Thursday 22 October 2009

Returns on share investment in Malaysia

Over the long run, the return on an investment of shares is very much higher than the return on fixed deposits. 

Historically, in Malaysia/Singapore, the return on share investment had been about twice as high than that obtainable on fixed deposit (based on past ten years' record). 

However, since one can never get something for nothing, the much higher return has been accompanied by much greater riskiness of an investment in shares because much of the return from share investment has been in the form of capital gain which is highly unpredictable. 

Historically, about three quarters of the total return obtainable from share investment has been obtained by a combination of good years when the return may be higher than 100 percent as well as bad years when the loss may exceed 50 percent

The changes in the price of share have been so large that they totally swamp the small regular income one can get from shares (in the region of 2-4% on the value of the initial investment).

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