Hi Everyone

I've recently taken out my money from a savings plan I had previously ( it was decent but the return is low for my current age, I'm in my mid 20s and am keen with something with higher risk and higher returns )

And am planning to diversify my investments in different vehicles

I currently hold as some of you may know

Stocks
FDs
Cash
Foreign Currency
e-Toro
StashAway
Planning to add
(ETF)
(Bonds)
(Crypto)
(Unit Trust)

With that said I've researched more into Bonds and ETFs and I have a slightly better grasp of what these 2 are
Bonds basically is lending your money to the government ( AAA ) or a corporation ( A B C etc which are higher risk bonds ) in return for a coupon rate ( which works like interest rate )

Say I put in RM10,000 in a 10 year Malaysia Government AAA bond for a Coupon rate of 5% p/a over 10 years

So my money will be

RM 10,000 + 5% per year compounded for 10 years = RM 16,288.95

or ....

Is it RM 10,000 + 5% a year without compound = RM 10,000 + RM 500 p/a x 10 year = RM 15,000

From what I can see these are safer than Stocks but yield higher returns than FD but the catch is they are not guaranteed by PIDM
As for ETFs

It's basically buying a stock with a lot of different stocks in one basket

ie SnP500 contains Apple, Coca Cola , Microsoft etc in one stock

So it averages the stock price ... so it's well diversified by itself, correct me if I'm wrong here
With all that said
1. Is my understanding of Bonds and ETF correct?
2. Where can I buy ETF and Bonds in Malaysia ?

I have an account with Rakuten but it doesn't show anything when I type in Bonds / ETF

And even when I click on the indices I don't have a buy option which is confusing

As for bonds I heard I have to go sukuk Malaysia yes?

Hi Ramjade,

compare buying Malaysia ETF in bursa and overseas ETF, the norm for Malaysia ETF is that the spread is too wide means expensive compare to overseas. If taking into account for exchange rate to buy overseas ETF, will overseas ETF still cheaper?

The ETF that I am interested now is Tradeplus New China

Bonds are not for everyone. The entry bar is set quite high, especially if you’re a new/young investor starting out - as someone mentioned, whole (retail) bonds are sold in multiples of RM250,000 or $250,000 (in Singapore). Investment grade bonds don’t pay a high yield, usually up to 5% (and even that is rare now, given the super low interest environment) per annum, and the coupon is not compounded.

The typical bond buyer profile is someone who is more interested in preserving their wealth/capital with returns that beat inflation, as opposed to someone who is actively looking to grow their capital with higher returns.

A bond fund is like someone who has bought a basket of bonds, and now repackages the total into smaller, easier to digest, parcels and resells them to investors. So, instead of having to cough up $250,000 (or RM250,000) each time, an investor can come up with say, $50,000 and own a portion of a basket of bonds. The coupons are also then pro-rated and distributed accordingly.

As for defaults, only in catastrophic circumstances would investment grade bonds turn turtle - Lehman Brothers was a good example. And look at the pain and subsequent decade of mess that event created. If you pick and choose your IG bonds carefully, you can sleep relatively well at night, free from the roller coaster dips and crests of the economic turmoil - and just continue ie to wait for your next coupon. There’s also capital appreciation from your initial purchase price, if you bought at the right time, of course.

A good example in my case is a bunch of UBS and CS bonds which I bought during the COVID panic for below IPO. Then, news of their possible merger broke, and the bond prices rose in tandem with their share prices in fact, all of my bonds have appreciated! Contrast this with my 25% haircut in terms of rental returns received from my erstwhile most reliable client (a master tenant who rents a number of suites from me as part of his boutique hotel operations in Sydney) since the first 3rd of this year, and the recent announcement of a cap on dividends to be distributed by the local banks as part of the COVID response!

However don’t let me sway you with only the good news and positive perspectives. It’s not all a bed of roses, and low risk doesn’t mean no risk.

:thumbsup:

I think the real lesson here is to buy into something that you know well and have done your research - be it bonds or shares, there are bargains and gems to be found. Well done on your recent trade, and safe & happy investing my friend!