According to the Youth Capital Market Survey conducted by Securities Commission Malaysia ( SC ) in 2022 , only 38 per cent of total respondents have a high level of financial literacy , while 62 per cent did not . It shows that young Malaysian people have little financial knowledge , which can influence their investments choice .

Investing is an essential aspect of making plans and ensuring a secure retirement . It not only offers financial security , but it also has the potential to grow wealth over time . Creating a wise financial choice today could be beneficial in the long run .

BY NOR ASILA NAZMI

AND

IMPORTANCE OF INVESTMENTS FOR YOUTH

Investing is a good way for young people to reach their financial goals and create longterm financial security . They will have a better chance of success if they start early and maintain their focus . Here are some of the most important reasons for young people to invest :

• Young people who start investing early in life have more time to reach their financial goals , such as saving for retirement , buying a home , or starting a business .

• Investing gives young people a chance to build their wealth over time . Instead of keeping money in low-profit savings accounts , they can make money on their investments .

• Protection against inflation , which diminishes the purchasing power of money . By investing in assets that increase in value , young people can preserve their money ’ s worth and purchasing power over time .

• Investing can teach young people the value of financial discipline , such as saving money , establishing financial objectives , and developing a long-term plan . It is an effective way to acquire the fundamentals of money management .

• Investing at a young age allows one to spread out their investments over a broader range of horizons . They can diversify their risk by investing in assets with different maturities and time horizons . For example , the cash flow from short and medium-term investments can be reinvested or spent as needed . In addition , a long-term investment ensures that a portion of the portfolio is protected against needless expenditure .

CONCEPT OF HALAL INVESTMENT

Muslims are encouraged to seek for wealth as Allah says in the Qur ’ an , “ And when the Prayer is finished , then may ye disperse through the land , and seek of the Bounty of Allah ; and celebrate the Praises of Allah often ( and without stint ); that ye may prosper .” [ Q . Al- Jumu ’ ah , 62 : 10 ]

Investing is a way to accumulate wealth . For Muslim investors , it is essential to make sure that the investments abide by shari ’ ah law . Investing in corporations or products that conform to Islamic beliefs and values is known as halal investment .

HARUNA BABATUNDE JAIYEOBA

INTERNATIONAL INSTITUTE FOR HALAL RESEARCH AND TRAINING ( INHART ) AND IIUM INSTITUTE OF ISLAMIC BANKING AND FINANCE ( IIIBF ) INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

In halal investments , financial transactions and activities are governed by the shari ’ ah principles , which prohibit certain elements such as charging or paying interest ( riba ), engaging in speculative or risky ventures ( gharar ), and investing in companies that are regarded as haram or forbidden , like those that deal in alcohol , gambling , or pork .

Investors who follow halal investment principles frequently prioritise investments that are morally and socially responsible as well as those that generate profit in an ethical way , such as by providing a valuable service or good .

MATTERS TO CONSIDER WHEN INVESTING

People can now choose from various investment products based on their values , financial objectives , and risk tolerance . Liquidity is one of the most essential matters to consider , especially for young investors .

The investment product should be relatively simple to purchase and sell so that young investors can access their funds when necessary . It is essential for individuals who may require access to their funds for unanticipated expenses or opportunities .

Fees are another important consideration since young investors may have limited financial resources . Selecting investments with low and reasonable fees and expenses is preferable as later , it does not outweigh the return .

The investment product should then offer diversification , spreading the investment across various asset classes , industries , and geographic areas . Diversification lowers risk and increases long-term income at the same time .

To spread out their risk , young investors might want to think about investing in different types of assets . Thus , if one class of asset loses money , the gains from the other class of asset may make up the difference and lead to a profit .

For Muslims , the most crucial aspect is ensuring that the investment products comply with shari ’ ah law while avoiding prohibited investments or activities . It makes

sure that the investment reflects their values and beliefs .

One of the most crucial and fundamental aspects of investing is determining investors ’ risk profile . Investors should objectively evaluate an investment ’ s risk and return , focusing mainly on the risk factor .

Suppose investors do not initially understand their risk profile or level of risk . In that case , they cannot tolerate each investment they participate in . It is argued that they may panic and make an inappropriate investment decision ( for example , buy a share at the wrong time ).

Finally , sustainability is another issue to consider . Investment should prioritise the elements of moral and socially responsible behaviour , such as investing in businesses that support sustainable practices or positively impact society .

DIVERSIFY YOUR PORTFOLIO WITH VARIOUS TYPES OF ISLAMIC INVESTMENT PRODUCTS

Diversification is one way to mitigate risk . As stated in the Qur ’ an : “ Further he said : O my sons ! Enter not all by one gate : go in by different gates . I can naught avail you against Allah . Lo ! The decision rests with Allah only . In Him do I put my trust , and in Him let all the trusting put their trust .” [ Q . Yusuf , 12 : 67 ]

Diversification is a risk-mitigation strategy that spreads investments across various financial instruments , industries , and other categories . Diversification may help spread the risk by spreading money across multiple types of investments . It seeks to maximise return by investing in various areas that will react differently to the same event .

ISLAMIC UNIT TRUST

There are numerous investment products from which young investors can choose and diversify their portfolios . Islamic unit trusts are one of the popular investment products because they have a low-risk appetite compared to other types of investment products .

The Islamic unit trust comprises money pools from various investors with similar