Minimalist

Four place to hide & grow your emergency fund in Malaysia

 An emergency fund is for financial disaster. In 2018, 75% of Malaysians said it was a challenge to raise RM1,000 cash in the event of an emergency. The now optional 6-month loan moratorium in Malaysia could be one chance to build up a cash flow reserve, and I’ll show you where to start saving.

And if you are one of the 25% of people who do have an emergency fund, where do you safely stash the funds away? Although it is tempting to hide cash in the biscuit tin, you need to consider the cost of inflation and risk of thief/misplacing.

While you could try to find out how much emergency fund you need (typically 3-9 months of your expenses), there is no harm to start and start saving. You’ll know when it’s too much is in the account.

Here are four great places to keep your emergency fund

Gold bullion
Gold is not commonplace to save emergency funds, but in the longer-term, you might earn more than the three standard options below. In a global emergency, gold keeps its value. I am not referring to the jewelry gold you get from Habit or PohKong. Those do not count. You need to buy Kijiang or Maple or Kangaroo from banks. UOB (competitive pricing) and Maybank (more accessible) offers the bullion at a daily rate and could easily covert to cash when you need it. You could also consider a gold investment account with Maybank. That being said, gold price maybe to high to invest in now. Lastly, don’t keep your emergency funds in products that charge yearly fees like HelloGold.

Money market funds
Money market funds may sound like an investment but they are not the high fee trust fund. They are bonds and loans to a stable organization like the bank you keep your money in. The typical rate of return is 0.5 percentage point higher than the Fixed Deposit. You can start investing in one from RM1,000. Read more here.

Fixed Deposit (Promo)
We all know this, save for a fixed period with the banks, and you earn a higher interest rate. It is great to start by putting RM1,000 for three months or start to aim for promo-rate offered by banks when you accumulated at least RM10,000. What’s more, your funds are protected by PIDM for up to RM250,000 (that’s a whole lot of savings). I think Maybank has the lowest board-rate, so shop around!

High-interest saving account
Few banks offer high-interest saving accounts. This type of account typically looks the same in terms of function. However, some have rules and higher minimum savings requirement. The options I know are OCBC 360 account if you take the time to plan or the fuss-free M2U Savers account (min saving RM2000 to enjoy interestthe exact word the bank used, lol ). They offer 1.8-3.4%, depending on Bank Negara Malaysia’s current OCR.

To start
If you have never saved before, here’s an easy plan for you to consider.

1. Open an M2U Savers account online. Debit your payroll in the high-interest account and only withdraw what you need. 
2. Once the savings reach RM1,000, move to a Fixed Deposit. When the savings reach RM10,000, look for FD promo. 
3. When you have 3 months of expenses saved, it’s time to save-up in money market funds. 

And off you go with a peace of mind and getting most from your savings. 

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