Building our investment portfolios

An often-asked question is how do I build my mutual fund or unit trust portfolio for my retirement planning and children’s education?

In this brief discussion, we will discuss the 4 most basic funds for investment planning. They are Equities, Bonds, Money Market and Balanced Fund.

  • Equities funds are funds that invest in stocks. In general, these funds’ objective is to generate long term capital growth. Of course, there are many different types of equities funds. That would be a topic for another discussion.
  • Bond funds are debt instruments issued by governments or corporates. It promises to pay a certain return upon maturity. Bond funds provide a steady stream of income for investors.
  • Money Market Fund is a short-term debt instrument. It is placed with financial institutions as deposits and in government bills. It is a safe investment vehicle for those who are extremely concerned with capital preservation. Money market funds do not earn investors high or substantial returns, but it still provides a return that would be higher than putting money in savings account or fixed deposits.
  • Balanced Fund, as its name suggest sought to provide a balanced investment spread for investors. It is primarily invested in equities, bonds and money market according to a certain asset allocation ratio. Its objective is to provide a steady stream income and generate capital growth over the medium and long term.

There is no perfect system or methodology to build an investment portfolio. It depends on our investment objectives, financial goals and investment time horizons. Understanding these factors would allow us to plan our assets allocation wisely. If we are planning for retirement, with an investment (time) horizon of 10 years and above, we have the time luxury to be a little aggressive in our approach. In this instance, we can invest in equities funds that would generate capital growth over the long term. Equities can help us to beat inflation and preserve the purchasing power of our Dollars or Ringgit. However, equities are more volatile and not good for those with short term financial goals. If we are planning for education, we may want to choose to balance it with equities and bond, and do not forget insurance. Education funds planning for our children is a different ball game. In this context, protection is as important as investment.

For mid-term financial objectives or goals, it is better to mix Equities, Bonds and Money Market.  Those already retired and more concerned with steady income, Bonds and Money Market funds would be a wiser choice.

In conclusion, building an investment portfolio depends on the following factors:

  • What are the objectives?
  • How much time do we have? What is the investment time horizon?

So, embarking on this journey requires us to know what we want in our retirement or the needs of our children’s education.

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Checkboxes Before Retirement

According to a report Malaysians are aging fast. By 2035, 15% of our population would be 65 years old and above. Life expectancy is rising due to better living standards and healthcare. A male life expectancy is estimated at 72.5 years and 77.4 for females.

Aging is a process none of us can escape. The million-dollar question is are we prepared financially to live longer? According to EPF, 68% (2/3) of EPF members have less than RM50,000 in their account! That would mean a monthly budget of RM320.5 per month to spend if you retire at 60 and live to 73 (RM50,000/13years/12months)!

Retirement is serious business. Not just fun, sun and vacation, unless you’re financially prepared. If you are in your 40s or even 50, approaching retirement, perhaps you should start checking out these items.

  • Define what retirement means to you. Does it mean working less, working part time or just not working at all? Whichever definition is your retirement, have you done enough savings or investments to live it out?
  • What would be my monthly expenses during retirement? Do I have enough fund? Do I need to do more savings now? Do I need to do more investments to grow my retirement nest eggs?
  • Where or What would be the source of my income during retirement? EPF? Investments, e.g. unit trusts/mutual fund, stocks etc? Passive income, e.g. rental from properties or businesses?
  • Do you need to relook or review your savings and investments strategy? How to grow your nest eggs? Have you explored avenues such as Private Retirement Scheme (PRS), EPF-Member Investment Scheme (MIS), Unit Trust or Mutual Fund, Insurance etc.
  • Get professional help. Professionals are trained people who would assist in monitoring our investments. They take away the ‘emotions’ element in our investment decisions, which is always the biggest killer in our financial planning.

In conclusion, retirement planning is an extremely serious matter. Don’t leave it to chance or emotions. Most importantly, do not procrastinate.

Contact or Call +60123898648 for more professional advice now.

*Information sourced and summarized from and