Why invest in FDs?
If you don’t have the time or necessary financial knowledge to invest in other products. Putting your money in investments such as stocks and unit trusts requires a lot of research. Also unlike unit trusts or stocks, FDs let you achieve (moderate) capital guaranteed returns.
If you fear making a loss. FDs are effectively risk free as your capital is guaranteed for amounts up to RM250,000. With FDs you know exactly what your returns and investment timeframe will look like beforehand unlike investing in the stock market.
If you want to be assured of your returns. You don’t have to worry about your money because you know exactly how much you’ll get when you put your money in FD. While this might potentially be lower than the returns you’d earn investing in the stock market, at least you know exactly what you’ll earn.
If you want to be able to access your money easily. As compared to other investment products, fixed deposits are very liquid. This means that you can access your cash almost instantly in case of emergencies or for your immediate spending needs. Do note that you may forfeit some or all of your interest if you do break your FD early. So please be aware of any conditions for withdrawal that the bank has imposed to avoid losing out on your interest payments.
And, when you compare FD returns to savings accounts. Fixed deposits offer better rates but you’ve got to leave your money alone for the length of time you’ve chosen.