CHAPTER 6

INVESTMENT
PLANNING
 LEARNING OBJECTIVES

 To understand the types of investment

available in the Malaysian market.
 To be able to evaluate the alternatives
available.
 To be able to analyze and make suggestions
on the alternatives to be chosen.
 TYPES OF INVESTMENT

 INVESTMENT IN SAVINGS ACC

- Having savings acc, depositor can earn interest or
participate in profit sharing with the bank.
- Objectives savings acc:
1) Meet daily expenses
2) Wealth accumulation
3) Necessary better retirement
4) Acquire fixed assets / short term assets
5) Meet unexpected use of cash
- An interest bearing deposits acc in which given
passbook and ATM’s card.
- Three types of savings acc:
- 1) Individual saving acc
- 2) Joint savings acc
- 3) Savings acc for associations, societies, and clubs
- Interest amount received:
Principal x Time x Rate
 INVESTMENT IN FIXED DEPOSIT (FD) ACC
- better return than savings acc.
- fixed deposit amount with fixed interest rate either
1 month, 3 months, 9 months, 12 months, and up
to 60 months.
- Islamic FD :al-Mudharabah (bank as entrepreneur
and depositor as the financier).
 INVESTMENT IN SHARES
- types of stock that sold to public – long term
financing to the issuer.
- common stockholders are the owners of the
company in which entitles voting privileges &
profits.
- can be purchased through:
1) Initial Public Offering (IPO)
2) Kuala Lumpur Stock Exchange (KLSE)
 TYPES OF COMMON SHARES

 Blue Chip Shares - issued by leaders in a particular

industry.
- stable in price & earnings
- issuer: TNB and Petronas
 Growth Shares - issued by companies that focus on
research & development industry.
- do not pay dividends / small
dividends
 Income Shares - high dividend yields
- ideal for those who seek relatively
safe & high level of current income.
- issuer: Hwa Tai and Nestle
 FEATURES OF COMMON SHARES

2) Claims On Assets
1) Claims On Income - During liquidation after
- In form of dividends & claims by bondholders
capital gains and preferred
shareholders
3) Voting Rights
- Have right to elect
members of the BOD

4) Preemptive Rights
- When company sells 5) Limited Liability
new shares, the existing
- Limited to their amount
shareholders are given the
of investment
right to buy the share
before sold to public.
 INVESTMENT IN BONDS
- long term debt instrument issued by corporation
either public or private to finance the company’s
long term assets.
- bondholder can claim on the firm’s income and
assets as specified in the indenture.
- types of bond: MGS, PDS, convertible bond,
secured bond, and unsecured bond.
 FEATURES OF A BOND

1) Par Value 3) Coupon Rate 5) Maturity

- Face or principal - Indicated as the Period
value: RM1,000 % of par value of - Length of time
bond that will until the bond
paid out issuer returns the
2) Claims on par value to the
assets 4) Voting right
& fixed income bondholder
- 1st priority
- Fixed income in
term of coupon
rate
 INVESTMENT IN RESIDENTIAL HOME
- buy houses for getting extra income in terms of
rent or capital gain.
 INVESTMENT IN REAL PROPERTIES
- investments in shop houses, standard lots in
shopping complex, condominium, & residential
home.
- people willing to give up a capital sum of money in
exchange for benefits to be received in future
 Factors influence
Why been Need to consider: property’s
choose? return:

• Less volatile • % to be invested in • Population growth

• Opportunities for property • Scarcity of land
growth • Look for location • Income growth
• Appreciate in • Sources of • Economic
value financing activities
• Real estate cycle • Supply & demand
• Speculation
 UNIT TRUST INVESTMENT
- investment scheme where a fund manager pools
money from numerous investors to invest in
portfolio assets.
- can be open-ended funds (unlimited capital &
units) while close-end funds (limited units).
- three parties involved:
1) Unit Holder
2) Investment Management Company
3) Trustee
 CATEGORIES OF UNIT TRUST

EQUITY FUNDS
FIXED
Income Funds
INCOME
- Provide steady stream income
FUNDS
- Low expected return, low risk

Growth Funds ISLAMIC

- Invest in smaller & emerging companies FUNDS
- Pay very little or no dividend

Aggressive Growth Funds

- High return funds PROPERTY
- Highly volatile TRUST
- Pay little or no dividend FUNDS

Balanced Funds
- Invest for income and capital appreciation
- Provide moderate capital growth
 • Meet desired objectives
• Good management
CHOOSING A •
•
Good track record
Excellent service
UNIT TRUST • Low cost
FUND

• Diversification of risks
• Service of professional fund managers
BENEFITS • Liquidity
INVESTING IN • Low capital requirement
UNIT TRUST • Convenience

FUND