The year 2016 has seen a significant drop in the value of the Malaysian Ringgit. Even the stock market has had a high volatility. This makes investing in stocks unattractive to those who are averse to risk. Because of these factors, investors are looking for alternative ways to earn money without the high risk of traditional money-making instruments like the stocks and Forex. In this light, fixed deposit account are again brought to forefront as a preferable way to earn fixed returns.
Fixed deposits are a cross between regular bank accounts and traditional investment platforms. The bigger your investment and the longer it remains with the bank, the larger the amount you will earn in interest. However, withdrawing your funds early will mean either getting a lower interest rate or losing it altogether. The straightforward way it works does not mean you cannot take advantage of fixed deposits to grow your money fairly fast. Here are a few tips to help you on this front.
- Do thorough research. Different banks have different fixed deposit schemes. There are banks that offer only up to a year in investment terms, while there are those that offer up to five years. The interest rates can also be calculated differently. Some calculate the rates at the maturity, while some opt for a quarterly, annual, or semi-annual calculation. Looking for an optimal high interest fixed deposit account in Malaysia is often just a matter of comparing bank schemes through online comparison websites.
One thing to remember is that you have to anticipate your future expenses when committing to a fixed deposit account. While such accounts are liquid and will allow you to withdraw anytime you wish, this will defeat the purpose of the investment. Know how much you can commit, and find the right scheme to match.
- Reinvest the interest. If money-making is your goal, take advantage of the interest you earn by reinvesting it. Unlike other instruments, you cannot just add onto your fixed deposit at will. Instead, you can choose to roll over the interest as an addition to your current investment. You will usually be given an option withdraw or reinvest your earnings. If the interest is computed at a quarterly or semi-annual rate, reinvesting will give you more earnings when you arrive at the maturity period. This is because later interests will take into account the previous ones already added onto the account.
- Look at the fine print. One of the most important things to look for are fees. These can significantly eat up into your earnings. While Malaysian banks aren’t given to adding periodic charges to fixed deposit accounts, it is still important to double check.
One other important thing to look at is the early withdrawal penalty fee — the one you are charged in case you break the agreement and withdraw your funds early. This may be a necessity in case of a financial emergency. This can nullify any interest you have earned before, so it is important to study.
Earning money through fixed deposits are once again becoming lucrative, either on its own or as a low-interest part of a portfolio. With the right knowledge, it can be the perfect entry point for beginner investors, too.