Investing vs trading are both ways to make money in the financial markets, but they are different. While investing vs trading have some similarities, they differ in many ways.
Investing involves buying assets to hold them for a long period of time, with the expectation that they will appreciate in value or generate income. The goal of investing is to build wealth over the long term, and investors often take a more passive approach, holding onto their assets for years or even decades.
In investing vs trading, there are several reasons why people invest:
1. To Grow Wealth
Investing can be a way to build wealth over the long term. Investors can increase their financial resources by buying assets expected to appreciate in value or generate income.
2. To Generate Income
Some investments, such as stocks that pay dividends or rental properties, can generate regular income for investors. This can be an attractive option for those looking for a source of passive income.
3. To Save For The Future
Investing can also be a way to save for long-term financial goals, such as retirement or education expenses. By investing in a diverse range of assets, investors can potentially earn higher returns than they would by saving in a low-interest savings account.
4. To Beat Inflation
Inflation is the general increase in prices over time, which can erode the purchasing power of money. Investing can be a way to protect against inflation, as assets that appreciate in value can help to offset the impact of rising prices.
An investor will normally do fundamental analysis to filter good stocks.
Fundamental analysis refers to analysing the information from the news and reports. The investors will assess the information in their hands and attempt to predict the asset’s price direction.
Overall, investing can effectively grow wealth, generate income, save for the future, and protect against inflation. While risks are involved, investing can be a valuable tool for those looking to secure their financial future.
On the other hand, trading involves buying and selling financial instruments with a shorter-term focus, often holding positions for only a few days or weeks. The goal of trading is to generate profits from short-term price movements rather than from holding onto assets for the long term.
Traders often take a more active approach, continuously buying and selling to take advantage of market movements. Trading can be an attractive option for people looking for ways to generate financial returns and are comfortable with the inherent risks and uncertainties of the markets.
In investing vs trading, some of the potential benefits of trading include the following:
1. The Potential To Generate High Returns
By buying and selling securities or other financial instruments at the right time, traders can potentially generate high returns on their investments.
2. The Ability To Take Advantage Of Market Movements
Trading allows individuals to take advantage of short-term market price movements and potentially make profits.
3. Flexibility And Control
Trading allows individuals to buy and sell assets as they see fit, allowing them to have more control over their financial affairs.
4. The Opportunity To Diversify
Trading allows individuals to diversify their investment portfolio by buying and selling various securities and financial instruments.
As for traders, they will normally do technical analysis to find good stocks that can give the desired returns quickly. Price and volume are essential in finding good stocks to trade.
The technical analysis is a price action strategy. The investors will evaluate the market breadth based on the readings of price trend patterns, indicators and oscillators, then draw a conclusion on future market sentiment.
However, it’s important to note that trading also carries inherent risks and uncertainties and is not suitable for everyone. Trading requires a high level of risk tolerance and financial knowledge, and it is not guaranteed to be profitable.
It is important for individuals to carefully consider their financial goals and risk tolerance before deciding whether trading is the right approach for them.
Investing VS Trading, Which One Is Suitable For Me?
In general, investing is more suitable for those looking to build wealth over the long term, while trading is more suitable for those looking to generate short-term profits. Both strategies can be used to generate returns, but they require different approaches and different levels of risk tolerance.
So between investing vs trading, which one do you prefer?
It is not uncommon to see or hear people we know to make life decisions based on our relationship with money. Even when one is unhappy with their environment, they may not have the courage to make any moves or changes because they fear the impact on their financial well-being.
We enjoy seeing our investments grow but lose many nights of sleep when the opposite occurs. If we find our lives saddled with debt or see our peers living a more lavish life, we may feel that we are not enough.
Money has a huge role in our quest to feel enough or be happy. The reason I want to talk about this is that we must not use money as the measurement of our progress in life. It should not be the reason we feel inadequate or terrible.
People seek belonging, acceptance, and validation from the people around them. We want to feel that we belong to something, to a certain group or culture. When it comes to our relationship with money, the same pattern and need to be seen as ‘normal’ can also be easily observed.
When we see others around us dress well and drive expensive cars, we tend to assign them to the ‘successful group’ and think ‘they are doing well in life’. But statistics have told us that people who earn a high income can also deal with money issues and seek debt management programs from AKPK (Agensi Kaunseling & Pengurusan Kredit). On the other hand, not all middle- or low-income earners are terrible money managers.
Comparing what we have to what others have can lead us to an endless chase of happiness based on what other people are doing. It takes away our focus on how well we are doing.
Have you been telling yourself: “If I have X amount of income, I will be able to do this or feel happier”?
This thinking puts money in the driver’s seat behind every decision we make and that money is the only enabler for us to do anything.
When we give more power to money, it will take it and eventually become the lens through which we make most, if not all, of our life decisions. We must break this pattern and take back control. It starts with redefining the relationship we have with our money.
Doing this early is important. If we do not confront this relationship with money early, it may cause us to tie our self-worth to our net worth, which means if you don’t feel you are as rich as me, you will convince yourself to believe that you are not as good as me, and this may blind you from seeing your true potential.
Money is not unimportant. Don’t get me wrong. It is important, but it should not be more important than our sense of self or cause us to lose our sense of self.
Money shouldn’t be why we cannot prioritise caring for others or stop us from feeling happy. Money is the car that gets us to our desired destination; it is not the driver itself. You are.
To regain control, the driver must know where he or she wants to go. But many times, we don’t have a clear idea of what our goal is. You don’t have to feel bad or guilty if this is you.
We haven’t been taught how to think about our goals. I think we need to first find out what we value most.
Understanding what we treasure the most can help us discover what we want to make happen. If your core value is your family, you may find ways to use your money to help your family live a better life or protect your family’s financial security.
If your core value is health, you can learn how to use your money to help you live healthier. I think it makes little sense to use our money on things we don’t value as much because this will deprive us of our life satisfaction. They may give us a short boost in happiness, but they may not be as sustainable as when we use our money on things that truly matter more to us.
Determining our core values and things we hold dear will help us shift the steering wheel into our own hands and help us focus on how to utilize our money to live the type of life we want.
This will help us find out how to manage our money accordingly and create a spending plan to help us keep our money in the right place. This financial plan would have had a say in where we wanted our money to go and what we wanted it to do for us, not the other way around.
Also, in our quest to have a constructive relationship with money, we must first determine what kind of relationship we have with it now. What would a mutually supportive relationship look like?
It makes sense to conduct an initial assessment to determine how much money we need to live the best life we want. From there, we can then find out what things would need some tweaking to create the kind of future we’d love to have.
When our relationship with money is healthy, our financial well-being can improve. We will be more at peace with ourselves and our money.
We can live better today. Wishing you a great 2023 by starting with a refresh on your relationship with money.
Kevin Neoh works with people to transform their relationship with money and support them to use their money to live a meaningful life. He is a CFP professional and a certified member of Financial Planning Association Malaysia (FPAM). Kevin can be contacted at www.kevinneoh.my.
The post-electoral coalition between Pakatan Harapan (PH) and Barisan Nasional (BN), along with Gabungan Parti Sarawak and Gabungan Rakyat Sabah, has vividly shown us what “politics as the art of the possible” really means. But what about Malaysia’s economic challenges?
After all, who would have thought BN, whose legitimacy has been relentlessly challenged since Datuk Seri Anwar Ibrahim’s fall from grace in 1998, would eventually erode when it lost a two-thirds majority in 2008 and the popular vote in 2013 to the Anwar-led Barisan Alternatif. BN’s reign ended with the power shift to PH in 2018.
At least for now, the seemingly strong coalition with two-thirds majority seats masks a critical fact: nearly two-thirds of Malay voters believe in Perikatan Nasional (PN) as a reliable political party after UMNO when it comes to protecting their interests. Many of them are young, semi-skilled, and reside in rural areas.
However, whether the shifting landscape of Malay votes is purely ideological and political remains to be observed. Its economic roots should not be taken lightly. Of all the economic dissatisfactions capable of shaping voting preferences, nothing can be more personal and consequential than the low, nearly stagnant, and relatively unfair wage progress.
Let’s chart out a few hypotheticals.
Malaysia’s Economic Challenges
A beautiful shot of the Kuala Lumpur buildings under a cloudy sky at Malaysia
Let us take an honest, hard look at what Malaysia’s economic challenges mean. Suppose we take 2010 as the year of comparison. In 2021, gross national income expanded by 71%, or 6.45% on average each year since. Going at this speed, the national income would have doubled every 11 years.
At the same time, half of the wage earners in Malaysia witnessed the purchasing power of their income stall at 22%. It is, at most, better than the individuals in the same income group were 11 years ago.
Compared to 2010, when the B50 earned RM1,000, their standard of living has only gone up by RM220, or RM22 per year. To double B50’s monthly income after adjusting for the cost of living will take 35 years or more.
The truth becomes even more obnoxious if we go down the demographic road. Look at the purchasing power of the income for B50, aged 30 to 34 years old, and it is just 11% better over the same period of time, or 1% on average each year.
In other words, it takes 70 years for a B50 in this age cohort to live one time better than the older generations. Unfortunately, the gross national income is already 64 times higher by then!
The worst is for those in the younger age cohort. The income of people aged 25 to 29 in 2021 was 4% less than that of the same age group in 2010. This means that they have less money to spend, and this is one of the main issues when it comes to Malaysia’s economic challenges.
Malaysia’s Economic Challenges: Of Regions And Skill
Turning to the perspective of regions and skill level, it is perhaps unsurprising to find out that rural and semi-skilled median wage earners, which constitute more than half of our labour force, benefit the least in their categories from the growing economic prosperity.
Source: DOSM; Author’s own calculation
Rural residents are 14% better, while semi-skilled workers are 20% better. What’s more surprising is that race doesn’t matter as much as we used to believe. Actual salaries and wages for Bumiputera B50 in 2019 were 65% greater than that of the 2010 cohort, outperforming the 44% advancement for Chinese B50.
Bumiputera B50, on the other hand, was hit the hardest by the pandemic and had been getting better more slowly. Putting all this together, the lesson is straightforward: not all Malaysians prosper equally. And when they don’t, it instigates a sense of unfairness.
As economic anxiety and discontent mobilises voters, it must be more than just a coincidence that rural residents, semi-skilled workers, and young voters identified along the racial line, who are losing out in the horse race of prosperity and suffering the most in the pandemic, happen to be bowling with Perikatan Nasional in the most recent general election.
Against this backdrop, addressing economic anxiety and discontent makes the economic slogan ‘shared prosperity’ meaningful. Perhaps more importantly, it works to break down electoral divisions based on ethnicity, geography, and occupation without using racial rhetoric.
Bolstering economic growth, though necessary, is no longer sufficient to lift the living standard of the majority. The trickle-down effect of growth is long dead. For this, the Anwar government and cabinet need a paradigm shift in their policy-making philosophy.
Growth policies shouldn’t stop looking for new growth sectors. Instead, they should make existing products and sectors more complicated. That means investment policies cannot be satisfied by bringing in more foreign direct investment. It will be done by strengthening ties between domestic and foreign companies and giving domestic companies more ways to work with the rest of the world and export.
That means labor policies shall not be bound by the traditional domain of labor issues when laborers go through the gig economy route and become entrepreneurs. The employer-employee social contract is evolving.
Welfare policies will be more than just a one-time cash transfer and financial aid for marginalised communities and poor families. It is, in fact, a way for all Malaysians to get automatic protection against risk and a way to share returns. This is done by coordinating cash transfers, tax rebates, unemployment insurance, subsidies, and other programs.
That also means that government functions shouldn’t be put in separate boxes and that policies should be thought about, designed, and put into place in a way that doesn’t divide them up. It’s true that politics is the art of the possible, the attainable, and the best.
But don’t get it wrong. A power play for the possible and attainable without pivoting to the economic needs of the people only ends with pushing voters to their next best option.
“Good politics is the art of bringing the possible and the attainable to the people.”
I hope the new Malaysian government will take a severe look at Malaysia’s economic challenges and take the right step towards addressing them.
About the Author
Wong Chin Yoong is a professor of economics in Universiti Tunku Abdul Rahman, and an external consultant to Max Wealth Group.This article is in collaboration with Max Wealth Education Sdn Bhd, an approved Education Provider for the CFP Certification Program.
In the world of ESG, corporate sustainability is gaining momentum. Corporate sustainability is an approach aiming to create long-term stakeholder value through the implementation of a business strategy that focuses on the ethical, social, environmental, cultural, and economic dimensions of doing business.
Smart Investor spoke to Professor Avvari V. Mohan, Deputy Head of the School of Business, Monash University Malaysia, to find out more about corporate sustainability trends in Malaysia. He is well versed in speaking on the realisation of sustainable development in Malaysia, the ecosystem required to do so, and the roles of different actors, with a focus on the private sector and education.
Corporate Sustainability Trends In Malaysia
Smart Investor: What is the state of Malaysia in terms of ESG?
Professor Avvari V. Mohan, Deputy Head of the School of Business, Monash University Malaysia
Avvari V. Mohan: The state of sustainability / ESG practices should be looked at from different perspectives – at the country level what is the institutional push from policy & regulatory support, adoption by a business organisation and how the consumers/society are practicing it?
At the country level, the National Sustainable Development Goals (SDG) Council, chaired by the Malaysian Prime Minister, sets the national agenda and milestones; and prepares reports for the United Nations (UN). Since 2009, Malaysia has put in place a progression of policies, frameworks and implementation mechanisms to move the country towards a low-carbon future like the National Green Technology Policy, The Renewable Energy Act, the Low Carbon City Framework and Assessment System (2011), the National Policy on Biological Diversity 2016-2025 and such.
On the technology front, the National Fourth Industrial Revolution (4IR) Policy has also made sustainability and ESG issues are the critical point, with clear outcomes to be achieved by 2030 to support the country’s commitment to the UN-SDGs. To resource the implementation of the SDGs, the Malaysian government, in addition to the initiatives in the 11th Malaysia Plan, has also mapped out the SDGs in the Twelfth Malaysia Plan (2021 to 2025) and the Thirteenth Malaysia Plan (2026 to 2030).
To drive sustainability / ESG adoption by the private sector the Securities Commission (SC) Malaysia laid the foundation of sustainable and responsible investment (SRI) in 2014 by introducing the SRI Sukuk Framework. More recently, SC also initiated the Sustainable and Responsible Investment (SRI) Roadmap and released the 2021 Malaysian Code on Corporate Governance (MCCG).
Bursa Malaysia took the lead in ASEAN by introducing a globally benchmarked ESG Index and the FTSE4Good Bursa Malaysia (F4GBM) Index as early as 2014. This index is to increase the profile and exposure of companies with leading ESG practices. These helped investors make ESG investments in Malaysian listed companies. Bursa Malaysia has several initiatives to support the private sector, including the Sustainability Road Map, BURSASUSTAIN, a one-stop knowledge centre.
There is also the JC3 platform, established in September 2019, to pursue collaborative actions for building climate resilience within the Malaysian financial sector. The JC3 is co-chaired by Bank Negara and SC Malaysia, with members including senior officials from Bursa Malaysia and the industry.
Bursa Malaysia launched the Bursa Carbon Exchange (BCX) in Dec 2022, a voluntary carbon market (VCM) and the world’s first shariah-compliant carbon exchange. This exchange enables companies and other entities to trade voluntary carbon credits from projects that remove, reduce or avoid greenhouse gas (GHG) emissions to help them meet their climate targets.
The country has been putting in place support in terms of financing sustainability. There is the RM1 billion Low Carbon Transition Facility by Bank Negara Malaysia (BNM) to support the adoption of sustainable and low carbon practices by small and medium enterprises. The banking sector has also started announcing ESG-linked financing.
SI: How is Malaysia standing in the region compared to other nations, as well as globally?
AVM: A recent publication (April 2022) published by PwC Malaysia and Capital Markets Malaysia (CMM) shows that Malaysian public listed companies have done comparatively well in Sustainability / ESG indicators in comparison to other ASEAN countries’ peers based on leading ESG indicators. The publications also find that there are 28 Malaysian companies listed in the MSCI All Country World Index (ACWI) ESG Leaders Index [1].
The Index consists of large and mid-cap companies across developed and emerging markets countries. Malaysian companies are also comparatively advanced in embracing global standards, with nine companies currently committed to emissions reduction targets grounded in climate science through the Science Based Targets initiative (SBTi).
Malaysia accounts for the second highest number among ASEAN peers for the MSCI ACWI ESG Leaders Index and the SBTi indicators. Despite these encouraging findings related to sustainability and ESG practices within the Malaysian private sector, the report also states that there are challenges in measuring and comparing ESG efforts across various organisations.
The recently launched (Sept 2022) Malaysia Businesses Sustainability Pulse Report (SPR) 2022 by UN Global Compact Network Malaysia & Brunei (UNGCMYB), based on a survey done among both large and small business organisations, reveals varying levels of readiness among companies to adopt ESG practices. Many companies indicated that they are considering but need more understanding regarding the various ESG practices.
This calls for bridging the knowledge gap through awareness-building and competency development programs. The study also indicated that ‘Social’ and ‘Governance’ related practices are relatively stronger than ‘Environment’ related practices.
Despite the growing trends of Malaysian stakeholders’ sustainability demands, 45% of Malaysian companies had still not allocated a budget for sustainability initiatives, with 33% claiming a lack of sustainable financing plans.
While the survey indicates varying levels of ESG adoption, some large companies in Malaysia have embarked on sustainability / ESG-related strategies, like Sarawak Energy, the first corporation in Malaysia to commit to the “Business Ambition for 1.5°Celsius” under United Nations Global Compact. It has committed to set a science-based emission reduction target across relevant scopes, in line with the Paris Agreement, to pursue efforts to limit the global temperature increase to 1.5°C above pre-industrial levels by 2030.
Another example is HSBC Amanah Malaysia, which completed a bespoke green trade financing facility for Guan Chong Cocoa Manufacturer Sdn Bhd. This ESG financing supports Guan Chong’s ambition to achieve 100% Traceable and sustainable cocoa by 2030 from its direct cocoa bean sourcing network. VINDA (hygiene products), with its Malaysian R&D and manufacturing base, is a good case study for sustainability commitments in terms of its products and social agendas.
Malaysia also has good small and medium-sized companies that have adopted ESG-oriented business strategies. Some examples of Malaysian small or medium enterprises to watch in the ESG space include the Green Factory (wood furniture), Edar (formerly BeliGas), BoomGrow (Agro tech), Next Green (sustainable paper mill), NettsGroup, The TLC (home cleaning), Hexafoods & Hexa IOT are all Malaysian homegrown companies that are great case studies for sustainability /ESG related practices.
The other important readiness for sustainability (ESG) is at the market, consumer, or individual level. Responsible members of society and consumers of products/services have a role in realising sustainable development through the lifestyles they lead. Malaysian consumers are beginning to show interest in demanding ‘green’ products or sustainability.
Many local enterprises are emerging in the fashion and food sectors that consumers support. Civic society and educational institutions (from primary school to universities) are influential in educating the general public/society, businesses, and individuals to help realise sustainable development goals. Civic society organisations can help businesses to understand ground-level issues, eg. environmental and ecological degradation.
In Malaysia, there are both global non-government organisations like the UNGCMYB, and local ones like the TRCRC, RIMBA, and many other NGOs playing a crucial role in such efforts. Finally, it’s heartening to see media organisations now playing an essential role in communicating about ‘responsible businesses.’
SI: Where is Malaysia heading with ESG? What does the future of ESG look like? Is Malaysia on the right track? If not, what can be done to ensure we can meet the goals related to sustainability?
AVM: At the national level, policies and frameworks are implemented to drive the adoption of sustainability / ESG practices in the private sector. Malaysia can be seen as early stages of its ESG journey compared to, say, Nordic and some northern EU counties but is already ahead in ASEAN (based on a study by the NUS and ASEAN CSR of Sustainability Reporting in ASEAN).
There are also vital sustainably finance-related initiatives, including the Bank Negara Climate Taxonomy and green financing products emerging fast. There is still some paucity regarding policy blocks for economically accessing technologies. There also seems to be some incongruence between policies at the federal level and those at the state level.
What is also needed is better literacy of sustainability, ESGs and the UN-SDGs at all levels of business organisations and even more among small business owners. There is a lot of confusion with the current ‘compliance’ approach. The Sustainability Pulse Report (by UNGCMYB – Sept 2022) also found that businesses still perceive sustainability / ESG adoption from only a ‘risk’ perspective and not as an opportunity for product/process innovation.
There is also room for exploring traditional knowledge (as done by companies like Tanamera Spa products or Frangipani resorts with their water treatment facility) for modern market needs.
SI: How successful is the ESG deployment at Monash Universiti Malaysia, and what are the challenges you/the organisation are facing regarding ESG?
Millennial group of young businesspeople Asia businessman and businesswoman celebrate giving five after dealing feeling happy and signing contract or agreement at meeting room in small modern office.
AVM: Monash University overall and the campus in Malaysia can be seen as being committed to driving sustainable change and empowering communities through its education, research, and leadership. Monash’s new strategic plan, Impact 2030 [2], defines priorities and actions for the University for the next decade, focusing on climate change, preserving geopolitical security, and fostering thriving communities as the challenges Impact 2030 will address.
They are also efforts to make the campus infrastructure more environmentally friendly, and the issues of social justice and inclusion are core to Monash University’s goals and values. The university has a diversity and inclusion framework to support campus social justice.
The School of Business, Monash University Malaysia, is an advanced signatory of the UN Principles of Responsible Management Education. This means that sustainability/ESG elements are embedded in a myriad of subjects taught, faculty conduct research in this realm, and there is also engagement with relevant stakeholders to promote sustainability / ESG in business and society.
A recent such high-level event was the ‘State of Sustainability in the Malaysia Private Sector,” a Roundtable organised collaboratively by the UN Global Compact Malaysia and Brunei and the School of Business Monash University Malaysia in Oct 2022. In this roundtable, representatives from private industry, government, and academia discussed the findings of the Malaysia Businesses Sustainability Pulse Report 2022, launched by UNGCMYB.
The challenges for Monash University Malaysia, as with any private institute of higher learning in Malaysia, are that businesses and other organisations need to understand that there is a wealth of knowledge related (be it research-related or training content) to environmental issues, ecology, community development, business, etc. in the university.
Through public-private academic collaborations, there can be mutual benefits through knowledge exchange, and that is what you should know about the corporate sustainability trends in Malaysia.
Talentbank recently revealed the winners of the Graduates’ Choice Award (GCA) 2023 – Asia Pacific’s Most Authoritative Graduate Employer Branding Award.
The event which was held on January 5, 2023 at Sunway Resort Hotel, was officiated by Guest of Honour Datuk Mohammad Yusof Apdal, Deputy Minister, Ministry of Higher Education and Datuk Prof. Dr. Husaini Omar, Director General, Ministry of Higher Education. Also in attendance were Vice-Chancellors from tertiary education institutions including Universiti Teknologi MARA, Universiti Malaysia Perlis, Sunway University, Heriot-Watt University Malaysia, University of Nottingham Malaysia, UOW Malaysia and Multimedia University.
The GCA 2023 takes into account the wants and needs of more than 23,000 public and private education students – in various aspects – as well as their most preferred employers. The results were vetted by a group of audit members to ensure that the findings were independent and valid.
“Since its establishment in 2018, Talentbank’s GCA has received more than 200,000 accumulative votes from university graduates, giving the award meaning when it comes to what graduates want in an employer.
“University and tertiary education students voted for a solid 12 months for GCA 2023 and as we continue to receive an increasing number of votes each year, undergraduates are signalling to the industry on the growing importance of employer branding,” Ben Ho, Chief Executive Officer of Talentbank said.
He added that without the right employer branding, employers risk not hiring the right talent.
The Graduates’ Choice Awards, he said, is a big part of an effort to improve Malaysia’s employability landscape. It serves to pave the way for graduates to find their preferred careers.
GCA’s 2023 survey revealed flexible working opportunities to be a popular attribute for employment besides the value for work-life balance. Salary and bonuses, career development and company culture remain in the top three important attributes and there was a stark increase in graduates expecting salaries ranging between RM3,000 and RM3,500.
On the topic of career readiness, GCA’s 2023 results found employers rating career readiness among fresh graduates a 6 out of 10, indicating the importance of equipping fresh graduates with adequate skill sets. Based on the results, Talentbank encourages further active engagement between universities and students, while seeking alternative methods to ensure graduates are well prepared before entering the job market.
“Communication and interpersonal skills rank top in the critical skills employers look for in fresh graduates and besides good academic skills, talents with good attitude are always sought for by employers,” Ho said.
In his key address, Datuk Mohammad Yusof Apdal commended Talentbank for its effort that corresponds with the ministry’s development of an ecosystem to provide a high-quality education to develop individuals’ potential and meet national aspirations.
“The private sector has a big role to play in the process of improving our graduates’ employability, while being supported with the right policies to create a sustainable environment. Talentbank plays the conduit through which universities and the industry can form a successful ecosystem linking top employers and graduates,” he said.
Noting the constant evolution of the job market and skills demanded for in the workforce, Datuk Mohammad Yusof Apdal said human talents are still pivotal even as the world moves towards a more digital workforce.
“According to a study by McKinsey, superior talent can be up to eight times more productive. Unfortunately, talent is not easy to come by. Great talent is scarce. The competition to attract and retain talents is becoming increasingly fierce. This is why I applaud Talentbank for starting this journey of recognising the importance of employer branding”.
“It does not only reward the companies that go above and beyond to build a brand amongst university graduates, but more importantly it provides a fair and robust measurement on which graduates can start researching on their preferred employers and careers,” he said, adding that employer branding can be the silver bullet to attract top candidates.
“A strong employer brand increases the chances of recruiting the right talents significantly”, the Deputy Minister said.
The GCA 2023 saw big brands like Maybank, Petronas, Shopee, Google, and Microsoft on the Top 25 list of the 2023 Graduates’ Choice of Employers. Also making the list were Maxis, Shell, EY, CIMB and Intel.
The brands that have made the list for five consecutive years are: AIA Berhad in the insurance category, Maybank in the banking category, Nestlé in the fast-moving consumer goods (FMCG) category and in the engineering category, Petronas.
Talentbank also revealed that Sunway Group bagged five Champion positions across nine industry categories while Maybank took three Champion, and made the Overall Champion across the categories. Petronas won three Champion titles in four categories they were listed in and EY clinched two Champion awards in the field of accounting and consulting.
“We applaud all the winners for your hard work, determination, and the excellence and distinction you achieved in exceptional employer branding in Malaysia,” said Ho.
About Talentbank
Established in 2010, Talentbank is an enabler in the employability ecosystem, focused on producing career-ready candidates and providing them with better career paths by connecting them with industry leaders. Over the last 13 years, Talentbank has helped tens of thousands of graduates in finding their feet post-graduation. Talentbank also assisted hundreds if not thousands of employers in hiring talents from universities nationwide. This list includes the likes of Maybank, Petronas, Shopee, Maxis, Shell, EY, Huawei, CIMB, Shopee, Intel and many others.
According to the Global Investment Review 2020 report, at the start of 2020, ESG investing or ESG-themed investing had reached USD35.3 trillion in the five major markets, a 15% increase in the past two years (2018-2020) and a 55% increase in the past four years (2016-2020). It’s up from 33.4% in 2018 to 35.9% of all professionally managed assets across all regions.
This trend is continuing to grow in most regions, with Canada experiencing a tremendous increase in absolute terms over the past two years (48% growth), followed by the United States (42% growth), Japan (34% growth), and Australasia (25% growth) from 2018 to 2020.
So, what is ESG investing? Let’s look at the facts.
ESG is an acronym that stands for Environmental, Social, and Governance Investing. In addition to evaluating an investment’s financial metrics, the ESG investing approach involves a need to weigh up the corporation’s or fund’s policies related to:
Environmental matters (climate change and pollution, for example)
Social issues (such as diversity and ethics)
Governance (style of leadership and transparency)
Why Are People Attracted to ESG Investing?
Traditionally, most long-term investors felt they had to choose between their values and making money. To fulfil this intention, they will hold a massive and diversified portfolio that likely ended up with companies that paid well but did not do much good for the planet or society in their business practices.
However, the Schroders Global Investment Study 2020 reported that almost half (47%) of people around the globe are attracted to sustainable investments because of their broad environmental impact. Another 42% believe sustainable funds are appealing because they are likely to provide higher returns.
The data shows that investors no longer have to choose between two options because ESG-based sustainable investing is good for both goals, making it a very good choice.
Local ESG Investing Growth Trends
Where do Malaysians stand when it comes to adopting ESG investing?
The Securities Commission Malaysia (SC) developed a 10-year strategy blueprint (2010-2020) involving ESG investing. Since 2014, SC has introduced several initiatives, including developing the Sustainable and Responsible Investment (SRI) Sukuk Framework.
In December 2014, Bursa Malaysia launched the FTSE4Good Bursa Malaysia (F4GBM) Index for the Malaysian market to provide more visibility and profiling of ESG-compliant companies that meet various ESG inclusion criteria and are eligible to be included.
The standard is consistent with the global ESG model that FTSE developed, with strong references to the Global Reporting Initiative and Carbon Disclosure Project. As of 30 September 2019, there are 71 constituents of the Index, with a market capitalization of RM510.4 billion. As of June 2022, the total number of constituents is 87.
On the other hand, the FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index was launched in July 2021 with 54 constituents to cater to investor demand for ESG and Shariah-compliant index solutions. The purpose is to track constituents in the F4GBM Index that are Shariah-compliant. For the most recent review period, June 2022, nine new companies were added to the F4GBMS Index. This brought the total number of companies in the index to 65.
Both indices are reviewed semi-annually in June and December against international benchmarks.
From the perspective of industry players, the challenges arising in developing ESG investments locally are due to a limited investment universe and a lack of quality ESG reporting standards. These limitations are reflected in the types of ESG-themed funds available in Malaysia.
With the limited local investment universe, the fund houses need to construct a portfolio that consists of global securities for diversification purposes. The aim is to deliver the most value to their investors with higher potential returns and manage downside risks.
In addition to not having good reporting standards, fund houses need to spend more money to make sure the information they report is correct. Some might rely on information from ESG rating agencies, while others use third-party screening tools.
Fear of missing out (FOMO) in investing is the desire to stay continually connected with what others are doing. Often, one succumbs to “recency bias” and makes a rushed decision based on recent investment performance.
How do you combat this and align your investment portfolio with your values? Let’s look at how financial planners can help in this situation.
Discover client’s ESG values
Usually, financial planners will seek to learn about their client’s unique set of financial goals and risk tolerance first. But ESG values can be very personal, and they can differ from one person to the next. One client may prioritise environmental issues, while another values diversity.
Financial planners must first understand how clients might want to see them executed in the investments they pursue. Then, personalize their portfolio to mirror the client’s values.
Deploy a negative screening approach
Once financial planners are on the same page with their clients, they can start putting clients’ values into practice. They will identify companies that don’t align with clients’ values and remove them from clients’ portfolios.
A straightforward approach is to identify the right ESG funds for their clients. A fund will reduce the need to analyze individual stocks and spread out risk by holding a large basket of equities.
Review and reporting
Greenwashing is one of the risks associated with ESG investing. It is a strategy to market a company as sustainable or green when it isn’t.
To manage the risk, financial planners will use the right ESG data and tools to monitor and report ongoing changes to the ESG scores of the companies or funds. By working hand in hand with a professional Licensed Financial Planner, you will have clarity on the placement of ESG in your investment portfolio.
Have you incorporated ESG investing?
About the Author
Zulkhairi Zulkifli (CFP) is a Licensed Financial Planner With Expanded Scope. His expertise is in holistic financial planning and advising on equities, debentures, or warrants listed on Bursa Securities. Zulkhairi truly believes that a simple and personalized investment plan is vital to growing your financial assets. He can be contacted at zulkhairi@wealthvantage.com.my
With the world continuing to emerge from Covid-19 lockdowns, cracks in economies, societies, and environmental ambitions are becoming clearer. Looking ahead to the sustainability outlook for 2023 and beyond, the debt legacy from that crisis limits governments’ capacity to continue supporting societies through difficult times.
We’re likely to see more interventions, and businesses will be expected to play a greater role in tackling critical issues, from climate challenges and biodiversity threats to the cost-of-living crises. In short, the future looks like it will play out very differently from the past.
In that context, a fund manager’s active management and ability to adapt investment strategies to the challenges and opportunities ahead will be more important to investment performance than ever.
Sustainability Outlook For 2023: Five Trends To Watch
1. Climate Change And Political Will
First, climate change is an inevitable question. All investors are exposed to the impact, not just of global warming and environmental damage, but of political and economic action to tackle their causes. Investors must make sure any exposures to these risks are contemplated and managed alongside opportunities in solutions to the climate challenge.
At Schroders, we committed to transitioning toward net zero over the coming decades, including setting a Science-Based Target, validated by the Science-Based Targets initiative earlier in 2022. But setting a target is the easy part. How we, and other businesses, decarbonise is critically important to the value we will create for our clients. Our Climate Transition Action Plan outlines our roadmap.
Political momentum slowed in 2022, but importantly the private sector continues to push ahead, helping close some of the gap between the ambitions global leaders have laid out and corporate readiness for transition. In November, the COP27 climate summit in Egypt did little to cement global commitments to action.
That said, agreement on a “loss and damage” fund to help developing nations should ease one key challenge to delivering the changes needed to reach the goals laid out in Paris in 2015. Attention will turn to COP28 in the UAE later in 2023.
Our focus has been on using our voice and influence to engage the most exposed companies and pushing them to lay out transition plans. In the year ahead, we will be intensifying those efforts.
2. Natural Capital
In that context, the role of natural capital and wider biodiversity threats are central. Climate threats are symptomatic of the structural and growing tensions between escalating demand from a larger, wealthier and hungrier global population and the world’s finite resources to support that population.
Today we use resources equivalent to those provided by 1.7 Earths every year, pushing us further into natural capital deficit and intensifying the threats degrading global ecosystems create. By some estimates, roughly $10 trillion of natural capital value is lost every year, underlining the hidden liabilities building in the global economy.
The reality is stark: nature risk is fast becoming an integral factor to investment risk and returns. That’s why we released our first company-wide Plan for Nature in late 2022, drawing together our action to date and setting a future direction for the action we are taking to tackle the causes and implications of nature loss.
3. Cost Of Living And Other Social Stresses
At a human level, a cost-of-living crisis has taken a grip in many countries, and while the most acute pressures may abate in 2023, poverty is a threat we will be monitoring. Few governments have the fiscal capacity to absorb shortfalls in household budgets, and social stresses could intensify.
Companies are coming under pressure to protect vulnerable workers – whether through wage increases and benefits for their employees or their responsibility to workers in supply chains.
We could see greater pressure on the political systems. This could undermine investors’ faith that political leadership will clearly define priorities, pushing responsibility back to companies and investors like ourselves. While climate change and nature have dominated headlines, particularly in the run-up to COP27 and COP15, we expect a bigger focus on social issues, including human capital management, human rights and diversity and inclusion in the new year. These are core themes for active ownership for us at Schroders.
4. Active Ownership And Impact
As the forces shaping value in financial markets multiply, stock-picking will be only a partial solution. Our ability to engage with the companies and assets in which we have invested will be a critical lever and a necessary one to create value for our clients.
Few companies are prepared for the world we are heading toward, and encouraging or pushing them to adapt will be important to protect their value. We published our Engagement Blueprint early in 2022, laying out our expectations of the companies we invest in and plan to build on that foundation in the future.
As our focus on impact investing continues to grow, active ownership will also be an important component of those strategies. Our survey of more than 700 institutional investors in 2022 found that around half (48%) are focusing on the impact of their investments, up from about a third (34%) in 2020. We expect that trend to continue.
5. Regulation
These trends are playing out against a backdrop of an industry under more intense scrutiny and scepticism than ever. Regulation is spreading from the EU to other parts of the world, and demands for transparency and clarity in product promises are rightly likely to increase.
Greenwashing headlines have underlined the importance of transparency; the antidote is honesty, transparency and consistency. For example, ahead of COP15, we’ve signed Business for Nature’s Make it Mandatory campaign, calling on mandatory disclosure for all large businesses and financial institutions of nature-related impacts and dependencies from 2030.
We are determined to help our clients navigate our investment products and understand what they can expect from different strategies.
Conclusion
For those of us focused on sustainability in the investment industry, the last few years have felt incredibly busy. Keeping up with the scale and pace of regulatory change has been challenging enough. Developing the analysis and the models and adapting our engagement with portfolio companies to reflect our deepening understanding of the implications of structural social and environmental trends in the expanding volume of ESG data all add to those demands.
None of this will change in 2023, and there you go with the sustainability outlook for 2023.
Andy Howard is the global head of Sustainable Investment at Schroders.
Taking out loans is a normal part of life. Some take out loans to buy a house, or a car, to sustain their lifestyle and many other things. But is there a better way to manage debts, so we can save monthly repayment and sleep better at night?
Meet Isabela (not her real name), a working mother at a multinational bank in Malaysia. Managing 20 employees as a senior manager while raising seven children was frequently like working two jobs. She was so busy she did not have time to manage her finances.
As a result, Isabela suffered from a negative cash flow of RM5,000 every month, even though she earned a T20 income* as a senior manager in a bank. She constantly asked these same questions over and over: “Why is it that I pay my credit card bill every month on time, but my outstanding debt seems to be getting bigger and bigger?”
So how is it possible that if one pays their credit card on time, they are still in debt?
This is what we found out when we sat down with Isabela. The main contributor to her RM5,000 per month deficit is the ‘Loan Repayment’ row (in the diagram below).
Can you imagine paying RM11,000 per month on your loan repayments? Is there a way to save monthly repayment?
How To Save Monthly Repayment Up To RM9,000 Per Month?
Before and after: a monthly cash flow summary from a deficit of RM5,000 to saving RM2,000 in two months
As I dug deeper, I found four credit cards with multiple instalment plans (refer to Chart 1). “Okay, it’s not too bad,” I thought. I have seen worse, something like 10 to 20 cards.
Chart 1
For Isabela, some of the cards were tied to recurring payment plans. Nothing out of the ordinary but they all had one thing in common: all the cards had outstanding balances.
I started to organise them to understand how much she was paying monthly for each card. Here’s a snapshot, where we found the root cause.
I realised she was paying a fixed amount for some of the cards. I knew she was in trouble because her income couldn’t support the card repayments. She was paying on ‘gut feel’, meaning she would pay an average of RM3,000 per card for three of the four cards.
For example, as shown in Chart 1, she only pays RM3,000 for her CIMB Credit Card. However, the monthly instalments come up to RM2,130, and she was spending RM3,071 in June, totalling to RM5,201. Meaning the payment was short of RM2,201, so she owed her credit card outstanding payments before she started that month.
This is a bad habit and one of the major blind spots for most credit card users as they don’t clear their monthly balance. Here’s what I have to advise:
First, although you pay your cards on time every time, you still need to pay the amount spent in full for that month or else the outstanding will grow out of proportion. You cannot just pay on time without paying in full for what you need to pay.
Secondly, when you miss paying in full for one month (that means having an outstanding balance for the following month), it would be very hard to keep track of your expenses. It becomes impossible to reconcile what you spend the subsequent months unless you sit down and take a snapshot of your expenses over three months of credit card spending.
When you don’t know what you have been spending, you won’t know how much you have to pay. And this will go on like running on a treadmill that won’t stop and will keep going faster until you fall.
Thirdly, most people who constantly pay off any outstanding monthly credit card expenses will not have this problem.
So how can we save monthly repayment and solve this issue?
Once we identify the problem, we can develop solutions and strategies. In Isabela’s case, here’s what we needed to do to save monthly repayment:
1) Restructure her debt and consolidate it into one unifying loan. 2) Manage her expenses through ICE JAR, the world’s simplest money management system, to prevent her from falling into the same situation in the future.
Although she has a housing loan that we can use to consolidate her credit card debts, there wasn’t much capital appreciation as these properties were purchased recently.
So, we had to use another ‘container’ to consolidate her loan. The most effective ‘container’ is similar to a housing loan that uses a ‘reducing balance interest’ calculation instead of a ‘fixed line interest’ calculation loan (also known as a personal loan) that most people use.
Within a month, my team and I managed to help Isabela find her ‘container’ and save monthly repayment by reducing her loan repayment from RM11,648 to just RM2,594 monthly.
Many of our fellow Malaysians are unaware of a significant difference in interest calculation.
The ‘fixed line interest’ calculation (typically used for traditional car loans and personal loans) is very different from the ‘reducing balance interest’ calculation (typically used for housing loans). Let me illustrate by using this example of taking an RM100,000 loan with a 5% interest rate over ten years.
From the diagram illustrating Isabela’s Debt Consolidation Strategy (DCS), you can clearly see why I chose to use the ‘reducing balance interest’ option. Given the same loan amount, interest rate and same 10-year duration, and a monthly instalment of RM1,250, you can see that the ‘reducing balance interest’ calculation gives 50% interest savings compared to the ‘fixed line interest’ calculation.
This is how you can save monthly repayment and sleep better at night.
This is the reason we need to invest in our financial education. As they say: “Education lifts us past poverty,” and that especially includes financial education, and save monthly repayment is something that almost everyone needs to know how to do it.
*T20 income is classified by the Household Income & Basic Amenities Survey Report 2019 by the Department of Statistics Malaysia (DOSM). The income classifications for T20 have been revised to reflect inflation, the rising cost of living, and household size, among a host of other factors, into two parts:
T20 Part 1 – RM 10,961 to 15,039 and
T20 Part 2 – RM 15,040 and above
About the Author
Ng Ka Hoe is a Licensed Financial Planner and a Financial Adviser Representative (FAR) with Bank Negara Malaysia and“Capital Market Service Representative License (CMSRL) Financial Planner with Securities Commission Malaysia. He is also the Founder of J Advisory, a Personal Finance Academy that helps struggling Malaysians elevate their financial well-being with proven tools, systems and strategies. For more real-world case studies, you can head over to https://jadvisory.asia/.
Environmental, social, and governance (ESG) are gaining momentum and becoming the talk of the town worldwide, including in Malaysia. We are committed to becoming a nation with net-zero greenhouse gas emissions by 2050, and it needs a concerted effort by the government and the private sector.
Smart Investor spoke to an industry expert, Ben Lim, to learn more about how technology and ESG are making the world a better place. Ben is Epicor Malaysia’s Senior Country Manager with ten years of ERP (Enterprise Resource Planning) experience.
Epicor Software Corporation equips hard-working businesses with enterprise solutions that keep the world turning. For almost 50 years, Epicor’s customers in the automotive, building supply, distribution, manufacturing, and retail industries have trusted Epicor to help them do business better.
Ben Lim, Senior Country Manager, Epicor Malaysia
How Technology And ESG Making The World A Better Place
Smart Investor: What does ESG mean to you, and why is it important to your business?
Ben Lim: ESG for Epicor is about understanding how we can help our customers better understand their environmental waste data, such as reduced energy consumption and carbon emissions, and support our customers’ social interdependencies, such as data hygiene and data security. Epicor helps companies improve hiring and onboarding best practices and logistics to achieve their business goals.
Progress on ESG initiatives is taking place at many levels, with businesses increasingly looking to strengthen their brand reputations through environmentally sound organisational practices. Cloud computing is uniquely positioned to help businesses save energy, reduce waste, and adopt sustainable business practices that support a healthier environment. Epicor’s customers in Malaysia can do just that.
Epicor has researched the opinions of technology decision-makers on their opinions and benefits of cloud computing with regard to their organisation’s sustainability objectives. Overall, the research results point to a positive trend when it comes to prioritizing sustainability within the corporate agenda.
An overwhelming 93% of IT decision-makers surveyed named sustainability as their focus area, with 41% saying it is a key focus area.
SI: How do technology and ESG impact your industry?
BL: A recent quote from Gartner summarizes the importance of sustainability and the impact it has on our industry, stating: “By 2025, 40% of all manufacturing company IT departments will own the responsibility of data modelling for sustainability and net-zero carbon targets”.
Malaysia has also committed to achieving carbon neutrality by the year 2050. This highlights the urgency for IT departments to start taking ownership and looking both internally and externally at how they can help to achieve this goal.
Clear evidence of this necessity is the increase in customer type and the need to understand more about how to achieve better consumption rates. Customer migrations are another important impact, including the reasons behind it.
SI: What are the key factors for a successful technology and ESG deployment?
BL: Cloud computing can have a direct and positive effect on sustainable operations, particularly when it comes to running IT daily operations, offices or facilities. This includes digitizing paper-based communications with cloud-based electronic document signature solutions to simplify the process, reduce reliance on paper and minimize environmental impact.
Complex manufacturing systems and data flows are monitored and controlled for improved efficiency in operations. This ultimately results in the maximization of resources and the reduction of resource wastage which reduces adverse effects on the environment. All of this is right in the wheelhouse of Epicor, being an ERP software as a service (Saas).
Another key factor for successful deployment is a clear understanding of the industry, its processes for which areas that need improvement can be identified and the right solutions (not just immediate/quick fixes but also fit for the future. (i.e. workforce gaps, automation on the factory floor, production processes, and measurement/consumption of energy deployment needs to be about industry expertise and then having the right solutions now that are also fit for the future).
About half of the IT leaders surveyed (47%) believe they can reduce paper wastage through digitization efforts, and 42% believe that cloud computing will significantly reduce IT hardware wastage within their organisations.
SI: What are the key trends you see gaining traction for technology and ESG? What are the areas of growth amongst the pillars to look at in 2023?
ESG, Environmental, Social and Governance printed in blue with two rubber stamps over white background. Corporate responsibility concept.
BL: The Covid pandemic has momentously shifted working patterns for good, with the growing number of employees working remotely from home, either permanently or part-time, as part of a hybrid model. Cloud computing acts as an enabler for the distributed workforce and ‘work from anywhere’ practices. However, the environmental impact of remote work is not as easy to measure.
The worsening global climate crisis and conflict in Ukraine are propelling complex risks, and organisations need to be aware of how these risks affect their businesses and help management plan strategically and tactically. Climate and geopolitical issues should be a permanent part of a company’s enterprise risk management.
The traditional shareholder-centric capitalism of the past half century is giving way to a broader set of shareholder considerations, expectations, and interests where employees, customers, regulators, suppliers and others are playing more important roles.
SI: How do technology and ESG trends shape Epicor as an organisation and its services?
In Malaysia, we are witnessing manufacturing companies become more observant of how their data is being collected and a trend where data is being managed via a formal energy intelligence system, connecting executives to the day-to-day tactical operations to achieve the strategic business goals that include ESG. One of the key solutions that Epicor heavily invests in is the Epicor Manufacturing Execution Systems (MES) which collects data from shop floor resources such as machines and operators.
On the factory floor, the complex manufacturing systems and data flows are monitored and controlled for improved efficiency in manufacturing operations. This ultimately results in the maximization of resources and the reduction of resource wastage which reduces adverse effects on the environment.
SI: How has Epicor Software helped improve many organisations with their software?
Epicor solutions fit very well for organisations that Make, Move & Sell. The Manufacturing, Distribution and Services industries are the three key industries that Epicor focuses on in Malaysia, and we have helped these organisations harvest exponential growth and improve their bottom line.
We are proud to have worked with Solarvest Holdings Berhad, one of Malaysia’s market leaders in the growth of the solar photovoltaic energy industry. The implementation of the Epicor ERP, Kinetic, has aided Solarvest in boosting their productivity and their capability to take on more projects than they were previously.
According to their CEO Davis Chong, Solarvest may have only been able to commit to 30 projects in a year but with the support of Epicor Kinetic, the company is now able to take on as many as 100 projects a year.
SI: How can Epicor help or contribute to Malaysia’s SME digital transformation?
BL: At Epicor, we’ve built our reputation on knowing exactly what our customers need. According to the OECD (Organisation for Economic Co-operation and Development), research has indicated that 70% of SMEs have intensified their use of digital technologies due to COVID-19. SMEs are one of our key markets, and implementing ERP as part of their digital transformation is a key success factor for our SME customers’ growth.
We work hand-in-hand with our customers to better understand their businesses and industries to deliver market-leading industry productivity solutions and practices via Enterprise Resource Planning (ERP) Software to solve our customers’ real business problems and provide seamless customer experiences.
Epicor in Malaysia has successfully assisted SME organisations in the following industries: metal/steel services, industrial machinery, electronics, medical devices, automotive, F&B, engineering, and chemical.
Now you know how technology and ESG make the world better.
Have you ever set goals for yourself but failed to meet them? It may be to start exercising, investing, spending more time with your family members or loved ones, or whatever goals you may have.
You set goals at the start of the year but did not follow through in the following weeks or months. You only realize your goals as year-end approaches.
A study by Martin Oscarsson published online in 2020 on large-scale experience with New Year’s Resolutions found that 55% of the respondents successfully sustained their resolutions at a 1-year follow-up.
Therefore, it is possible to follow through on your goals by following these five tips to help you set and attain your financial goals.
Do you have a clear and specific goal for how much you want to achieve in financial goals?
It can be measured by savings amount, net cash flow or how much net worth or how much investment portfolio, how many like properties or how much reduction of debt or how much sum insured you would like to have at a certain time frame.
Clarity is power; having that clear focus on what you want helps give you that clear direction.
When you use your GPS, whether you are using Waze or Google Maps, the first step is to key in your destination. In your financial planning, you need to know what clear financial goals you want to achieve.
After you know what you want, the next thing is to know why you want those financial goals.
“ Reasons come first. Answers come second.”
– Jim Rohn
Why do you need to achieve that goal? For what purpose? Is it for yourself or for others?
Having that compelling reason will pull you toward the goals that you set. You may face certain challenges/obstacles, but your stronger reasons will pull you back to the right track.
For example, by achieving that financial freedom, what would this allow you to do? Is it to live a comfortable lifestyle for yourself and your family? Is it to travel worldwide and create memories with your loved ones? Is it to start a charitable organisation?
Consistency is key to ensuring that you are getting closer to your goals. Don’t undervalue the small steps you take every day.
For example, by saving RM3 per day for 365 days, you will save around RM1,100 over one year. What if you put it in an investment vehicle that grows at a certain percentage?
For example, someone saving RM500 per month over 35 years with the assumption of an 8% compounded annual return will have over RM1.1 million at the end of that period.
Do you have someone accountable to you who helps you track and guide you in achieving your financial journey, be it your financial planner or someone competent enough to advise you on your personal finances?
It is like having a mentor or a coach who can advise you on the rights and wrongs.
It is always good to measure periodically; it may be quarterly, half-yearly, or yearly, depending on the duration of those financial goals that you set. Knowing the actual results will allow you to make necessary adjustments to try out different methods to save or reduce unnecessary expenses that contribute to your overall financial goals.
Once you have your financial goals, the most important step is to take action either to create that investment account opening or schedule that appointment with your financial planner or what would the next things you can do.
5 Tips To Help You Set And Achieve Your Financial Goals
Every new year comes with optimism and new year resolutions. I hope that these tips will be able to help you set and achieve your financial goals.
About the Author
Goh Chee Yong is a Licensed Financial Planner under Capital Markets Services Representative License (CMSRL) and Bank Negara approved Financial Advisor Representative (FAR). Prior to becoming a financial advisor, he spent eight years working in Big 4 audit firms and multinational corporations. He is also invited to speak on financial literature at universities and public events. He can be contacted at cygoh@imaxfinancial.com.my
