Are banks really helping us GROW MONEY?

The market fixed deposit offered by banks in Malaysia are currently around 4% per annum.

On the other hand, what is the annual inflation rate in Malaysia?

A rate of 3% - 4% as published by the authority?

The recent hike in RON95 petrol price from RM 2.10 to RM 2.30 on the 1st February 2017, the % increase is already above 9.5%.

The recent parking charges in Bangsar increased from 60 cents to RM1, the % increase is above 66%.

The lists is too exhaustive to be mentioned here.

So is the published inflation rate realistic? What is the actual inflation rate?

Is the bank really helping you grow your money? and are you able to ride the tides of inflation?

Is there a better way to hedge your money against inflation? Do you want to WIN over inflation?

Surely everyone wants to be a WINNER and certainly do not want to be a LOSER. But the fact is, saving all your money in the bank is behaving like a LOSER.

Instead of saving all your hard earned money in the bank, why not consider investing some of your hard earn money in a reasonable yield property with capital appreciation potential.

What is a reasonable yield property?

Look for an investment property that give you about 5% yield. (The details of yield calculation is in earlier article here). That is already above the 4% fixed deposit interest rate offered by banks.

So, what about capital appreciation?

Capital appreciation means the value of the property increases over a period of time from the date of purchase.

If you purchase the property for say RM250K 2 years ago and now you can sell it for RM300K. That means the capital has appreciated 20% over 2 years

If we keep the same RM250K in the bank as fixed deposit. Would any bank to our knowledge gives us a 2% extra on top of the principal sum of RM250K apart from the contractual 4% interest per annum.

The answer is always a definite NO.

Then WHY is it that so many people still keep ALL their money in bank to see it reduce in value over time?

The answer can be FEAR: Forget about Everything And Run. Unfortunately they are running to a place called bank that will only make the VALUE of their money smaller by the day!