Interview with Bryan Zeng, Head of Investment Planning Division for A.D. Financial Sdn Bhd.
CFP Bryan Zeng shares his insight on Gold and Silver investment.
Q: How do you see Precious Metals investment in Malaysia market?
Bryan: It is definitely a growing market due to increasing awareness and demand from the public lately. Traditionally the Precious Metals market is dominated by Banks, Goldsmiths and Jewelers, now we can see increasing numbers of private companies that distribute or trade precious metals.
Similarly the product range has also increased dramatically, there are various physical and paper based Precious Metals products available in Malaysia now. In fact in some cases the situation has become “feverish” with “Gold Investments” or “Alternative Investments” seminars all over town.
Q: What is the current Malaysian’s mentality on Precious Metals investment? Are Malaysian aware of Precious Metals investment pros and cons?
There is unquestionably an increase of awareness on the benefits or the need to invest in Precious Metals. You can now hear people chat or discuss about Gold or Silver in Facebook, offices or at their favorite coffee shop. It’s just like how they have discuss about properties, stocks, cars and the “Next Greatest Opportunity”.
There would be obviously some people who are well informed and others who are less informed of the risks, benefits, costs, and the variety of options to invest in Precious Metals. I applaud your effort in creating and maintaining this blog which provides a concise flow of useful and up to date information to fellow Malaysians.
Q: Which one is your pick? Gold or Silver?
Why not have both? OK, seriously this really depends on each individual’s investment objectives, risk tolerance, investment horizon, available capital and financial situation. And of course, the price and trend of Gold and Silver itself. Okay, okay…I see that look on your face, but I’m a practicing Financial Planner, that’s what I look at first! 😀
Well if you want specifics, I’d say Gold for the general masses, for more experienced investors with good knowledge they should go for both Gold and Silver. Usually I advise a 2:1 Gold-to-Silver ratio but more aggressive investor can raise it to 1.5:1 or more.
Q: Is Gold a lower risk investment and why?
Gold is a lower risk investment in relation to Silver. One key reason of buying Gold is as a store of value for your wealth. This is where Gold can be a longer term investment vehicle. Silver tends to be much volatile than Gold, but have a much higher potential of gains compared with Gold. If you can time your entry and exit well in Silver, you stand to reap handsome profits (expect the exact opposite if you got it wrong!)
Q: What is the percentage of one’s portfolio should be in Precious Metals?
For a start, having 5% of one’s investment asset in Precious Metals is good. This can be increased to 10%-15% and more depending on the knowledge, experience and financial situation of the investor.
I would not recommend an allocation of more than 20% unless one knows the Precious Metals market really well. For example, for a typical mass-affluent investor, I do not think it is wise to hold 2kg or 3kg of Gold Bars where one can use that money to invest in good properties which can give rental income and capital appreciation.
Q: What are the strategies would you recommend for new comer into Precious Metals investment?
Understand as much as you can about the commodity. The Internet is a good resource for your research. Get information from preferably independent sources, and seek to verify your finding. Be wary of information from “product pushers”. Also understand yourself, your investment objective, resources and behavior. There is no need to quickly jump on the band-wagon just because everyone is doing it. Your world will not end if you do not own Precious Metals, but you could preserve or increase your wealth if you do it right!
Bryan Zeng is the Head of Investment Planning Division of A.D. FINANCIAL SDN BHD an independent Financial Planning firm licensed by Securities Commission and Bank Negara Malaysia. He is a CFP professional, and has more than 9 years in the retail investment industry. His passion is in delivering value through superior investment planning.
There's 2 Comments So Far
December 4th, 2011 at 12:33 pm
Dear Sir,
What type of bars would you recommend to buy for a beginner?
TQ
December 5th, 2011 at 12:18 am
For a beginner, go for small size bar – 1 oz bars. Scottsdale Silver bars, Sunshine Silver bars and Silver Towne Silver bar are pretty well known bars. PAMP Suisse Silver bars are nice but they also carry a higher premium.
You can read on my previous posting on this here: Which Silver Bar to Buy in Malaysia?