Understand This Before You Start Investing: Risk Tolerance and Asset Types

Estimated reading time: 17 minutes

It’s important to understand your risk tolerance – the level of risk you’re willing and able to handle (especially in the volatile market) before you start investing. This is because it will definitely determine the types of assets you choose and the amount you invest, which in turn affects your potential returns as well as your ability to cover losses when the market fluctuates!

In today’s blog, I’m going to show you the three main levels of risk tolerance and the asset types that best align with different investment goals. So that you can choose your asset portfolio wisely!

Three Main Levels of Risk Tolerance

Here are the three main levels of risk tolerance: conservative, moderate, and aggressive. Each one offers different rates of return, as you can see here.

Risk vs Rewards

Based on the graph below, you can see that each of these assets carries a different level of risk and reward, ranging from low to high.

• Insured (shaded region): insured by PIDM (Perbadanan Insurans Deposit Malaysia) that will protect the bank depositors up to RM 250,000 in case a financial institution such as a licensed bank goes bankrupt.
• Non-insured: non-insured by PIDM as they are considered investments.

Cash & Foreign Currency

First, let’s talk about cash (which includes foreign currencies). This is the least risky if not entirely risk-free assets, because if you keep RM 100 in your pocket, it will still be RM 100 after 10 years, excluding the effects of inflation and depreciation. When it comes to benefits, it’s not only liquidity, but also acts as a buffer which allows you to seize buying opportunities in the market. For example, if you want to invest in the US stock market, you’ll need USD, right?

With these reasons, I personally convert some of my money into foreign currencies like USD for two key reasons: first, as an opportunity fund, so I’m always ready to invest when the right chance comes along, and second, to protect my money’s value as the MYR weakens against the USD over time.

So what I do is exchange my MYR to USD using the moomoo app, as I frequently use it for my investments. I find it quite convenient because it allows currency exchange not only to USD but also to other popular options like SGD, HKD, and CNY. From my experience, the process is transparent, smooth, and hassle-free as the system automatically calculates the exchangeable amount based on my available balance.

Plus, exchanges are processed in real-time during stock trading hours, which means you don’t have to wait in long queues at banks or money changers. Convenient and easy!

For those of you curious of their daily conversion limit, here’s a quick table (basically, there’s nothing for you to worry about!):

Fixed Deposit

Second, we have fixed deposits – the most popular asset you’ve likely heard your aunties and uncles talk about. Simply put, you deposit a certain amount of money in the bank and leave it there without taking out a single cent until it matures (ranging from one week to 10 years), then collect the interest.

Here are some examples of fixed deposit interest rates offered by certain banks in Malaysia. Generally, the longer you keep your money in a fixed deposit, the higher the interest rate you’ll earn.

For me, the downside is that fixed deposits aren’t as liquid as cash in a bank account. However, it’s a great option for beginners looking to manage your finances, as it allows you to earn a steady return while taking the time to learn about more advanced investments.

Money Market Fund (MMF)

Moving on, if you’re ready to start investing, MMFs (Money Market Funds) are a great place to begin. They are low-risk investments, especially compared to riskier options like ETFs, REITs, and stocks, which I’ll cover later. They even offer higher returns of around 4% p.a., compared to fixed deposits at 2-3% p.a. While returns aren’t guaranteed, the biggest advantage is liquidity where you can withdraw your money anytime.

Personally, I’ve invested in Moomoo’s MMF – Cash Plus, which offers one of the best rates of more than 4% p.a. for its USD fund that is not offered by many other MMF. This means you can benefit from the stability of USD which helps offset losses when MYR depreciates.

The best part of it is it will credit daily returns to your account, along with a standout feature – SmartSave. From my experience, it’s super convenient as it automatically invests idle cash from my brokerage account into Cash Plus and pulls funds when needed to cover trades that exceed my cash balance. Thanks to this, I’ve never missed a trade due to insufficient funds! If you’re interested, Moomoo MY is currently offering Welcome Rewards of up to RM 1,800*, sign up now to claim yours!

Bond

Now, if you say: I want something that can give me fixed income, what should I go for? Then bonds might be the right choice for you. In simple terms, a bond is where you lend your money to a government or company for a set period of time to help fund their projects or operations. In return, they will pay you interest regularly and repay the original face value of the bond when it reaches the maturity date.

As of now, bonds are not available on Moomoo MY yet. However, you can still find bond ETFs, which are ETFs that invest in bonds, on Moomoo MY.

Exchange-Traded Fund (ETF) / Real Estate Investment Trust (REIT)

On the topic of ETF, if you’re looking for portfolio diversification, ETFs (Exchange-Traded Funds) are a great choice because it allows you to invest in a basket of stocks, bonds, or commodities with just a single trade – less riskier than stocks, but still pretty good returns.

Think of popular index ETFs such as the Vanguard S&P 500 ETF that tracks the S&P 500 Index. This Index ETF provides broad exposure to the top 500 US companies like Meta, Microsoft, and Amazon with an annual return of around 12% p.a. from the past 10 years, or maybe even, the tech-heavy Nasdaq-100 Index (famously tracked by the QQQ ETF) that returned an average of more than 19% p.a. for the last 10 years – all these ETFs, on top of the benefit of investing in USD are all available at your fingertips, in the moomoo app itself.

On another note, if you want exposure to real estate but don’t want the hassle of owning properties, you can invest via something called REITs (Real Estate Investment Trusts). For this, you are like the landlord of those commercial properties such as shopping malls, offices, and hotels but without the need to buy or manage anything yourself. Plus, you can earn potential rental income and benefit from long-term property appreciation at the same time. 

Most of the popular shopping mall or buildings that you know are actually in the moomoo app, like KLCC (one of the largest and most stable REITs in Malaysia), IGBREIT (that owns Mid Valley Megamall & The Garden Mall), SUNREIT (those Sunway Pyramid, Sunway Resort Hotel, and Sunway University), PAVREIT (the 3 pavilions), and plenty more that you can discover yourself.

Stock

If you are willing to take on more risk for higher long-term growth, stocks will be the one suited for you. This is because it allows you to invest directly in a company, such as Apple (AAPL), Microsoft (MSFT), and Meta Platforms (META). By buying their stocks, they give you a share of their profits, and some even provide dividend returns.

For example, now with Artificial Intelligence (AI) growing in a rapid pace, this trend may further invigorate the stock market. Take tech companies like those in the semiconductor sector such as Inari Amertron Berhad – Malaysia’s biggest outsourced semiconductor assembly and test firm for example. In just a year, they earned a net profit of 29%!

But this doesn’t mean it’s always profitable, and share prices can fluctuate wildly. However, as the saying goes: “high risk, high return”, so it all depends on what your risk appetite is. If you care about what’s happening right now, you can use the moomoo app, which provides real-time prices for stocks across different markets and will also show you everything you need to know about that particular stock.

With moomoo, you can trade on those popular markets including Malaysia, US, Singapore, Hong Kong, and China. This means you can access the most well-known companies such as Maybank, CIMB, Tesla, Apple, UOB, OCBC Bank, Tencent, JD, BYD, and Bank of China! It gives you more opportunities in high-growth industries, it’s nothing’s better than that!

Property

Furthermore, we have property, which typically requires a larger capital investment. Nowadays, there’s a ton of platforms like PropertyGuru and iProperty, where you can see all the property available in different locations. Not only that, but with just a click, you can get to know the property prices, rental rates, images, nearby infrastructure, loan calculations, and more, all in one place.

If you are wondering about the risk, usually the major challenges are dealing with tenants who fail to pay rent and covering maintenance and repair costs. Also, there will be liquidity issues as you have to wait a long time to actually receive the cash. Not only that, if you decide to use agents to sell or rent your house, there will be many middleman fees attached to it as well. Therefore, be sure to carefully consider these factors before investing!

Initial Public Offering (IPO)

Moving to the high risk categories, we will start with IPOs (Initial Public Offerings). This feature allows you to subscribe to shares of early-stage companies, which usually have a significantly higher growth potential.

Take Oriental Kopi as an example, a well known Malaysian cafe chain that is popular for its traditional Nanyang cuisine. Currently, their price per share is around RM 0.70 at this time of writing. If you were one of the lucky early investors that bought their IPOs (which was priced at RM 0.44 per share), you would’ve had a RM 0.26 profit for every share that you sold today. Imagine buying a thousand shares, that would mean a profit of RM 260!

Now with moomoo, you can apply for IPOs with zero fees and even borrow funds to increase your allocation.

Of course, not all IPOs guarantee gains, there have also been failed IPOs in the past, such as AirAsia X Berhad in 2013. Even after raising RM 987.5 million, the company still struggled with high costs, weak demand, and debt, which then led to a stock decline and debt restructuring in 2021. This is why IPOs are considered as a high risk asset because it really depends on market conditions and many other factors.

Options

Next up is options trading. Options are financial contracts that allow you to buy or sell stocks, funds, commodities, or indexes at a specific price before a certain date. There are two types: call options (to buy) and put options (to sell). 

If you’re curious about how it works, many investors use a strategy called covered calls and cash-secured puts to generate passive income. A covered call involves selling a call option on stocks you already own to earn extra income, while a cash-secured put means selling a put option while keeping enough cash ready in case you need to buy the stock. You can learn more about this on the Moomoo platform, which offers guidance articles, trading courses, and 24/7 live chat support to help you every step of the way!

Now, Moomoo MY offers options trading with low fees and free real-time data, available on both desktop and mobile. So do check out their website to learn more!

For example, with 5x leverage, if the market moves against you such as when selling a naked call (a call option without owning the stock) and the stock price surges, you could be forced to buy at a much higher price, leading to losses beyond your initial investment. That’s why it’s crucial to understand the risks, plan carefully, apply proper risk management, and practice to maximize your returns in options trading!

Crypto

Here we are at the highest-risk asset – crypto. I’m sure you’ve heard of it, especially in recent years, as it has become a hot topic worldwide. Cryptocurrency is a digital or virtual currency that exists only online and is secured by cryptography, so it’s safe from counterfeiting or double-spending. 

Currently, Moomoo supports SGD and USD trading pairs, offering most of the popular cryptocurrencies in both countries. As of the writing of this blog, it’s only launched in Moomoo SG and Futu HK, but not yet available in Moomoo Malaysia. However, I believe it’s only a matter of time. So for those interested let’s stay tuned and wait for the day to come!

Regular Savings Plan (RSP) / Fractional Shares

By now, I’m sure you have a better understanding of each asset, but what if you can only commit a certain amount each month? Well, since Moomoo offers fractional shares, you can now set up automatic recurring investments through their Regular Savings Plan (RSP), allowing you to invest a fixed dollar amount at regular intervals. It’s a great way to start practicing Dollar-Cost Averaging (DCA), a tried-and-true investment strategy.

With a minimum of just 5 USD, you have full flexibility to choose your investment frequency, whether is daily, weekly, or monthly. Plus, you can adjust, pause, or delete your RSP anytime, so your investments can literally be set once and done. Simple and hassle-free! Do check out here for more details about it!

Conclusion

To sum it up, these are the basics every investor should know before getting started. They may seem simple, but they’re crucial for understanding what’s available in the market. If I had to recommend a platform, Moomoo would be a good start for you as it offers a full range of tools and assets, from low to high risk, all in one place. 

Best of all, everything is free to access! Just download the app and give it a try, I’m sure it will speak for itself. If you’d like to learn more about Moomoo, I’ve also made a Moomoo Review 2025 video, so be sure to check it out on my YouTube channel! Anyway, I hope you found this blog helpful. Happy investing!

Checkout the YouTube video about Moomoo Review 2025 here!

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