A well-rounded financial plan should include the best places to effectively manage and grow your cash reserves. In Malaysia, there aren’t many options for you to manage your cash; typically, you were limited to either using fixed deposits or high-yield savings accounts that come with a lot of conditions just to earn a decent rate on your idle cash. Fixed deposits, in particular, require you to put a minimum deposit and lock up your funds for up to 12 months just to earn the rate.
But you don’t have to trade away the flexibility to access your money whenever you want just to earn a better rate. We introduced StashAway Simple™ as a better alternative to fixed deposits that lets you earn a projected flat rate of 2.4% on your entire cash balance without having to put up a minimum deposit, lock up your funds or fulfil any other conditions.
With a fixed deposit, you have to lock up your funds to earn the full rate. Withdrawing your money early from a fixed deposit often comes with consequences. If you made an early withdrawal from a fixed deposit, you lose the interest you accrued for the months you kept your money in your fixed deposit account.
For instance, if you held RM10,000 in a fixed deposit at a rate of 2% for 6 months, you would have earned RM50 in interest for the first 3 months of your tenure. Suppose you had to withdraw your money in the 4th month, you would have to forfeit that RM50.
Fixed deposits that advertise promotional rates also have other conditions, such as minimum balance requirements, and investing in other financial products offered by the bank.
With StashAway Simple™, you don’t have to worry about missing out on earned returns. You can withdraw from your Simple portfolio at any time without losing the returns that you’ve already accrued on the money in your portfolio. We achieve this flexibility by building StashAway Simple™ with a short- to medium-term fixed income fund, and so your cash can accrue returns every day. Plus, you’re entitled to rebates and dividends paid out by the fund on a prorated basis. In addition to not locking up your funds, StashAway Simple™ doesn’t have any minimum deposit requirements, or other conditions that you need to fulfil to earn a rate. It really is that straightforward and simple.
Here’s how StashAway Simple™ stacks up against fixed deposits:
Assumption: Fixed deposit rate is taken from the average fixed deposit rate in Malaysia as at 1 June 2020. Returns are calculated using simple interest after 12 months.
Just as fixed deposits are considered a low-risk rate-earning option for your cash, StashAway Simple™ also keeps your risk level extremely low. How does StashAway Simple™ keep your risk low? Your Simple portfolio is built with a short to medium-term fixed income fund that invests in money market and other fixed income instruments. In fact, StashAway Simple™ has an SRI (StashAway Risk Index) of 0.1%, which is much lower than our lowest-risk portfolio at SRI 6.5%.
Unlike a fixed deposit where the lock-up limits how you can manage your cash, the flexibility that StashAway Simple™ offers means that you can use your Simple portfolio to manage your cash in many ways: You can use StashAway Simple™ to build and keep your emergency fund, manage cash for your short-term goals (putting a downpayment for a house), grow the cash you’re intending to use for investing over time, or whatever else you want to use your cash reserves for.