By NUR HANANI AZMAN / Pic BLOOMBERG
MALAYSIANS are putting less money into investment these days due to financial restraints and the immediate need for cash, an impact from the Covid-19 induced recession.
As households struggle to make ends meet, many have been forced to pull out of their investments or raid their savings for basic usages like paying bills, rent, mortgage and other essentials during the crisis as many have lost their jobs or furloughed due to the Movement Control Order.
A unit trust consultant who requested anonymity said depending on the situation, people in need of cash would not choose to invest.
“As we all know, investing in unit trusts takes medium to long term, so we do not advise our clients to invest all their money.
“Investors must have holding power to avoid any losses when the market is not doing well,” she told The Malaysian Reserve (TMR).
However, she said although there have been requests from some clients to make withdrawals from their investments, others are seeing these trying times as a good time to continue investing.
She added that those with extra funds would want to gain more profit instead of just keeping their money in a savings account or fixed deposit which offer a lower rate compared to the rate before this.
“Investors may also continue to top up their investments when prices are low, following the ‘buy low, sell high’ general rule.
“Investing in unit trust may diversify investment risks as one fund is invested into many sectors, countries and companies,” she added.
Meanwhile, another consultant said there are also fewer people investing especially from their Employees Provident Fund (EPF)
Account 1, as not everyone is eligible to withdraw from the account.
On the other hand, investors who put in cash in their investment remain unchanged, she added.
“Rather than predicting what will happen tomorrow, investors need to patiently wait and focus on the long-term prospects of their funds,” she told TMR .
However, public mutual unit trust consultant Md Zakhir Md Khir revealed that he has been receiving more clients this year compared to 2019.
With education and awareness among his clients, he said none of them had requested to withdraw their funds or pull out of investments as they understand it is a long-term commitment and would take 10 years or more to bear fruit.
“These days, people are more aware and smart. They know that an economic downturn period is the right time to invest because of the low price.
“With an option to invest into unit trust funds from their EPF’s Account 1 or cash, investors in fact can earn more if they have the right strategy,” he told TMR .