Global investing without a doubt enables you to access investment opportunities that are not present domestically. Investing internationally is a way through which an investor may acquire financial assets and securities in different countries of the world. It may serve different purposes like diversification of portfolio, larger returns, more stability and the list goes on.
Episode 21 of the Top In Tech Series: Being a Global Investor sought to gain insights on what it is like to be a global investor and the state of cryptocurrencies in Malaysia. Hosted by Karamjit Singh, the guest panelists were Kazumasa Mise, Chief Executive Officer, Rakuten Trade, Wong Wai Ken, Country Manager (Malaysia), StashAway and Dato’ Fadzli Shah, Chief Executive Officer, MX Global.
Being a Global Investor based on Malaysia context
Kazumasa believes that the locals can become global investors as there are many global financial products that can be accessed today. There is also the worldwide financial asset — cryptocurrency that Malaysians can invest in. By investing globally, portfolios have generally had the dual benefit of better markets and appreciating currencies.
“Investing globally is paramount in getting returns. Being a global investor is never been easier because if we look at 5 years ago, we were able to access through an interactive broker but now with so many product providers, it is easy to trade any asset class from the comfort of your own home,” Wong said.
At the end of the day is your asset allocation and the way you form and build your portfolio. Your ideal asset allocation is the mix of investments, from most aggressive to safest, that will earn the total return over time that you need. The mix includes stocks, bonds, and cash or money market securities. The percentage of your portfolio you devote to each depends on your time frame and your tolerance for risk.
Fadzli pointed out that through the internet and the vast amount of digital applications, accessing markets that are on the other side of the world and discovering brand new products that typically takes a long time to get in our market is no more a hassle.
“However, in Malaysia, we have to be conscious of the fact that there are local biases and perceptions. Therefore, it is always advised to do your own research on portfolios, cryptocurrencies and investing securities. Be responsible for the potential upside and downside,” he explained.
Building your portfolio in a secure way in 2022
Kazumasa noted that financial literacy is vital. From a stockbroker point of view, customers have to pick up on the stocks. 80% of customers have less than 3 years of experience and most of them are unsure of stock trading. Hence, we provide webinars on stock trading, investment talks, diversifying portfolios and many others.
To become financially literate, an individual must learn about key components in regards to investing. Some of the components that should be learned to ensure favorable investments are interest rates, price levels, diversification, risk mitigation, and indexes. Learning about crucial investment components allows individuals to make smarter financial decisions and increases their inflow of income.
According to Wong, the biggest risk for this year is inflation. If you were to look at a 1-year time horizon, the building blocks of your portfolio should take inflation into account since it is now not only a problem in the US but also globally. Traditional asset classes like gold tend to look at inflation hedging but then there are also energy assets such as oil and gas or commodity-producing countries like Australia equities that provide investors with higher returns.
“For most Malaysians, investing in crypto is not an immediate planned strategy. This is because either they are not in tuned or heard enough about it. A lot of investors in the retail space join the cryptocurrency field because they heard it from a friend, or the fear of missing out or perhaps they see an outsize of returns. If you have started your crypto journey, make sure to invest on a platform that is approved by the Securities Commission. In Malaysia, there are 5 versions of crypto effectively whitelisted by the Securities Commission which are Bitcoin, Ethereum, Litcoin, Ripple and Bitcoin cash,” Fadzli explained.
“Investing will have a lot of volatility but one way of investing through it is to invest for the long term. Sound oversimplified but if you really look at the data and conduct your research, it would certainly set your success in the long run,” Wong concluded.
“If you have decided to invest in the cryptocurrency market, as with any other investment, it's important to do your research before you begin your investment journey, Fadzli concluded.
“Collect and diversify as much as possible. This would distribute financial risks across different instruments and different industries to maintain a balance,” Kazumasa concluded.
Find out more about the discussion from the replay of Top In Tech Episode 21: Being a Global Investor here.