I’ll be brutally honest today! Our fixed deposit (FD) interest rates are PATHETIC. They SUCK! Period! Getting 3.70% interest per annum is not even sufficient to preserve your capital after taking into account that inflation is likely to be around 5%.
And because of this, most of us are approached by a plethora of people telling you:
INVEST IN MY PRODUCT! IT’S GUARANTEED TO GIVE YOU A RETURN HIGHER THAN THE FD RATES. WHY ARE YOU KEEPING YOUR MONEY IN THE BANK / EPF ETC?
And you think? Hmm… Why not?
STOP! That’s the sort of thinking that will get you into DEEP SH*T later on, especially if you haven’t got a clue of what these people are going to do with your money.
Before you trust your hard earned money to unit trust / insurance / Chartered Financial Planner agents, why don’t you trust YOURSELF to invest your own money? Yes, I hear some of you groaning – I don’t have the time!
Fine! Well, just think about it. If you don’t have time or couldn’t be bothered to look after your own money, what makes you think that other people will?
Look, it’s really SIMPLE! You need to take an active interest in managing your own money and investments and not let someone do it for you. I’m NOT saying – don’t invest in Unit Trusts etc. etc. What I am saying is – do your own research first! Make sure that your investment vehicle is something you are comfortable with.
If the unit trust agent is saying, this Fund will earn 15% per annum on average, challenge her. Is this return guaranteed? What’s the risk involved? Why? Because even though FD’s suck, your principal and the 3.70% interest per annum is GUARANTEED by the bank.
Other investments may not be so safe, especially those promising high returns. Sure, you may get 40% returns per annum OR you might see all your capital being WIPED OUT!
Worst still are Ponzi Schemes (aka Skim Cepat Kaya)! They might promise you 1000% returns within one week and sure enough, your first RM100/= yields RM1,000/= back within a week. Next thing you know, you dump your whole live savings into the Skim Cepat Kaya and poof! There goes your money!
So, think carefully before you start venturing into the world of investing. You’ll definitely be taking some risks with your money once you move it out of your FDs. So what! Life’s a calculated risk – so you should set aside some money to invest in instruments with higher rates of return than FDs. However, there are always Black Swans lurking around, so ALWAYS keep some money in your fixed deposits.
Conclusion: Keep your eyes wide open and be careful who you trust your hard earned money to! You know what they say about fools & their money... :)