In this post, I am going to share 4 simple tips to maximize your fixed deposit placement.
If you have savings in a fixed deposit or you are planning to deposit your money in a fixed deposit, knowing about these simple tips will surely allow you to better manage your fixed deposit.
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[Disclaimer: I am not a certified financial planner. My sharing is purely based on my own research and personal experience. To make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a certified financial planner if necessary]
4 tips to maximize fixed deposit placement
When I shared in one of my earlier posts 12 reasons I still love fixed deposits, I think many of my readers think that I am making a mistake by putting my money in a fixed deposit.
To be honest, despite having various investments in the unit trust, robo-advisory platform and cryptocurrency, I still feel safer by having a portion of my savings in the fixed deposit.
At least for my fixed deposit, the returns are guaranteed, even when the market is volatile.
And these are my 4 tips to maximize fixed deposit placement:
1. Do it online
Firstly is to perform the fixed deposit placement online.
The benefits of online fixed deposit placement compare to the conventional fixed deposit done at bank counters are:
- it saves you the precious time
- you can do it anytime at your convenience
- everything is under your control including uplifting
With online fixed deposit placement, you can perform the transaction with just a few clicks.
So, you don’t have to apply for leave and personally go to the bank counter for a fixed deposit placement.
2. Separate the fixed deposit into several certificates
The next tip is to separate the fixed deposit into several certificates, with different amounts and different tenures.
For example, you plan to put RM50,000 in a fixed deposit. Instead of putting RM50,000 into one certificate, you can separate the RM50,000 into 5 certificates of RM10,000 each.
And allocate each fixed deposit with different tenure, according to your needs.
The reasons are:
- in case you need RM10,000, you can uplift just one certificate and the rest of the fixed deposit and interest are not affected.
- you can choose a longer tenure to enjoy better interest rates for the certificate with the amount of money you foresee you do not need in near future.
After all, there are no charges no matter how many certificates you have.
So, grab this opportunity to better manage and maximize your fixed deposit placement.
3. Choose to add interest to the principal
The third tip to maximize fixed deposit placement is to choose the option to add interest to the principal.
Because if you choose the other option to credit the interest into your savings account:
- you tend to spend the interest on things
- the principal amount stays the same
- you don’t have the opportunity to see the power of compounding interest
This is especially true for young savers who have a longer investment time frame. Because, over time, they will see the magical power of compound interest.
From my personal experience, I noticed some financial institutions didn’t allow adding interest to the principal for their online fixed deposits. Instead, they only allowed crediting the interest to their savings or current account.
Therefore, it is advisable to gather relevant information before placing your fixed deposit with a financial institution.
4. Make sure the bank is a PIDM member bank
Lastly, make sure the bank where you deposit your fixed deposit is a PIDM (Perbandanan Insurans Deposit Malaysia) member bank.
The reason is you want to take advantage of the protection benefits offered by PIDM to eligible depositors.
But, if you have a fixed deposit of more than RM250,000, just make sure you get advice from the bank officer. PIDM protection only covers a maximum of RM250,000 per depositor per member bank.
The PIDM protection of RM250,000 also includes both the principal and the interest.
What you can consider is:
- to place the remaining fixed deposit under the Islamic fixed deposit
- open a new fixed deposit under a joint account with a family member
- open a new fixed deposit account with other banks under PIDM member
For further details, read my post on 4 PIDM Benefits.
Final thoughts
Now that you know the above simple tips to maximize the profit from a fixed deposit placement. The next time you plan to place a fixed deposit, you can consider these simple tips.
If you have other tips to better manage a fixed deposit, feel free to drop your comment.
Let’s learn to make better financial decisions.
Image Credits
Image by Nattanan Kanchanaprat from Pixabay
