When looking for a safe and low-risk investment alternative, Malaysians have historically turned to fixed deposit account (FDs). These financial products from banks and other financial organizations promise a predictable return over a set period.
How do fixed deposits operate?
When you deposit a certain amount of cash with a financial institution such as a bank for a specific period, known as the tenure, fixed deposits function as a simple investing tool.
For instance, some of the benefits offered by RHB Ordinary Fixed Deposit are:
- Placement Times: To suit your needs, choose from a range of flexible placement times, from one to sixty months.
- Convenience: Payments and withdrawals can be made at any branch across the country or through the RHB Mobile Banking App and Online Banking.
- Flexibility: You can withdraw money in increments of RM1,000, with a minimum balance of RM5,000. The rate of interest on the remaining amount will stay fixed.
- Add-ons: Receive up to 100% of the set deposit amount as an overdraft facility.
Throughout this period, the bank, in turn, offers the principal amount at an agreed-upon interest rate. The deposit amount, the duration selected, and the state of the market can all affect the interest rates. Depending on your preferences, the interest typically gets paid out
upon maturity, at regular intervals, or after it has accumulated over time.
Malaysian fixed deposit features
Here are some important aspects of fixed deposits to consider if you intend to invest in one:
Interest rate and duration
Interest rates on fixed deposits in Malaysia differ amongst financial institutions and depend on several variables, including the amount placed and the duration selected. In general, interest rates increase with the length of tenure. With many fixed deposit tenures available from one month to several years, Malaysian banks allow you to select the one that best suits your financial objectives.
Minimum amount required for a deposit
For fixed deposits, the majority of Malaysian banks have a minimum deposit requirement. When opening an FD account, you must verify that the bank meets the requirements, as the minimum amount varies.
Frequency of interest payments
Fixed deposit interest is paid out on a regular basis; payments might be made quarterly, monthly, semi-annually, or annually. You can select the frequency that best suits your interests and financial requirements.
Options for auto renewal
In Malaysia, an auto-renewal feature is included with fixed deposit accounts. This implies that barring the investor’s decision to the contrary, the principal amount and interest will be automatically reinvested for the same term upon maturity. You have continuity if you want to keep investing in fixed deposits thanks to this feature.
Fixed deposit advantages
Due to their advantages, fixed deposits are appealing to all kinds of investors. Here are a few examples of them:
Security and stability
The consistency and security that fixed deposits provide is one of the main reasons Malaysians choose them. Fixed deposits, in contrast to riskier investment choices, are insured by PIDM, providing up to RM250,000 in coverage for each depositor per bank. Before making a placement, make sure you’ve done your research because not all institutions are protected.
Predictable returns
Because the interest rates on fixed deposits have been established and fixed for the duration of the account, you may expect reliable returns. Risk-averse people who value protecting their assets over the possibility of larger but more erratic returns find this predictability appealing.
Portfolio diversification
One important part of a well-rounded investing strategy is fixed deposits. While more volatile assets could yield larger return possibilities, fixed deposits provide a solid base that balances the portfolio’s overall risk profile.
In Malaysia, fixed deposits account continues to be a mainstay of the financial system, providing a safe and reliable investment option for a wide range of investors. For individuals looking to protect capital while obtaining a moderate return on their investments, fixed deposits remain a dependable option due to their consistent rates, adaptable tenure options, and the safety net offered by PIDM.