Latest FD, EPF, Inflation, BLR and Saving Interest Rates History Trend in Malaysia

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: 28 Jan 2012]: Check it out the graph in 2011, inflation rate is now catching up with FD! :)

[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%).

How to read buying & selling price in money changer counter?

Have you ever confused with currency exchange especially when you want to buy certain country’s currency in the money changer counter before you travel? Should you aim for lower or higher price?

There are only 4 things you should able to see from money changer counter: Date, Unit, Currency, Buying and Selling prices.  Here is the example:

		Date:	20/02/2011
Unit	Currency	We Buy	We Sell
1	US Dollar	3.015	3.035
1	Great Britain Pound	4.880	4.935
100	Chinese RMB	46.000	46.650
1000	Japanese Yen	36.250	36.700

Before you go into this, the first thing you need to know is the base currency. The base currency should be the currency based on the country where you exchange your money. For example, if you go to the money changer in Malaysia, the base currency will be in MYR – Malaysia Ringgit. If you exchange your money in China, then the base currency will be based on the Chinese RMB then.

The table above is an example that you can see from the money changer in Malaysia (the base currency is MYR). The table tells you that you need RM3.035 to exchange with 1 US dollar and RM46.650 to exchange with 100 Chinese RMB. Look at the “We Sell” column whenever you want to buy and look at the “We Buy” column whenever you want to sell.  The formula is very easy:

You want to buy foreign currency with MYR, this is how much you should get:

Money that you want to exchange in base currency(MYR) / We Sell (Buying Price) X Unit

You want to sell foreign currency and get back the MYR, this is how much you should get:

Money that you want to exchange in target currency(Foreign $) X We Buy (Selling Price) / Unit

Example 1: You want to exchange RM10K to USD. You should able to get:

RM10K/3.035 X 1 = USD 3,294.89

Example 2: You want to exchange RM10K to RMB. You should able to get:

RM10K/46.65 X 100 = RMB 21,436.23

Example 3: You want to exchange USD10K to MYR. You should able to get:

USD10K X 3.015 / 1 = RM 30,150

Example 4: You want to exchange RMB10K to MYR. You should able to get:

RMB10K X 46.00 / 100 = RM 4,600

Key Notes: The lower of the buying price (we sell) or the higher of the selling price (we buy), the more money that you will be getting back after the conversion. Thus, if you want to compare with different money changers, look at the lowest buying price (we sell) and highest selling price (we buy) that they can offer. It is a similar concept with buy low and sell high. If you want buy, look for the lowest price. If you want to sell, look for the highest price.

Happy traveling! :)

p/S: The different between the selling & buying price is where the money changer makes their money!