This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on April 11 - 17, 2016.

Questions: As a 39-year-old with RM25,000 in personal savings, are there any investments in foreign currencies available for me to invest in? The following are my personal details:

 > Abdullah, via email

Answer: Getting exposure to foreign currency investments can generally be achieved by directly investing in foreign stocks, bonds and properties or through a collective investment scheme, such as a unit trust fund that has exposure to the above-mentioned asset classes. 

The other option would be to open a foreign currency deposit account at a financial institution. This option has the least market risk as there is no underlying investment — hence, the lower returns. But it still offers investors exposure to foreign currency movements. Foreign currency exposure can be a double-edged sword, both in terms of risk and reward.

In your case, the more optimal choice would be to invest in unit trust funds to achieve better portfolio diversification, given the relatively small investable amount for direct investment into shares, bonds or properties. Given the age and risk appetite, we suggest investment in either equity or balanced unit trust funds, and preferably funds that have stable income stream to service the reader’s other financial commitments. 

To gain exposure to foreign currency, an investor can explore a unit trust fund with investments in foreign equities/bonds or a fund based in a currency other than the ringgit. The Singapore dollar can be considered, given its historical movement against the ringgit.

Lastly, our advice to investors is to diversify their portfolio. Never put all your eggs in one basket. Know what you invest in. If it is shares or bonds, know and understand the business of the company you are investing in. If it is unit trust funds, know the characteristics of the fund and the strategy of the fund manager.

HoeHave a personal finance query? Send it to: Consult the Experts, Personal Wealth, Level 3, Menara KLK, No.1, Jalan PJU7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor; Fax: (03) 7721 8018; email: [email protected], Attn: Consult the Experts. Please include your full name, address, contact number and pseudonym, if any.

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