Investing your money is not really that difficult. First, you need to decide on how to grow that money. By knowing the \u201chows\u201d you can easily choose the instrument that can stretch your Ringgit, and be well on your way to become the next Buffett!<\/p>\n
<\/span>1.\u00a0Interest earned<\/span><\/h2>\nThis is another way of how your money can grow through investments. By putting your money in an investment<\/a> like shares, you are essentially lending your money to a company at a fluctuating rate.<\/p>\nThe interest rate will change depending on various factors, such as the market, the company\u2019s performance and even the overall economy.<\/p>\n
Investment vehicles like unit trust, bonds, stocks and REITs, all help you grow your money the same way. The difference is the risk level and rates.<\/p>\n
<\/span>2.\u00a0Compounding interest<\/span><\/h2>\nAlmost every investor knows the true power of compounding interest. It is simple: when an amount is compounded, it doubles up. For example, two becomes four, four becomes eight, eight becomes 16, and so on, so forth.<\/p>\n
Some of the instruments that use the magic of compounding interest are your savings account, Fixed Deposit account<\/a>, unit trust and bonds. The popular Malay saying, sedikit-s<\/i>edikit<\/i>, lama<\/i>-lama jadi bukit<\/i>, definitely applies to the concept of compounding.<\/p>\n![\"A](\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2025\/01\/03124324\/compounding.png\")
<\/a><\/p>\nThe difference between compounding interest and interest earned is, if you leave your dividends to be reinvested or if you add on to your investment regularly, you will see your money snowball to an even bigger amount over time.<\/p>\n
![\"Line](\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2025\/01\/03124642\/saving_investing.png\")
<\/a><\/p>\nTime is the best friend of compounding interest<\/a>. The longer you leave your money to grow, the more you get at the end of the day.<\/p>\n<\/span>3.\u00a0Dividends<\/span><\/h2>\nBy purchasing shares of a company, you\u2019re entitled to receive a portion of the company\u2019s earnings, known as cash dividends.<\/p>\n
Dividends<\/a> are known to provide better returns compared to interest earnings from bonds. However, they come with higher risk as the rates of return depend on the company\u2019s performance.<\/p>\nThe dividend payout depends on the company management\u2019s discretion, which is usually influenced by the company\u2019s performance.<\/p>\n
For example, a profit-making company may choose not to give dividends to its investors despite being profitable, by reinvesting the additional surpluses back into the company in the interest of growth or expansion.<\/p>\n
Alternatively, investors are also offered stock dividends instead of the usual cash dividends. For instance, if you hold 100 shares of a company and the company issued a 5% stock dividend, you\u2019ll have 105 shares after the payout.<\/p>\n
The benefit of stock dividend is you get the option to either cash out the extra shares, or retain the shares in hopes of higher capital appreciation. However, transaction fees and charges may apply. Blue chip stocks are often cited as a safe bet. They provide the best steady dividend payout, but the purchase price may be too expensive for some.<\/p>\n
An affordable way to get in the blue chip game is to buy unit trust<\/a> or mutual funds, which provides the additional benefits of diversification<\/a>.<\/p>\n<\/span>4.\u00a0Capital appreciation<\/span><\/h2>\nIf you bought something for RM100 and sold it for RM200 the following year, the extra gain of RM100 is known as capital appreciation.<\/p>\n
The interest rate will change depending on various factors, such as the market, the company\u2019s performance and even the overall economy.<\/p>\n
Investment vehicles like unit trust, bonds, stocks and REITs, all help you grow your money the same way. The difference is the risk level and rates.<\/p>\n
<\/span>2.\u00a0Compounding interest<\/span><\/h2>\nAlmost every investor knows the true power of compounding interest. It is simple: when an amount is compounded, it doubles up. For example, two becomes four, four becomes eight, eight becomes 16, and so on, so forth.<\/p>\n
Some of the instruments that use the magic of compounding interest are your savings account, Fixed Deposit account<\/a>, unit trust and bonds. The popular Malay saying, sedikit-s<\/i>edikit<\/i>, lama<\/i>-lama jadi bukit<\/i>, definitely applies to the concept of compounding.<\/p>\n<\/a><\/p>\nThe difference between compounding interest and interest earned is, if you leave your dividends to be reinvested or if you add on to your investment regularly, you will see your money snowball to an even bigger amount over time.<\/p>\n
<\/a><\/p>\nTime is the best friend of compounding interest<\/a>. The longer you leave your money to grow, the more you get at the end of the day.<\/p>\n<\/span>3.\u00a0Dividends<\/span><\/h2>\nBy purchasing shares of a company, you\u2019re entitled to receive a portion of the company\u2019s earnings, known as cash dividends.<\/p>\n
Dividends<\/a> are known to provide better returns compared to interest earnings from bonds. However, they come with higher risk as the rates of return depend on the company\u2019s performance.<\/p>\nThe dividend payout depends on the company management\u2019s discretion, which is usually influenced by the company\u2019s performance.<\/p>\n
For example, a profit-making company may choose not to give dividends to its investors despite being profitable, by reinvesting the additional surpluses back into the company in the interest of growth or expansion.<\/p>\n
Alternatively, investors are also offered stock dividends instead of the usual cash dividends. For instance, if you hold 100 shares of a company and the company issued a 5% stock dividend, you\u2019ll have 105 shares after the payout.<\/p>\n
The benefit of stock dividend is you get the option to either cash out the extra shares, or retain the shares in hopes of higher capital appreciation. However, transaction fees and charges may apply. Blue chip stocks are often cited as a safe bet. They provide the best steady dividend payout, but the purchase price may be too expensive for some.<\/p>\n
An affordable way to get in the blue chip game is to buy unit trust<\/a> or mutual funds, which provides the additional benefits of diversification<\/a>.<\/p>\n<\/span>4.\u00a0Capital appreciation<\/span><\/h2>\nIf you bought something for RM100 and sold it for RM200 the following year, the extra gain of RM100 is known as capital appreciation.<\/p>\n
The difference between compounding interest and interest earned is, if you leave your dividends to be reinvested or if you add on to your investment regularly, you will see your money snowball to an even bigger amount over time.<\/p>\n Time is the best friend of compounding interest<\/a>. The longer you leave your money to grow, the more you get at the end of the day.<\/p>\n By purchasing shares of a company, you\u2019re entitled to receive a portion of the company\u2019s earnings, known as cash dividends.<\/p>\n Dividends<\/a> are known to provide better returns compared to interest earnings from bonds. However, they come with higher risk as the rates of return depend on the company\u2019s performance.<\/p>\n The dividend payout depends on the company management\u2019s discretion, which is usually influenced by the company\u2019s performance.<\/p>\n For example, a profit-making company may choose not to give dividends to its investors despite being profitable, by reinvesting the additional surpluses back into the company in the interest of growth or expansion.<\/p>\n Alternatively, investors are also offered stock dividends instead of the usual cash dividends. For instance, if you hold 100 shares of a company and the company issued a 5% stock dividend, you\u2019ll have 105 shares after the payout.<\/p>\n The benefit of stock dividend is you get the option to either cash out the extra shares, or retain the shares in hopes of higher capital appreciation. However, transaction fees and charges may apply. Blue chip stocks are often cited as a safe bet. They provide the best steady dividend payout, but the purchase price may be too expensive for some.<\/p>\n An affordable way to get in the blue chip game is to buy unit trust<\/a> or mutual funds, which provides the additional benefits of diversification<\/a>.<\/p>\n If you bought something for RM100 and sold it for RM200 the following year, the extra gain of RM100 is known as capital appreciation.<\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/span>3.\u00a0Dividends<\/span><\/h2>\n
<\/span>4.\u00a0Capital appreciation<\/span><\/h2>\n