If you wonder where to get the latest FD (Fixed Deposit), saving interest, EPF (Employee Provident Fund) dividend, BLR (Base Lending Rate) and inflation rates history trend in Malaysia, this is the place for you. I wrote about a similar topic in my previous post (almost 3 years ago) and apparently it is out-dated. The latest data was only up to 2007.
I will use this post to keep track of the latest interest rates. As you can see from the graph or chart below, I put the inflation rate as reference – green line. Any interest rates above the green line is good to go and this is where you want to put your money into. However for those who are buying house, you need to look at the BLR – brown line, any investment return that higher than BLR is where you want to put your money into especially if you don’t like Flexi loan package.
[Updated: 26 April 2014]
What can we conclude from this trend?
- Saving rates is getting lower and lower. Thus, you shouldn’t put your money in saving at all. For instance, if your monthly expenses is RM3K, you just need to make sure that you have RM4K in your saving account every month. RM1K extra is for backup.
- FD is as useless as saving but it is still better because it is higher than inflation rate in most of the years. But keep in mind that personal inflation rate is the thing that you want to look at (not the inflation rate reported by the government!)
- As expected, EPF is the best investment vehicle (of course only compared to FD and saving) and it is catching up the BLR rate (but still below BLR). This tells you that withdrawing your EPF money to pay your house loan is the right choice. How about withdrawing your EPF for Mutual Fund? Yes, but do this only when you believe the mutual fund return could be higher than 6%.
- 6% is a important value (based on EPF dividend return and also BLR). You will use your extra money to invest (after you have enough emergency fund) and your investment return should at least more than 6%. If not, you’re making a bad investment.
[Updated: 26 April 2014]: Update data up to 2013, inflation has moved down (lower than FD) and EPF is till performing good!
P/S: Well, to summarize: don’t put your money in saving and use FD as emergency fund. EPF dividend rate and BLR are very important because that is the investment goal that you want to set (i.e. Any of your investment return from stock, mutual fund, and bonds should be more than 6%).