Fixed deposits are still the most popular form of “investment” in Malaysia. As of June 2006, the amount in F.D. accounts attributable to individual investors stands at a whopping RM205 billion. 

However, with the latest inflation figures still hovering above 4%, and the F.D. rates not quite catching up, the danger of negative real returns is fast becoming a reality. Still in these uncertain times, many people continue to favour this asset class to other riskier investments. As the saying goes, “cash is king”.

Besides everyone needs to maintain some “liquid” assets for emergencies and as a buffer in the event of a cashflow crunch. I experienced this first-hand when in April this year I decided to quit my comfortable job to finish off my CFP and then to take a short hiatus from working life. I worked out my expenses and everything and planned my budgets. All was well it seemed…Then I got slapped with a huge tax bill in May! :-( My ex-employer had under-deducted my PCB contributions, and the amount was significant! Crrrruuunch!! Ouch! The moral of the story – a liquidity crunch can happen to anyone!

I’ve mentioned elsewhere that as a rule of thumb, we should all keep at least 3-6 months of our monthly expenses in the form of cash, before we look into investments, paying off any loans etc. This is an integral part of financial planing.

Here are the best available fixed deposit rates for amounts up to RM 1 million on offer at the moment (sorted according to highest rates for 12 month period):

No.

Banking Institutions w.e.f. 1-mth 3-mth 6-mth 9-mth 12-mth

1      

AmBank 5/6/06            3.30            3.40            3.50            3.70            4.00
2 RHB Bank 26/6/06            3.10            3.10            3.50            3.90

4.00       

3 Hong Leong Bank 29/4/06            3.00            3.00            3.10            3.70            4.00
4 Alliance Bank 4/8/06            3.30            3.30            3.50            3.60            3.90      
5 EON Bank 1/5/06            3.15            3.30            3.50            3.60            3.90
6 Nova Scotia Bank 11/7/06            3.10            3.30            3.50            3.60            3.90
7 Malayan Banking 27/4/06            3.10            3.30            3.50            3.60            3.88
8 United Overseas Bank 17/8/06            3.10            3.18            3.38            3.58            3.78
9 Bangkok Bank 3/5/06            3.20            3.30            3.40            3.50            3.75
10 Deutsche Bank   8/5/06            3.10            3.10            3.25            3.40            3.75
11 Bumiputra-Commerce 29/4/06            3.30            3.40            3.50            3.60            3.70

12     

Bank of Tokyo 2/5/06            3.20            3.20            3.20            3.20            3.70

13     

ABN AMRO Bank 15/5/06            3.10            3.10            3.20            3.20            3.70

14     

Affin Bank 28/4/06            3.10            3.20            3.40            3.50            3.70

15     

HSBC Bank   28/4/06            3.10            3.10            3.25            3.40            3.70

16     

OCBC Bank   29/4/06            3.10            3.20            3.40            3.50            3.70

17     

Public Bank 28/4/06            3.10            3.25            3.50            3.60            3.70

18     

Southern Bank 23/6/06            3.10            3.25            3.50            3.60            3.70

19     

Standard Chartered 29/4/06            3.10            3.20            3.45            3.60            3.70

20     

Bank of America 27/5/03            3.00            3.00            3.00            3.00            3.70

21     

Citibank 29/4/06            3.00            3.20            3.30            3.50            3.70

22     

J.P. Morgan Chase 22/5/03            3.00            3.00            3.00            3.00            3.70

23     

Bank of China 8/5/06        3.20            3.20            3.30            3.50            3.70

source: Bank Negara consumer website www.bankinginfo.com.my (updated 17/8/06)

Also good to keep in mind that there may be further interest rate hikes by Bank Negara before year-end. Some predict at least another 0.25%. Good to know for deciding on the tenure of your F.D.

Now you know. What you waitin’ for then? Get Saving! :)

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