Saturday, May 01, 2010

Safest Way to Invest in Forex in Malaysia

In my previous post, I talked about whether one should invest in Renminbi (RMB) and one of the readers recommended us to buy AUD instead. Well, all these recommendations are good but always keep in mind that no investment is 100% guarantee. However, the purpose of this post is not going to tell whether you should invest in AUD, NZD or GBP but rather to share with you the safest and easiest way to invest in Forex in Malaysia.

The fact is there are so many Forex scams out there especially those offer the Forex trading. The funniest comment that I heard from a friend (I'm not sure if that is true) is when he wanted to sell, the system doesn't sell immediately but the rather delays it until the price is dropped. This happens almost every time we wanted to sell. At the end, he was always selling at lower prices and made a lost.


"Foreign Currency Fixed Deposit"

To me, the easiest and safest way to invest Forex in Malaysia is to open a "Foreign Currency Fixed Deposit" account from the local banks in Malaysia. I"m not sure if other banks offer this service (I assume yes - you can clarify that if I"m wrong) but Public Bank in Malaysia does offer this service. Yeah, I'm the fan of Public Bank...
 

Steps to Open a Foreign Currency Fixed Deposit Account in Public Bank
  1. Go to "Public Bank" Office
  2. Press "Customer Services" button and wait for your turn.
  3. Once you're at the customer services desk, tell the banker that you would like to open a "Foreign Currency Fixed Deposit" account. Of course you need to tell her what currency you're interested in.
  4. After that, the banker will ask you to queue at one of the front counters (e.g. counter 8) so that they can issue the foreign fixed deposit statement to you.
  5. You will get something like this once everything is done:

Note: I choose auto reinvest the interest and auto renew the FD. You may also want to ask them whether there are any promotion before you decide. Sometimes they have promotion of putting 1 month of FD has higher rate than 12 months.  In that case, putting your FD in 1 month will earn more. By the way, minimum amount of investment is RM10K.


Summary

I think investing in Foreign Currency Fixed Deposit is the safest and easiest way to invest in Forex in Malaysia because it goes through official bank (although sometimes bank does play some tricks that seem to be like a scam). Another benefit of investing in Foreign FD is you will earn some interests out of your investment too.

So, wondering the easiest and safest way to invest in Forex in Malaysia? Just go to Public Bank...

32 Comments:

kampunginvestor said...

Foreign Currency Fixed Deposit is one of the investment tool that i have not try before.

Not sure when i am going to try though but i have tried playing Forex Online during my University Days and guess what, i got my fingers burned. Anyway those were the days!

Wow big investment you put there brother! Almost 20k! ^^ Good luck ya and what currency did your pegged your FD to?

ChampDog said...

Yes, because Forex trading is one of the highest risk investment. Good that at least you have tried before. I haven't not yet and I think I don't plan to in the near future.

It is in RMB currency and after converted to MYR, it should be ~RM10K which is the minimum requirement to invest in Foreign Currency Fixed Deposit from Public Bank. :D

Michael Tsen said...

well yes its a very safe way but this way is generally considered NOT forex investment at all.

For really safe way to do personal forex investment, consider this article Must use Expert Advisor If even that is too technical for you, then forex is not for you, its not that hard to really understand what you are capable of understanding. But if you pretend you are when you are not, then you are stepping one foot into an unmanaged risk. ie. thinking saving in a foreign FD is forex.

ChampDog said...

I think Forex (i.e. foreign exchange) is a generic term. For instant, you can just go to the money changer to buy some USD and keep it in house. You sell it later on. Can't this be considered as one of the way you invest in Forex? You exchange RM with USD, so is this called foreign exchange? If no, what should we call this?

Anyway, I could be wrong as I'm not the expert in the financial world. I understand the Forex as the direct English translation to “Foregin Exchange”. If you said “Forex Trading”, then I will probaly agree with you that FCFD is not a “Forex Trading” investment at all. So, is it true when people said Forex, it usually meant “Forex Trading”?

This is just my 2 cents. If FCFD is not considered as Forex (by technical term), perhaps the more suitable the of this post is “The alternative safest way to Invest in Forex”? That's the original intention of this post because I personally think that Forex trading is too high risk.

What do you guys think? Feel free to comment if any of you have any comments. I'm happy to hear from you. :)

1-million-dollar-blog.com said...

What is the interest rate for RMB? Is it 0.9% which shows in the certicicate?

ChampDog said...

Yes, 0.9%. I think now is 0.8% already...

http://www.pbebank.com/en//en_content/personal/rates/fcfdrates.html

Jayce said...

Still don't have time to study forex. How much can it earn? Better than stock market?

ChampDog said...

I think the Forex market is a lot more unpredictable than the stock market. So, I guess you will earn more but with higher risk if compared to stock market investment.

But this Foreign Currency FD is a different story which has the lower risk as compared to Forex trading. It is meant for a long term investment for People who have a lot of faith in another country's growth.

Kris said...

Yes. This will be for long term. Unless there is a huge fluctuation in the currency value.

Nevertheless, forex/currency trading itself is a few times larger than the stock market. That is the reason why hedge funds managers like SOROS only play currency trades. It is the biggest casino out there. WIN BIG or LOSE BIG..

ChampDog said...

There are a lot of Forex trading scams out there as well... :)

Michael Tsen said...

CD: I wasn't discussing the definition of forex. u can call all that foreign exchange. but effectively there are only a couple of potentially positive things in forex compare to all other non derivative investments ie. small gap price and high leverage. These 2 are the main ones resulting "high risk high return". money changer and FD like you mentioned here DO NOT have any of these 2 benefits. hence you are entering "forex investment" with still the same high risk but low return, a strategically disadvantage situation.

ChampDog said...

Thanks for the comment, I think you made a point here. It doesn't contain the original positive element of the Forex trading which supposedly to have high return due to small gap price and high leverage. Think of it again, you may right that it exposes the same risk but with low return may not be a right choice to go for.

However, I think the biggest difference the FCFD is really meant for long term investment and you really believe in another nation currency growth. It is like putting your FD in another countries to diversify your savings to different nations. If you look at from that perspective, it probably won't be considered as high risk? I”m not sure if that makes sense but this is the good discussion.

Anyway, I still think that RMB is currently under-valued and have potential growth in future. That's why I'm putting some of my savings there.:)

Forex strategies said...

The safest forex strategy could be, you don't need to trade continuously through the month. Just 3 to 4 trades are good enough to make lot of money. The whole idea is to be well informed. Understanding what's happening currently in the developing countries would help a lot in trading. Gather right information from reliable sources and trade accordingly.

ForexStrategiesNew.com

kampunginvestor said...

After reading all the comments from all the sifus, i still can't get myself indulge to the Forex instrument tool.

I am still very much in love with equity market! ^^

ChampDog said...

@Forex Strategies
That makes sense but the real challenge is still how to you made those trades the most earning? Can we?

@Kampung Investor
Why not? It is Forex a lot more unpredictable than Equity? Anyway, I don't think the sifu here perhaps the rest are. :)

Michael said...

Yeah!!! thanks for your sharing, RMB free now!!! let wait and see what next... :)

ChampDog said...

How much free exactly is not known yet but that is a good news, I think. Yupe, let's wait and see then...

Michael Tsen said...

"the biggest difference the FCFD is really meant for long term investment"

Long term investment part can be correct yes. For example, if one is planning to 'USE' a particular foreign currency ie. sending kids oversea for higher education, then its wise to 'lock down' that particular currency many years before then. This is also a form of 'hedging'.

but unfortunately, it is still NOT a wise move for pure 'investment' purpose, sorry.

ChampDog said...

True and agree, I get your point.. :)

wonder said...

In my opinion, this is not the safest for me as i know that if you exchange with bank, their spread is very high (e.g: Actual euro is 4.1000, bank tt buy will be 3.9 and tt sell will be 4.2), meaning that if the foreign currency appreciates but not much enough, you are still making loss with 0.9%interest only. if this is the case, i advise that you should stay with myr f.d.(with 3.2% interest) unless you share the view that myr will depreciate largely.

ChampDog said...

Yes, I think you've a point. Bank is always a winner no matter what.

Safest I meant here is rather than get cheated by those Forex scam or probably those quick rich schemes for Forex.

Angel Stone said...

Forex Investment is most suitable for BIG players. It is an investment tool for big corporate and institution to hedge there profit.

For individual who are interested in Forex investment, It is better to just use demo account first and practice. Only go for real account when you are confident.

The most important thing when invest in Forex investment - Must find a Forex broker that can really pays/withdrawal. Otherwise, there are just scams.

ChampDog said...

@Angel What is the reliable Forex broker in Malaysia?

Buffalo said...

Malaysia reliable forex broker is Bank, but they do not provide the platform for you to trade live. Some bank may ask u to invest their fund manager I not sure. There are some reliable forex broker like http://www.citifxpro.com.

ChampDog,how your FCA interest calculate? 0.9%/month? Do you know the Broker offer daily basis?

ChampDog said...

The interest rate is different from one country to another. The interest (e.g. 0.9%) should be based on annual.

This FCFD doesn't turn out right due to the strong MYR currency. I have withdraw most of the Foreign FD that I have. :D

I think no daily if not mistaken, minimum is 1 month like normal FD.

tracycfc said...

anyone of u try www.iforex.com before ?

ChampDog said...

Hmm... sorry. I haven't tried before.

bbMay1492 said...

Anyone?? Am very new and fresh in this investment thing but am interested. Can we invest in myr??

ludo said...

very interesting article on a volatil market

i try to develop a theory

thakns a lot to share

ludo

ChampDog said...

What kind of theory?

Forex Trading tips said...

I am Looking for the best Forex Trading tips I think, i am on the right page!!! its nice and way of presenting facts is too good. i like it.

Anonymous said...

I like reading an article that will make people think.
Also, thanks for allowing for me to comment!


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