So for example, you put in RM 5000, which is the minimum required for a 1 month FD placement. At an interest rate of 2%, you will only get RM 8.33 ( RM 100 / 12 ) per month. Quite pathetic. One can easily generate that much income if he or she is hardworking enough to write online articles.

Our FD interest rates are looking like this nowadays

That is why I don’t suggest people to invest in FD unless it’s their emergency fund (which you can withdraw easily and without penalty). For those who have extra money on their hands, try look into unit trusts since most of them are very cheap now but I would suggest you to look into bond and not equity. The equity market will only recover towards the end of 2009 or 2010 (my prediction), and that is quite a longggg time from now.

If you’re not interested in that, take a look at some defensive stocks such as Public Bank, F & N, Telekom Malaysia (TM) and others. These companies give a steady dividend yield to the shareholders and most of them are at a very attractive price now (TM is trading at a PE ratio of 4 – 5 while Public Bank’s PE is around 7 – . However, as with most investments nowadays, you must be willing to hold on for at least 1 year.

To conclude, if given a choice, I will not put my extra money into FD anymore due to the extremely pathetic interest rate. It’ll be better to put into unit trusts or defensive stocks. Or if you know about government bonds, then try to invest in those.

Hope it helps.

About 2 months ago, I wanted to move my high-risk equity fund to bond fund but my uncle told me not to do so since China is still quite stable. Now, the bond fund which I was looking at has gone up and my equity fund has gone wayyyy down. Too late to sell or to convert to bond fund.

Then I decided to call up my agent and told her to help me stop the auto-debit. My plan is to stop the auto-debit, take the money and save it up, and then buy in again (with lump sum) once it drops further. I expect most equity funds to drop further in the months to come.

Just sharing with you my decision. I could be wrong and this might be a beginner’s mistake. I don’t know. But I feel it’s worth a try.