk. It's important for you to understand the risk involved before investing.

This simple guide explores key points on how to invest. It also provides useful tips for beginner investors to keep in mind.

What is investing?

How your investments can make money

Is investing right for you?

Takeaway tips for beginner investors

What is investing?

Investing is when you allocate capital or resources, expecting to generate income or see an appreciation in value at some point in the future.

This has the potential to give you a better return (called return on investment, or ROI) than a savings account in the long run. However, there are no absolute guarantees because all investments involve risk.

Types of investments include gold, bonds, shares, comics and cryptocurrencies.

How your investments can make money

There are 2 main ways you can make money from investing:

  1. Growth
    With growth (also known as capital gains), you get back more than the amount you invested. For example, you buy shares (or units in a fund) at one price, and sell them later for a higher price.
  2. Income
    An investment can provide a return through dividend payments or regular interest payments.

Thinking about how to invest?

By choosing shares or funds that pay you dividends, or bonds that pay interest, you can receive regular payments to boost your existing income or pension.

Learn more: Understanding interest

Investing may help reduce the impact of inflation and protect your savings for the future.

Is investing right for you?

Now that you know how investors can make money from investing, start asking yourself a few questions.

What's my current financial position?

Before you decide to invest, you should take into account the outstanding debt, such as credit cards and loans, and the priority to settle these debts.

It's important to set aside an emergency savings fund that's worth 3-6 months of your living costs to face the unexpected. 

You should also consider how much liquidity, or cash on hand, you want to hold at any one time.

What are my goals?

It's better to focus on savings for shorter-term goals, like your wedding, buying a car or taking a holiday.

If you're setting aside money for something at least 5 years away – such as a child's education or retirement – or you aim to have more flexibility later in life, then investing may be the right path for you.

How do I feel about risk?

All investments involve risk. There's no guarantee of high return or high value as there are many uncertainties on investment.

Perform an assessment on your risk profile to help you determine the types of investment products that suit your risk appetite.

How much can I set aside to start investing?

You can start investing with any small amount you may have left at the end of the month. 

There are ways to get started. For instance, you can self-contribute to your Employees Provident Fund (EPF) savings by utilising the excess money you have each month. This is a great starting point to think about how you want to allocate your extra money.

You can also start doing your own investing with as little as RM100 through HSBC EZInvest. Starting small and investing in a fund could be a good way to dip your toes in the water. Then you can watch what happens to your investment over a period of time – and increase the level of risk you'd be willing to take on later, if you want to.

Start investing with HSBC EZInvest

Invest in unit trusts from a little as RM100 with EZInvest on your mobile.

If you're new to HSBC, you can open an account in minutes. New to investing with us? Open an investment account now to begin.

Takeaway tips for beginner investors

Keep these handy tips in mind as you start your investment journey.

  1. Consider a longer-term approach
    By investing longer term, you'll weather any dips in the market and give your money time to grow.
  2. Risk and reward go hand in hand
    The higher the potential rewards on offer, the higher the risk of losses.
  3. You don't need to be an expert
    Investing in a fund that is handled by a professional fund manager can be a good place to begin.
  4. Diversification is key
    Riding on a single investment can be risky. Investments may fluctuate. Spreading your money across multiple investments can help to diversify the risk.
  5. Start financial planning early
    The earlier you start saving, the sooner you can realise your investment goals.

By incorporating investment planning into your financial strategy, you can work towards greater wealth accumulation and a more secure financial future.

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