- Savings Accounts
- PROS
- Easy to open and maintain.
- Minimum requirements. Very reasonable.
- Flexible access to cash.
- CONS
- Ease of cash withdrawal can disrupt your savings programme.
- Relatively low interest rate.
- Fixed Deposits
- PROS
- Higher interest rate than savings account.
- Money cannot be spent on impulse purchases.
- CONS
- Interest may at times be outpaced by inflation.
- Withdrawal less flexible.
- Property
- PROS
- A good "forced-savings" plan.
- A good hedge against inflation.
- Can bring good returns in "boom" economy.
- CONS
- As a starting point for savings, it is difficult; high "start-up" down payment, and you must qualify for a bank loan.
- Long-term, inflexible mortage repayment scheme.
- Not readily converted to cash.
- Life Insurance
- PROS
- A useful saving-cum-protection vehicle
- As many policies have a penalty for premature break, it acts as a mechanism to promote savings
- Proven as an effective "forced savings" plan.
- CONS
- Relatively lower returns compared with other long-term investment vehicles.
- Lack of flexibility.
- Share Market
- PROS
- More exciting than operating a current account.
- Can bring spectacular returns when timing is right.
- CONS
- You need a lump sum to get into the share market.
- Not for the regular saver investing a couple of hundred ringgit per month.
- You need vast amounts of market information, time and luck in order to manage your investments successfully.
- Unit Trusts (HIGHLY RECOMMENDED!)
- PROS
- The perfect investment vehicle for regular savers.
- Starting amounts are not as small as for savings accounts, but are reasonable.
- Investments are easy to build up on a regular basis.
- Benefit derived from ringgit-cost averaging.
- Unit trusts give a well-balanced investment portfolio that you do not need to manage yourself.
- You can sell your units when the price is right at any time.
- CONS
- Affected by ups and downs of share market or other markets that the funds invested in.
Source of information :
- Dealing in Unit Trusts handbook by FMUTM (Federation of Malaysian Unit Trust Managers, also knowns as FIMM, Federation of Investment Managers Malaysia)
