A well-diversified portfolio is vital to any investor’s success. Most beginner investors tend to not factor in their risk tolerance level when creating a portfolio and invest blindly for years.

When we finally take a good look at our investment portfolio, it is usually a rude awakening because it looks like the picture below (for the unninitiated- it’s a plate of rojak representing the mess you’re in!)

messy portfolio

Let’s recall how we got ourselves into this messy investment portfolio…

Hot stock tips by friends and relatives? Lack of understanding of asset allocation? No clear investment objective?

Your investment portfolio should strive look to like this – allocated by geography and asset class (arranged neatly and in order unlike the chaotic rojak):

To achieve an ideal investment portfolio, you need to determine firstly – asset allocation for the investment goals and secondly, your risk tolerance.


Asset allocation is the diversification of your portfolio into different asset classes which exhibit low correlation amongst each other, taking into account different geography and currencies.

Studies show that asset allocation policy contributes 91.5% to portfolio performance! Other determinant factors contribute much less i.e. market timing (1.8%) and stock selection (4.6%).

What are the common asset classes?
(i) Equities – a share of a company. Entitles the shareholder to a company’s profits. Can be bought as direct share or through Exchange traded funds (ETF) or Unit/Mutual Trust funds,
(ii)  Fixed income– aka bonds, debt for companies and government,
(iii)    Commodities – traded good including metals, oil, agricultural products,
(iv) Real estate – residential and commercial land and structures,
(v)  Currencies – a form of payment typically at a national level,
(vi) Derivatives – complex financial contracts i.e investment linked products, options, swaps that ‘derive’ from an underlying asset.

Risk profile depends largely on your age. If you have a steady income flow and you are young (below 30), the higher your risk appetite and vice versa.

For the higher risk appetite investors, you may consider the ‘Rule of 120’ which indicates a percentage of your money invested in equities should be equal to 120 minus your age.

Here are some examples of balanced-higher risk appetite asset allocation based on your age:

Ages 20-30: 85% equities, 10% real estate, 5% cash
Ages 30-40: 65% equities, 20% fixed income, 10% real estate, 5% cash
Ages 40-50: 55% equities, 27.5% fixed income, 12.5% real estate, 5% cash
Ages 50-60: 40% equities, 35% fixed income, 15% real estate, 10% cash.

The other risk appetite consideration includes:
1. Time horizon – ability to hold the investment through volatile market cycles
2. Loss tolerance – how much can you afford to lose and still sleep at night? This will build your stop loss/exit strategy
3. Capital preservation – do you need principal protected investment products to safeguard your nest egg?
4. Investment restrictions – does your investment need to be shariah compliant or ESG compliant?
5. Size of your investment vs net worth – generally the smaller the ratio of investment vs net worth, the more aggressive you can be.

For beginner investors, I do not recommend stock/equity picking because to do it well, a lot of time needs to be spent on single company research.

In addition, you need to familiarise yourself in digesting financial reports and keep up with the current company news flow.

The trick is not to pick the right company. The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently.- Warren Buffet

As the US market makes up ~58% of the global economy, I would recommend that you look into investing in an ETF and/or Unit/Mutual Trust Funds which tracks the S&P 500 or funds that have invested in the top S&P 500 companies.

The same would apply if you wish to invest in another country specific index tracker.

Without rummaging through a pile of research reports, you can create an investment portfolio with direct equity exposure to a wide range of companies in US, Asian and China through an ETF on Bursa Malaysia by investing in these ETFs.

I have listed the 3 equity ETFs with its top 10 holdings, a gold, REIT and Bond ETF for your convenience to start building an ideal investment portfolio. You can invest in these 6 Bursa Malaysia ETFs through any existing stockbroker:

MyETF Dow Jones US Titan 50 – Microsoft, Apple, Facebook, Alphabet, Tesla, Nvidia, Johnson & Johnson, Visa, Home Depot, Procter & Gamble
Principal FTSE ASEAN 40 Malaysia – DBS, OCBC, UOB, Bank Central Asia, PTT, Public Bank, Bank Rakyat Indonesia, Singtel, Maybank, Siam Cement
TradePlus S&P New China Tracker – AIA, Alibaba, Li Ning, Mei Tuan,TenCent, JD.com, Ping An, Wuxi, Baidu, Nio
TradePlus Shariah Gold Tracker
ABF Malaysia Bond Index Fund
TradePlus MSCI Asia ex Japan REIT tracker

For US ETFs, there are more than 5,000 ETFs traded. You can invest through your broker by quoting to them the name of the ETF. Alternatively, do read my previous blog post on robo advisor which can assist you in getting direct US ETF exposure.


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