If you are looking for ways to grow your savings in Malaysia, you might want to consider investing in fixed deposits and redeemable preference shares. Fixed deposits are a type of bank account that offer a fixed interest rate for a fixed period of time. They are low-risk and easy to manage, but they also have low returns compared to other investments.
Redeemable preference shares are a type of company shares that have some features of both debt and equity. They pay a fixed dividend rate and have priority over ordinary shares in receiving dividends and capital in case of liquidation. They also have the option to be redeemed by the company or converted into ordinary shares at a specified date or event.
Fixed deposits and redeemable preference shares have different advantages and disadvantages, depending on your financial goals and risk appetite. Here are some factors to consider before investing in them:
– Interest rate and dividend rate: Fixed deposits usually offer a higher interest rate than savings accounts, but lower than redeemable preference shares. The interest rate of fixed deposits depends on the bank, the amount, and the tenure of the deposit. The dividend rate of redeemable preference shares depends on the company, the terms of issue, and the market conditions. You can compare the rates of different banks and companies online or by visiting their branches.
– Liquidity and flexibility: Fixed deposits are less liquid than savings accounts, as you cannot withdraw your money before the maturity date without paying a penalty. Redeemable preference shares are more liquid than ordinary shares. Depending on the terms and conditions set by the company offering these shares, you might be able to sell them in the stock market or redeem them from the company at a predetermined price. However, you may not be able to sell them at a favourable price if the market is down or the company is performing poorly. You also need to pay brokerage fees and taxes when you buy or sell redeemable preference shares.
– Risk and return: Fixed deposits are safer than redeemable preference shares, as they are guaranteed by the bank and protected by PIDM (Perbadanan Insurans Deposit Malaysia) up to RM250,000 per depositor per bank.
Redeemable preference shares can be riskier than fixed deposits, as they could be subject to market fluctuations and company performance unless the company fixes the return rate based on the number of fixed years. However, they have the potential to offer higher returns than fixed deposits, especially if the company pays regular dividends and increases its share price.
To get the most out of your savings, you should diversify your portfolio and allocate your funds according to your risk profile and time horizon. You can use fixed deposits as a safe and stable investment for your short-term goals or emergency fund.
You can use redeemable preference shares as a medium-risk and medium-return investment for your long-term goals or income generation. You can also combine both investments to balance your risk and return.
So to help you get more out of your savings, iMoney Malaysia has combed through the market and found the best fixed deposits in Malaysia this year.
Fixed deposit promotions
First off, here are the fixed deposit promotions you’ll want to take advantage of this season. These promos offer better-than-average rates, but you’ll generally have to place a higher minimum deposit.
| Bank | Promo until | Min deposit | Tenure | Interest rate |
|---|---|---|---|---|
| Alliance Bank CNY Wealth and FD | 29 February 2024 | RM10,000 | Up to 6 months | 12.88% p.a. |
| Bank Simpanan Nasional BSN Term Deposit-i with BSN SSP Platinum | 30 April 2024 | RM5,000 | 6 months | Up to 5.70% p.a |
| HSBC Bank Time Deposit Promo | 31 March 2024 | RM50,000 | 6 months | Up to 4.00% p.a. |
| Public Bank PB PowerInvest Fixed Deposit Campaign | 30 June 2024 | RM10,000 | Up to 8 months | Up to 13.05% p.a. |
Comparison of fixed deposits accounts
Besides seasonal promotions, we’ve also put together a list of the highest-returns fixed deposits to fit your needs. Read on for more information about each account.
| Best for | Bank | Tenure (months) | Interest rates |
|---|---|---|---|
| General savings | Maybank eFixed Deposit | 1 – 60 | 2.60% – 2.90% |
| Low ballers | MBSB Term Deposit-i | 1 – 60 | 3.00% – 3.90% |
| Kids | Hong Leong Bank Junior Fixed Deposit | 1 – 60 | 2.15% – 2.50% |
| Senior citizens | Public Bank PB Golden 50 PLUS | 1 – 60 | 2.60% – 2.80% |
1. For general savings: Maybank eFixed Deposit
| Tenure (month) | Interest rate |
|---|---|
| 1 | 2.60 |
| 2 | 2.65 |
| 3 | 2.75 |
| 4 | 2.75 |
| 5 | 2.75 |
| 6 | 2.80 |
| 7 | 2.80 |
| 8 | 2.80 |
| 9 | 2.80 |
| 10 | 2.80 |
| 11 | 2.80 |
| 12 | 2.80 |
| 13 – 35 | 2.85 |
| 36 – 47 | 2.90 |
| 48 – 59 | 2.90 |
| 60 | 2.90 |
Maybank’s eFixed Deposit is one of the better options for general savings. The minimum deposit for one-month tenures start at RM5,000 while you need RM1,000 for two-month and above tenures. While Maybank may not offer the highest interest rates over long-periods of time, they are one of the quickest to ramp up. It only takes 6 months for the FD to hit 2.80%, which is faster than most banks.
2. For the low ballers: MBSB Term Deposit-i
| Tenure | Interest rate |
|---|---|
| 1 | 3.00 (Annually) |
| 2 | 3.05 (Annually) |
| 3 | 3.10 (Annually) |
| 6 | 3.20 (Annually) |
| 9 | 3.30 (Annually) |
| 12 | 3.40 (Annually) |
| 15 | 3.45 (Annually) / 3.35 (Monthly) |
| 18 | 3.50 (Annually) / 3.40 (Monthly) |
| 24 | 3.55 (Annually) / 3.45 (Monthly) |
| 36 | 3.60 (Annually) / 3.50 (Monthly) |
| 48 | 3.65 (Annually) / 3.55 (Monthly) |
| 60 | 3.85 (Annually) / 3.80 (Monthly) |
Fixed deposits generally require at least an RM1,000 deposit, but the MBSB Term Deposit-i accepts as little as RM500. It offers flexible profit payment options (monthly, quarterly or upon maturity), though monthly and quarterly options are only available from 15 months onwards. Also, do note that this is an Islamic FD account and works slightly differently from a regular one.
3. For the kids: Hong Leong Bank Junior Fixed Deposit
| Tenure | Interest rate |
|---|---|
| 1 | 2.15 |
| 2 – 3 | 2.25 |
| 4 – 5 | 2.30 |
| 6 | 2.30 |
| 7 -11 | 2.35 |
| 12 – 60 | 2.50 |
If you’re looking for a fixed deposit account to open for your child, consider the Hong Leong Bank Junior Fixed Deposit. You’ll need a minimum deposit of RM1,000.
This account doesn’t offer the best interest rates, but it’s flexible enough to accommodate periodic withdrawals. With this account, interest is calculated daily and paid monthly. You’ll be able to make early partial withdrawals from your account and still earn interest on your remaining balance – other accounts may penalise your interest returns for doing so. Additionally, many other junior saver account options tend to see a sharp drop in interest rates after a certain amount is deposited.
4. For senior citizens: Public Bank PB Golden 50 PLUS
| Tenure | Interest rate |
|---|---|
| 1 | 2.60 |
| 2 | 2.65 |
| 3 | 2.75 |
| 4 | 2.75 |
| 5 | 2.75 |
| 6 | 2.80 |
| 7 | 2.80 |
| 8 | 2.80 |
| 9 | 2.80 |
| 10 | 2.80 |
| 11 | 2.80 |
| 12 | 2.80 |
| 15 | 2.80 |
| 18 | 2.80 |
| 21 | 2.80 |
| 24 | 2.80 |
| 36 | 2.80 |
| 48 | 2.80 |
| 60 | 2.80 |
If you’re aged 50 and above, the Public Bank PB Golden 50 PLUS could be a good fixed deposit account to consider. It has decently high interest rates that start at 2.15% and quickly picks-up the pace to 2.80% at 6 months.
It allows you to enjoy profits on a monthly basis until maturity, with medium to long term tenures of 6 to 60 months. However, since the interest rate seems to level out after 6 months, longer tenures might not be worth it. These relatively short tenures can be very useful if you’re relying on your interest payments to help cover living expenses during retirement.
The only downside is that you need to place a deposit of at least RM30,000 for 12 month tenures or less.
WHAT DID I INVEST IN?
Last year, I invested in two Fixed Deposits in CIMB Current Accounts for a 6 month term and received a 2.8% p.a profit rate. It’s not fantastic but it’s better than nothing.
Last year, I also invested in Redeemable Preference Shares with a Promo deal of 9% p.a Fixed Dividends. I received the first payout in December. Their standard payout terms are every half a year. This investment is for Sophisticated Investors for a fixed minimum number of years. I opted for two years. Their current Fixed Deposit is 6.9% p.a to 10.3% p.a for two years to nine years respectively.
This investment is suitable for high networth individuals, companies and cooperatives with high cash reserves.
Conservatively, I still invest in ASB and EPF.
ASNB, the wholly-owned unit trust management company of PNB, declared a total income distribution of 5.25 sen per unit for its flagship fund, ASB, for the financial year ending Dec 31, 2023 (FY23).
The total distribution consists of an income distribution of 4.25 sen a unit and a bonus of 1.00 sen a unit.
The Employees Provident Fund (EPF) is expected to announce a dividend of 5.5- 6.5 per cent for 2023, higher than the 5.35 per cent for conventional savings and 4.75 per cent for shariah savings in 2022
For more information on fixed deposits and redeemable preference shares in Malaysia, you can refer to these sources:
https://www.pidm.gov.my/en/for-public/what-we-protect/deposit-insurance-system
https://dnh.com.my/ordinary-shares-and-preference-shares-how-do-they-affect-shareholders-rights/
https://hzac.com.my/preference-shares-in-malaysia/
Malaysia – The Curious Case Of Redeemable Preference Shares.
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