Due to the rising cost of living, Malaysians are always looking for new ways to increase their income. Some are turning to e-commerce and selling products on social media, while others are helping the gig economy with services like Grab and FoodPanda.
Meanwhile, a significant number of Malaysians have also turned to investments as a form of additional income. But since the financial demands of traditional investments can be quite large, many of them have turned to micro-investments.
What is micro-investment?
First, let’s talk about what micro-investing is.
It’s simple. Micro investing is actually just like normal investing, but only on a much smaller scale. Instead of using a large amount of money as collateral, micro-investing is done with smaller amounts of money. For example, Stashaway does not require a minimum balance in your account for you to start investing.
This means that you can even invest with amounts as small as RM5.00.
Why is micro-investing growing in popularity?
With such a small starting amount, many Malaysians can start investing without too much risk. And that explains why it is gaining popularity around the world, and even among Malaysians.
But is micro-investing really a good option to supplement your income? To answer this question, let’s take a look at the pros and cons of micro-investing.
Benefits of micro-investing
Little or no start-up costs
If you ask someone why they don’t view investing as a form of additional income, chances are most of them will tell you that it’s too expensive to start.
And honestly, they’re right. For traditional forms of investment, the initial deposit itself can be expensive. For example, if you want to start investing using Robo Advisor from MyTHEO, the minimum initial investment amount is set at RM100. This then becomes a major obstacle for your average employee who is just looking to start experimenting with investing.
However, the low initial deposit offered by micro-investing platforms reduces this challenge to something more manageable.
Very little risk
In addition to having low entry costs, the micro-investment also allows a low-risk investment for its user. However, it should be noted that there is no such thing as a risk-free investment. Micro-investors are still subject to the same market forces as everyone else and could potentially suffer a loss. The only difference is that the size of the investment in this case limits the amount that can be lost.
Another advantage of micro-investing is its flexibility.
Once you’ve started to get started and your funds have started to grow, you can choose to make larger investments if you wish. This makes microinvesting the perfect starting point for growing your investments, and you can always move on to bigger things when you feel the need to.
But while there are many advantages to microinvesting, that doesn’t mean that there is no downside to microinvesting without any downside.
So, for this next section, let’s take a look at the downsides of microinvesting.
Disadvantages of micro-investing
Due to the low amount of investment that one usually makes in a microinvestment platform, it usually also means that the returns on investment that one gets are minimal as well.
The limited returns make micro-investing less effective for long-term financial goals like saving for retirement or building wealth.
Now that we have discussed the pros and cons of micro-investing, for those who are interested and think micro-investing is perfect and exactly what you need right now, let’s see how to start micro-investing in Malaysia.
How to start micro-investment in Malaysia
For Malaysians who want to get started in the world of micro-investing, the first thing to do is find a platform that is right for you. In Malaysia in particular, there are many micro-investment platforms that are suitable for all backgrounds of potential investors, depending on your needs. There are a number of Robo-Advisors, which are automated investment platforms that help you build and balance a portfolio automatically. Take a lot of hard work to get started. They are designed for micro-investors and offer low start-up costs with minimal fees.
Micro-investing is a perfect first foray into investing
Micro-investing is suitable for people who want to start investing but can’t really afford to risk too much, and the minimum entry requirements allow you to get a feel for investing at minimal costs.
As the old saying goes, “never invest what you can’t afford to lose”.
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