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  • Mr Money TV

Property vs Stock Investment Malaysia: Which Is Better? (2024)

Updated: May 24

In Malaysia, oftentimes, property and stocks stand out as the two predominant forms of investments. Both present unique advantages, risks, and strategies, making the choice between the two not-so-black and white.

In this article, we’ll dive into the world of property and stock investing to provide a clearer picture of their differences and hopefully, it’ll help you make better informed decisions.

Property vs Stock Investment Malaysia: Which Is Better?
Should You Invest In Property or Stocks in Malaysia?

Property Investment in Malaysia

Advantages of Property Investment:

1. Tangible Asset

Similar to global markets, Malaysian real estate, especially in prime areas like Kuala Lumpur, Penang, and Johor Bahru provides you with a tangible, physical asset.

This offers both utility like living in it or renting it out and security where you can touch and see the property.

2. Rental Yield

Malaysia has become a hub for expatriates and international students, especially in places like Cyberjaya, Kuala Lumpur and Selangor.

This provides you with the opportunity for rental income. This could either mean renting out the entire property or even individual rooms.

3. Tax Benefits

The Malaysian government has introduced various tax benefits and deductions for homeowners renting out their property as well as first-time home buyers.

In terms of rental tax deduction, you can get write-offs on:

  • Assessment tax

  • Quit rent

  • Interest on home loan

  • Fire insurance premium

  • Expenses incurred on rent collection

  • Expenses incurred on rent renewal

  • Expenses on repairs and property maintenance

On the other hand, according to FMT, if you’re a first-home buyer of residential properties, you are exempted from stamp duty on the sale and purchase agreement (SPA) and loan agreements for residential properties priced below RM500,000.

*Do note that the exemption applies to Malaysian citizens on any SPA completed between Jan 1, 2021 and Dec 31, 2025.

4. Leverage

With real estate, you can buy a property with a fraction of the price down (through a mortgage) and benefit from the full appreciation of its value over time.

The good thing is that financial institutions in Malaysia also often offer competitive mortgage rates, allowing you to leverage your investments with relatively low initial capital.

Disadvantages of Property Investment:

1. Market Oversupply

Certain segments of real estate in Malaysia, especially luxury condos in Kuala Lumpur, have seen an oversupply, which might affect rental yields and resale values.

Additionally, the property market can also go through long periods of decline, leaving you with assets worth less than their buying price.

2. Maintenance Costs

Owning property comes with ongoing expenses like taxes, maintenance, repairs, and insurance.

This means you’ll need to ensure that you have extra funds to not only cover those expenses but any “emergency” costs that may arise.

3. Illiquidity

Real estate is not as easily converted to cash compared to stocks. Selling a property can take weeks if not months.

So, when you decide to invest in property, you’ll need to keep in mind that this is a long-term investment.

Stock Investing in Malaysia

Advantages of Stocks Investment:

1. Liquidity

The appeal to stock investing is how “fast” you can profit from it. Stocks can be sold almost instantly during market hours, providing access to cash quickly.

In that sense, stocks are pretty liquid assets. However, it’s worth noting that you’ll only want to do this if you have the knowledge and time to spare.

2. Dividends

In Malaysia, there are many established companies, especially those in finance and utilities that regularly offer dividends, providing shareholders with a consistent income stream.

3. Diversification

With stocks, diversifying your portfolio is simpler and a healthy practice to adopt when investing.

You can invest in various sectors, industries, and regions with a smaller amount of money.

4. Growth Potential

Historically, the stock market has shown significant growth over long periods.

Disadvantages of Stocks Investment:

1. Market Volatility

As with global markets, Malaysian stocks can be volatile, influenced by both domestic and international events.

This could lead to potential short-term losses which is why understanding your financial goals, risk tolerance and investment horizon is important.

2. Requires Research

Effective stock investing often requires regular monitoring, research, and understanding of the market dynamics.

So, before investing, it’s best that you pick up on some knowledge then along the way, you can continue learning even more so that you’re able to make better investment decisions.

3. Emotional Factors

The stock market's ups and downs can be emotionally taxing. And when there are emotions involved, it could potentially lead to making impulsive investment decisions.

Maybe that’s why there are more and more robo-advisors popping up these days?

Anyway, what you need to understand is that the market’s volatility is normal and more often than not, the market bounces back after a dip. So, it’s important to stay disciplined on your financial goals when you’re investing in the stock market.

Property vs. Stock Investing in Malaysia: Which Is Better For You?

1. Initial Investment

Property: In Malaysia, buying a property, especially in prime areas, requires significant initial capital.

Stocks: In contrast, with just a few thousand or even hundreds of ringgits, one can start investing in a diverse portfolio of stocks.

2. Market Knowledge

Property: Understanding property hotspots like Bangsar, Desa Park City, or emerging areas in Shah Alam can be crucial for real estate.

Stocks: For stocks, staying updated with top-performing sectors, whether in the local or global stock can be equally critical.

3. Investment Period

Property: Real estate in Malaysia, given the current oversupply in some segments, might require a longer-term perspective.

Stocks: Depending on the strategy, can offer both short-term trading and long-term holding opportunities.

My Personal Opinion on Property vs Stock Investing in Malaysia

The decision between property vs stock investing in Malaysia hinges on individual preferences, financial goals, and market knowledge.

For some, the allure of owning tangible property might be irresistible. Others might find the dynamic nature of the stock market more exciting and lucrative.

Perhaps the ideal approach for you is a balanced portfolio, combining the stability and tangibility of property with the liquidity and growth potential of stocks.

Personally, I do a bit of both. One of my income streams is through rent yield and I’m also a pretty active investor whether it’s in the local market, global market or cryptocurrency.

This is because I believe in the importance of diversification. In fact, I always advocate that you should never put all your eggs in one basket!

However, whichever side of the fence you're on, at the end of the day, due diligence, continuous education, and sometimes even seeking advice from financial experts, remain key to successful investing in the Malaysian context.

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