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Interest Rates Rolling Down the Hill

Have you ever thought that there will be a day when you put your money into the bank, the bank will not give you any interest but deduct your money instead? In 1998, the deposit interest rate in Malaysia was as high as 8% to more than 10%! But in 2008, the interest rates for fixed deposit dropped to 3.5%. And guess What? Today, in 2020, it's 1.5%! 

What's the reason behind this drop? Will it continue to drop? That's the question.

In order to maintain economic growth, money supply must be increased in the country but the central bank cannot print money without restrictions. So at this time, lowering the interest rate is the only option to encourage people to spend more for consumption or investment. 

This is the trend going on around the world. In 2014, Euro entered the era of negative interest rate. In 2015, Switzerland and Sweden entered the era of negative interest rate as well. This is then followed by Japan in 2016. Today, we see the United States continues to lower their interest rates again and again.

So how should we respond against it? Is it possible to earn a higher interest without undertaking too much risks, and without any lock-in period? Of course, there are many vehicles in the market today that will offer much higher returns than FD rates.

But, what if, you’re currently saving up for plans with major expenses that you will need for the next 2-3 years such as:

  1. Wedding Expenses.
  2. Down Payment for Your First House or Your Next Property.
  3. Renovation, Furniture and Fittings for Your New Property.
  4. Reserve Funds for Your New or Existing Business Ventures.
  5. Your Children’s Tertiary Education Funds, assuming they are now teenagers.

You can’t possibly screw that money up.

If you have not thought about it, it is time to give these questions some considerations.  Comment below your thoughts.

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