Want to invest, but don’t want to take a lot of risk? Perhaps you’re nearing retirement, or you need somewhere safe to stash your cash for the next few years. Maybe the thought of volatile market conditions gives you heart palpitations.
The good news is that there are a couple of ways to invest without incurring a lot of risk. Here are some of the lowest-risk ways to grow your money.
1. Employees Provident Fund (EPF)
The EPF has a strong track record of performance, delivering 5% to 6% annual returns in past years. For conventional accounts, the EPF also guarantees a minimum of 2.5% annual dividend.
EPF historical returns
Even if you are currently contributing to your EPF savings through employment, you can still top up your savings through the Self Contribution scheme, up to a maximum of RM60,000 a year. If you are not formally employed, you can contribute via EPF i-Saraan.
However, you can’t access your EPF savings any time you want. You can only withdraw your investments once you reach the age of 50, or if you need it for a specific purpose, such as buying a home, covering a medical expense or funding your child’s education.
2. Amanah Saham Bumiputera (ASB) / Amanah Saham Malaysia (ASM)
ASB and ASM are unit trust funds managed by Amanah Saham Nasional Berhad, a subsidiary of government-linked investment company Permodalan Nasional Berhad (PNB). Only Malaysian Bumiputeras can invest in ASB, while non-bumiputeras can invest in ASM.
While ASB has gotten flak for delivering lower distributions in the past few years, these two funds still provide decent returns:
(Bumiputera investors) | (Non-bumiputera investors) | |
|---|---|---|
Unlike conventional unit trust funds, which can have sales charges of up to 5%, these funds have zero sales charges. This means spending more money towards building wealth, not on fees.
3. High-yield savings account
Using a savings account is one of the easiest, lowest-risk ways to grow your money. But it’s also one of the slowest. Basic savings accounts can provide returns of around 0.2% to 1.5%, which is hardly enough to beat inflation.
Here’s where high-yield savings accounts come in. They offer much higher returns – if you are eligible. Here are a few examples:
| Maximum interest rate p.a. | Eligibility | |
|---|---|---|
| Citibank AcceleRate Savings Account | 4.88% | - 0.50% base interest rate - 4.38% on your incremental balance versus previous |
| Standard Chartered Privilege$aver | 6.15% | - 0.05% base interest rate - 0.70% if you deposit RM3,000 or more - 0.70% if you spend RM1,000 on your credit card - 0.70% if you spend RM1,000 on your debit card |
| UOB Stash Account | 2.38% | Tiered interest rates; 2.38% if you deposit between RM100,001 and RM200,000 |
| Hong Leong Bank Pay&Save Account | 4.15% | - Up to 2.25% if you place RM2,000 single deposit for three consecutive months - 0.50% if you spend RM500 on your debit card - 0.50% if you spend RM500 online on bills, loans or credit card bills |
| Alliance SavePlus | 3.00% | - Deposit RM500,000 or more |
| OCBC 360 Account | 3.25% | - 0.10% on your entire balance - 1.05% if you deposit RM500 every month - 1.05% if you pay at least three bills online - 1.05% if you spend at least RM500 on your OCBC card(s) |
There are a few hoops you need to jump through to get the best rates. They are also usually applicable up to a certain amount of deposit only.
On the upside, your funds will be extremely liquid – you’ll be able to access them immediately if you need to. You also have little-to-no risk of losing your capital, and in the unlikely event that your bank fails, Perbadanan Insurans Deposit Malaysia (PIDM) will reimburse you with the money you have deposited (up to RM250,000).
4. Money market or cash management fund
These unit trust funds invest in “money market instruments” which include short-term debts that are loaned to banks and the government. These funds also hold fixed deposits from banks. Because these funds invest in high-quality investments that mature quickly, there is very low risk involved.
Here a few money market or cash management funds in Malaysia:
| Product | 5-year annualised returns |
|---|---|
| Eastspring Investments Islamic Income Fund | |
| Nomura i-Cash Fund | |
| RHB Money Market Fund | |
| RHB Cash Management Fund 2 | |
| Maybank Money Market-I Fund |
Source: FSMOne; accessed in June 2023
At around 3% return per year, these funds offer slightly higher returns than fixed deposits accounts. But they have one advantage: with fixed deposits, you can lose part or all your accrued interest if you withdraw before your tenure matures. With these funds, you can withdraw any time without incurring a penalty.
You can invest in these funds through a Fund Management Institution (FMI) or an online platform like FSMOne.
Instead of investing directly in these funds, you can also invest through , a cash management portfolio that invests in the AmIncome Fund. StashAway Simple has a projected return rate of 2.4% per year.
StashAway also offers an investment portfolio, which you can enjoy reduced fees when you sign up through this link. But as always, remember to do your own research before investing.
5. Bonds
A bond is a debt security (kind of like an official IOU) issued by governments or companies who want to raise money. When you buy a bond, you’re lending money to the issuer. In return, the issuer promises to pay a predetermined interest rate at specific intervals (e.g. twice a year).
While bonds are low-risk investments, they can carry a higher risk than money market funds, depending on the issuer. Each bond is given a rating that takes into consideration how likely the issuer is able to repay the bond.
However, the cost of buying a bond directly is quite high – if you go to a bank, you’d need a minimum of RM250,000. It’s easier to invest in a bond exchange-traded fund (ETF) or bond unit trust fund, where your money will be pooled with those of other investors to invest in a group of bonds or other money market instruments. You just need to invest a minimum of RM1,000 with unit trust funds, and buy at least 100 shares of an ETF.
There’s only one bond ETF available in the Malaysian stock market, but there are many bond funds around. Here are a few examples:
| Type | Product | 5-year annualised returns |
|---|---|---|
| ETF | ABF Malaysia Bond Index | |
| Unit trust fund | AmanahRaya Syariah Trust Fund | |
| AmanahRaya Unit Trust Fund | ||
| AmDynamic Bond | ||
| Principal Islamic Lifetime Enhanced Sukuk Fund |
You can invest in unit trust funds through an FMI or through FSMOne, while ETFs can be bought and sold like shares in the stock market.
Should you invest in low-risk investments?
Investing in these low-risk options make sense if:
- you need to lower the risk of your portfolio
- you are nearing retirement
- you need to use your money within the next few years
But if you have a high risk tolerance and don’t need the money any time soon, consider allocating some money to higher-risk investments too. This is because while low-risk investments can be ‘safer’, the trade-off is that you could earn potentially lower returns. The key is to balance risk and reward with your financial goals.
This article was first published in 2020 and has been updated for freshness, accuracy and comprehensiveness.
