12 Reasons Why I Still Love Fixed Deposit

Do you have savings in bank fixed deposits or famously known as FD?

I do have savings in fixed deposits. So do most of my family members and close friends. The majority of them have savings in fixed deposits too.

Many of us know that we can better reward through other investment methods. Such as investing in the unit trust, stocks, gold, robo-advisor or even cryptocurrency but many of us still have savings in fixed deposits.

There must be some good reasons why we still love fixed deposits.

Thus, for this post, I will be sharing 12 reasons why I still love fixed deposits despite knowing that I can get better profit through other types of investment.

12 reasons why I still love fixed deposit

Without further ado, here are the twelve reasons why I still love fixed deposits:

1. Bank fixed deposit provides a guaranteed return on investment

Among the main reasons why I love fixed deposit is because it provides a guaranteed return on a specific date.

Nothing makes me happier when I know that on a specific date, there is a specific amount of money transferred to my bank account.

It is just like a payday. But, the great feeling is this payday is created by myself.

2. Competitive bank fixed deposit rates

Another strong reason why I love fixed deposits is the competitive fixed deposit rates. Banks often try to win customers by offering better interest rates on fixed deposits.

Before the COVID-19 pandemic, the fixed deposit interest rate in Malaysia ranged from 3.15% to 4.0% per annum. And during special campaign and promotion, some bank offers interest rate as high as 4.20% per annum.

But, due to the pandemic, the fixed deposit rate in Malaysia dropped to around 2% per annum. Of course, it also depends on the deposit tenure, deposit amount and other terms and conditions set by the respective bank.

And I can see that there’s fierce competition between banks to win customers’ deposits.

So, I find it hard to resist a good fixed deposit interest rate.

3. The easiest and safest way to keep my money

Bank fixed deposit offers the easiest and safest way to keep my money while generating some interest from it.

Because I can walk into my preferred bank and the bank staff will gladly process my fixed deposit placement.

In addition, putting the money in the bank is safer than keeping the money at home.

4. Minimal risk with PIDM protection

Another strong reason why I love fixed deposits is because of the benefits offered by PIDM.

I love the minimal risk of losing my money because Perbadanan Insurans Deposit Malaysia (PIDM) protects my eligible fixed deposit accounts at a member bank.

In case anything happens to the member bank, PIDM will reimburse my eligible deposits accordingly.

5. Convenient with online fixed deposit placement

And now the majority of banks in Malaysia offer an online fixed deposit. So, it is even easier to do a fixed deposit placement.

Because with the online fixed deposit feature, I can conveniently perform the fixed deposit placement at my comfort, in just a few clicks.

There is no need to physically go to the bank. And I can do it anytime anywhere, as long as I have an internet connection.

The convenience of performing and managing my fixed deposit adds to the reasons why I still love fixed deposits.

6. Multiple choices of tenure

Another reason why I love the fixed deposit is that there is a multiple choice of fixed deposit tenure.

The common tenure range from 1 month to 12 months. While depositors can also opt for longer tenure up to 60 months.

Because of this multiple choice of tenure, I can find a tenure suitable for me.

7. Flexible withdrawal for emergency needs

As part of solid money management, I prefer to put a portion of my money in a fixed deposit for emergency needs.

Because I know that I can conveniently uplift or withdraw the fixed deposit in case I need the cash.

Perhaps there is zero or only a small percentage of interest amount due to the premature withdrawal. But it does not matter because the most important part is I can get access to the principal amount.

That’s why even though I am aware I should be able to receive better returns through EPF (Employee Provident Fund) savings, I have not transferred my fixed deposit to EPF savings. I love the flexibility offered by fixed deposit placement.

8. Minimal initial deposit

Next, it does not require a lot of money to enjoy the benefits of a fixed deposit. While the majority of banks require a minimum deposit of RM1,000, some banks offer a minimum deposit of RM500 only.

With the low initial deposits, I find it much easier to have multiple fixed deposit accounts at different banks.

9. Options for interest arrangement

When come to managing the interest, usually bank offers 2 options:

• add on to the principal amount; or
• credit into a saving account upon maturity date

So, these flexible options also suit my financial needs perfectly.

For some of the fixed deposit accounts, I can arrange to credit the interest in my saving account for my monthly expenses.

While, for the rest of the fixed deposit account, I can choose to add on to the principal amount to grow my savings.

10. Insufficient knowledge of other investment options

I have to admit that another reason why I still love fixed deposits is that I have insufficient knowledge of other types of investment opportunities.

Or, maybe I am aware of other options but I am not ready to take the risk with other opportunities yet.

So, currently, I am learning better ways to invest my money instead of letting them sit in the bank’s fixed deposit.

11. Perception of banks as a safe place to keep my money

Do you agree when I said that I have the perception of the bank as a safe place to keep my money?

In fact, not only money. Many people also put their other valuables such as gold, jewellery and important documents in bank safe deposit boxes.

So, instead of putting my money into an investment such as unit trust, robo-advisor or stock, I feel safer with a bank fixed deposit.

I am well aware that if I want to grow my money at a higher rate, I need to change this perception.

12. Influence by my late father

My late father was a strong supporter of the bank fixed deposit.

He preferred fixed deposits compared to unit trusts because of the bad experience he had with some of the irresponsible unit trust agents.

I realised that my late father’s preference did affect my decision of having my fixed deposit account when I still have a balance from my PTPTN fund. That balance from my PTPTN fund was my first fixed deposit placement.

So, my late father’s trust in fixed deposits is also another reason why I still love fixed deposits.

Final thoughts

With all the good reasons above, no wonder I still love bank fixed deposits.

As of now, I think the bank fixed deposit offers a good solution for me to temporarily park some of my savings.

Instead of putting the money in savings or a current account with very minimal interest rates, I would choose to put the money in a fixed deposit to enjoy a higher interest rate.

However, for long-term financial planning, it is wiser to invest the money elsewhere such as in cryptocurrency or robo-advisor.

Because upon considering the average inflation rate of 3%, there is not much left from the average fixed deposit interest rates of about 3%.

So, what do you think of a bank fixed deposit? Feel free to drop your comment below.

Lastly, you might be interested to read my sharing on how to maximize fixed deposit placement with 4 simple but useful tips.