Investment Amount vs Return: Why Your Capital Matters

Why the Amount You Invest Also Matters

Increase the amount invested instead of chasing a surging share

You may have just graduated and started working, or you may have worked for some time. You understand that managing money matters, so you set aside some money to invest.

That is good, because many people may not yet have this financial awareness.

Many finance books, Xiaohongshu posts and Facebook posts tell you to invest, but not that the amount invested may matter more than the rate of return.

Instead of spending your time searching for the next surging share and taking unnecessary risks, focus on your main work, raise your income and increase the amount you invest.

A common journey for a new investor

After more than ten years in the financial-planning industry, one of the most common beginner cases resembles Woman A in the original illustration.

After starting work, she understands the power of investing and puts money into an investment account. She may make a small profit at first. Her appetite grows, investing begins to look easy and her confidence rises. She may even put everything in and blindly follow rising prices.

As the saying goes, when the favourable wind passes, those who chased it fall.

What return is needed to make the same RM20,000?

Have you noticed the large flaw here?

In the original illustration, both examples aim to make RM20,000:

• RM10,000 of capital needs to rise by 200%;
• RM100,000 of capital needs to rise by only 20%.

Which is more likely: a 200% return or a 20% return?

The answer seems clear, yet many people forget risk management, blindly chase rising prices and hope to become rich overnight, only to lose everything.

Are you one of them?

Focus on your main work, income and investment amount

Especially when investing is not your area of strength, remember this: instead of spending your time looking for the next surging share and taking unnecessary risks, focus on your main work, increase your income and raise the amount you invest.

A 20% return is much easier than a 200% return.

Do not imagine that you can become a stock-picking genius, keep making unnecessary moves or become rich overnight.

A person placed in the right role is a talent; in the wrong role, that person may perform poorly. Wealth success is easier when you focus on what you do best.