Unit trust

A unit trust is made up of an unincorporated mutual fund structure, which is an

investment that pools money from various investors and hold different securities, such as bonds
and equities. The element that attracts to invest in a unit trust is that it is established under a trust
deed, therefore the investors is basically the beneficiary of the trust. The value of the unit trust
funds fluctuates every day which heavily depends on the price of the securities bought by a
professional fund manager. One of the reasons why the couple should invest in a unit trust is that
it allows the profits goes straight to them instead of having their money reinvesting back into the
funds. Moreover, the funds that the couple put into the unit trust can be easily redeemed back. As
the unit trust has high liquidity, the couple may redeem all or part of the units and the unit trust
manager will purchase them as well. In another word, if the couple needs money, they could
easily sell the investments on any business day. Besides, the risk of the couple putting their
money into a unit trust is low to medium. This is because their funds are managed by a
professional fund manager and invested in such a way that is called ‘diversified portfolio’.
Therefore, I would recommend ‘AmChina A-Shares MYR’ managed by AmFunds Management
Berhad. This unit trust has a 19.83% ROI over the past 10 years. (Fsmone.com.my, 2021)

Cryptocurrency

Cryptocurrency is a digital form of payment which denominated in term of ‘token’ that

can exchanged online for goods and services. Cryptocurrencies are not controlled by government
and central authority as crypto is the peer-to-peer system than allow anyone and anywhere to do
transaction. All the transactions are recorded by using decentralized system called ‘blockchain’
to verify every single transaction. Therefore, Ben and Bella should not be worrying about the
safety of their funds invested. However, cryptocurrencies investment is considered as high-risk
investment, due to the volatility of the price of the cryptocurrency, as it changes every day. Also,
the liquidity of the cryptocurrency is doubtful as it is not easy to take the money out once it is
invested and the government has not legalized whether the income earned from such investment
should be taxed or not. The reason why I suggest Ben and Bella to invest in cryptocurrency as
this investment has extremely high profits, however it also carries with a lot of risks, which are
mentioned above. Therefore, I will suggest Ben and Bella to invest a small apportion of money
in cryptocurrency investment which may help Ben and Bella to achieve the retirement goal
earlier. The type of cryptocurrency that I will suggest Ben and Bella to invest in is ‘Chainlink’.
‘Chainlink’ is aiming to become a fully decentralized oracle network. It functions like a bridge
between smart contracts and off-chain applications, and it is built on the Ethereum blockchain as
well, which is the second-best cryptocurrency of all time after Bitcoin. Based on cryptocurrency
market, ‘Chainlink’ is one of the top 5 best performer for the last three years and it’s ROI is
8948.70%. (coinranking.com, 2021)

Real Estate Investment Trust

REITs allows Ben and Bella to buy an interest in a professional managed portfolio of real
estate. This investment vehicle allows them to profit from the capital appreciation from the value
of the properties invested. It also could generate profit for Ben and Bella from the rental income
generated from the properties. Since Ben and Bella has limited capital, which is RM 156,269.50,
it means they could only afford a small and cheap unit of property in Malaysia, which is
expected to only appreciate by a small margin. Therefore, instead of purchasing a property by
themselves, they should let an experienced real property agent to handle the investment. Then, he
or she will allocate the amount invested by Ben and Bella into different properties, which means
the diversified portfolio also carries a low risk. REITs has high liquidity as the fund can be sold
or redeemed easily too if Ben and Bella happen to need cash immediately. The REIT I would
recommend to Ben and Bella is Axis REIT, which has an ROI of 19 % per year.(fifthperson.com,
2021)

Robo-advisor investment

Robo-advisor investment is a digital financial advisor which manage the investment with
moderate to minimal human intervention and provide the financial advice to clients. This type of
investment is suitable to Ben and Bella as they will based on Ben and Bella’s risk tolerance,
goals and investing preferences to determine where the fund to be located such as bond, stock
and other investment, and help Ben and Bella to build up a portfolio of diversified investment to
meet the retirement needs. Besides that, the reason why robo-advisor investment is suitable for
people who are lack of investing knowledge like Ben and Bella as they will offer greater option
between 5 to 10 portfolios, ranging from conservative to aggressive. Hence, Ben and Bella will
not spend a lot of time in researching and monitoring the portfolio as the robo-advisor will make
investment on behalf of Bena and Bella. Among the robo-advisor in Malaysia, the one that I
recommend to Ben and Bella to use StashAway robo-advisor in Malaysia which allows us to
customize the investment plan depending on the risk appetite and goal. This StashAway robo-
advisor will offer a return of 2.4% per annual.

Conclusion

Ben and Bella should invest 50% of their initial capital in unit trust, which is under
‘AmChina A-Shares MYR’. The reason why I recommend in such a way is because this fund
provides long-term capital growth by investing primarily in the A-Shares equity market of the
People's Republic of China, which the country’s economic growth has already recovered from
the repercussion of Covid-19 outbreak. Therefore, the volatility and stability of the shares
invested in China’s equity market is very stable in the foreseeable future. The expected return of
this investment in 13 years’ time is RM 741,625.50(Working 1). Then, I would recommend the
couple to invest another 50% of their initial capital in real estate investment trust. Though, the
ROI generated from REIT compared to unit trust is slightly lower, but I would still recommend
investing half of the capital in it since REIT has a better potential to generate more ROI in the
future compared to unit trust, considering Malaysia’s properties increasing day by day.
Therefore, the expected return will be very optimistic in 13 years’ time too, which will bring the
couple a profit of RM 673,228.65. Therefore, the total expected return will be RM1,414,854.15.
Though, this amount is still not enough to reach the couple’s retirement needs after deducting
their EPF income, which is RM2,037,126.80 (RM2444168.80-RM407000). However, Ben and
Bella could invest in cryptocurrency to meet their retirement needs if they could afford to take
the high risk, with that being said, high risk comes with high reward. If they had invested
RM1000 in Chainlink 3 years ago, it will earn them a profit of RM89,000 today, but this is only
estimation as the price of cryptocurrency is very unstable. Therefore, Ben and Bella should really
consider investing in cryptocurrency if they have extra fund in the future. Regarding robo-
advisor investment, the ROI is too low compared to the others, so it is not recommended.
However, if Ben and Bella want the safest way to secure the profit, robo-advisor investment is
the best choice as it has the lowest risk rating compared to the other investment vehicles
Workings

1)Unit Trust

PV = 78,314.75 (50% x RM156629.50)

I = 19.8 (compounded annually)
N = 13 years
FV = 819,940.24
ER=819,940.24-78,314.75
=741,625.50

2) REIT
PV = 78,314.75 (50% x RM156629.50)
I = 19%(compounded annually)
N = 13 years
FV = 751,543.40
ER=751,543.40-78,314.75
=673,228.65
https://www.fsmone.com.my/funds/tools/factsheet/amchina-a-shares-myr?
fund=MYAMCHSHMY&src=best-and-worst-performers

https://coinranking.com/coin/VLqpJwogdhHNb+chainlink-link

https://fifthperson.com/top-5-malaysia-reits-2021/