errr.... I would say depend.

Those had invested in Lehman shares, Citigroup, AIG or some real estate related ETF, UT and a lot more, they wish they put the money in FD in the first place.

Like it or not, FD is the one instrument that enable people to send their kids for further study, enable them top have capital to open up businesses, enable one to have security in term of financial wise, enable bank to provide loan to businesses, etc and many many more.

It may not able to hedge inflation, but having FD and if with a lot, then it just means one is successful enough in term of personal financial management. It may not yield you a lot of return, but one has made a step right in the first place. So personally, I won't call somebody with a lot of FD as a loser.

Frankly speaking, little instrument can hedge fully the inflation, in fact looking back 35 years history, gold price history/performance is worst than FD return.

A person have multi-millions dollar of FD is loser? I don't think so. Yes, it may not a good investment target that provide good return but it is near risk free, while any other type of investment can yield negative return if situation is not favourable.

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Added on January 13, 2010, 11:40 pmCan scroll through the respective bank balance sheet to find out, Public bank alone got around 180 billion deposit from customers. So total deposit should be more than 1-2 trillion.

This post has been edited by cherroy: Jan 13 2010, 11:40 PM

They have 3 years, 5 years, 3.2%, 3.7% currently if not mistaken.

2.3% is considered high in international level currently. Most developed nation has zero interest rate except Aussia at 3.x%

Yup, I know, locally, in foreign currency FD, also offer around 5%.

I mean short term duration one.

Everyone has different risk appetite and perception, so it does't matter if 500 millions is his/her sole asset class. The most importance is he/she know how to make and got the 500 million.

I believe 99.9999% of people sleep like a baby (instead sleepless) they have 500 million in FD.

FD return might be low, but if a person has 500million in FD, at current 2% pa rate, he/she got extra 10 million to spend on every year. 10 million is still a big sum, although it might be eroded by inflation as time passed, but undeniable, he/she is way way way better than any working class or ordinary people out there, which ordinary people work whole life also cannot achieve the figure one.

Capital protection become more important than chasing for return, when the money is big time. That's why we see big money investment is always in US treasury bill.

When one has 10K, then we try to max out the return and willing to put the 10K in risk for high risk investment which if the investment doesn't work out, then lose the 10K
But when one have 10 million, do you try to max out the return and put the total 10 million in risky area?

No matter how, FD is always needed as standby, emergency purposes, or even enable one to invest and capture opportunity when it coming.
Just how one adjusted the ratio according to one's needs and risk appetite.

Just my 2 cents.

FD cannot hedge inflation, no doubt about it.
Other investment like UT, shares, or whatever, probably can hedge inflation risk, but come with losing the initial capital risk as well.

Take example, if one invested in S&P500 or Dow Jones index ETF or index fund 10 years ago. After a decade, those investors lose out to FD depositors, because S&P500 gain nothing after 10 years, while FD even at a paranoid 3%, after 10 years without calculated the compounded interest, means 30% return.

So FD win in this case.

Basically, FD is not as bad as many people taught although it is bad be in term of inflation hedge or return but if choosing the wrong investment target or the outcome is not favourable, FD can beat those investment target as well.
FD beat gold investment in 35 years period history. FD lose out big time to stock market over 20-30 years, but if one invested in wrong stock, one still lose out the FD return rate.

What I want to highlight is that there is no easy way to hedge inflation or search for higher return rate.

Those invested in Citigroup, AIG years ago and many many more some others stocks, they might say to you, if got chance back to future, they rather put the money in FD.

I am not pro or against FD. Just to say FD is totally bad somehow not quite right either as above example shown, FD does beat some investment as well, this is true and hard fact.

HLB 2.75% for 1 year.

1. Share market primary reaction is towards corporate earning. Corporate earning will be better with a better economy.

2. Solely with FD rate up, won't send share market tumbling due to reason 1.

3. FD rate up means central banks want to cool off the inflation as with too low rate, it prompt and lead to asset bubble.

4. Generally FD rate up only when economy situation is better or having problem to cool off inflation, as central banks action on interest rate is based on economy.

Generally it is the economy situation dictate the interest rate movement as any decision made on interest rate is based on the objective of it either to cool off or to boost the economy.

Some banks can, some banks cannot, depended on respective bank internal system.

I taught it is 20K or no?

here http://forum.lowyat.net/topic/512136/+220

It is 2.6% based on the lastest adjustment on 19/5

BLR all being raised 0.25%
FD rate only being raised range from 0.1 to 0.15% only.

The gap or profit margin for banks is widening.

Those are insurance saving plan, not FD.

Please don't use the word FD, it may confuse people.

It depends on banks need for liquidity aka cash or deposit from customers.

Currently banks are not short of liquidity so there is no incentive for them to put higher FD rate to attract more customers.

In history term, spread between BLR and FD should be around 3%, which is already quite a lucrative rate for bank to earn profit from it.

Greedy greedy banks.

As mentioned many time and expected, some banks widen their profit margin.

BLR up 0.25%, FD rate up range from 0.05 - 0.2%

It is especially disappointed on the 1 year rate, up from 2.7~2.8% to 2.85%.

I just came across Bank of China 1 year FD is 3.1%. The highest so far I came across.

http://www.bank-of-china.com/malaysia/

Actually the various FD promotion is somehow twist and turn or tweaking in between only.

If calculated its net, it is merely 0.05-0.2% higher only.

Not something very big as advertised like 3.xx%, 4.xx%

They offer higher rate because they are investment bank, not commercial bank.

The risk issue is different than ordinary commercial banks.
Investment bank is more vulnerable than ordinary commecial bank if there is something wrong with the financial market/crisis.
Also, capital base is totally different and there is huge gap between them.

Just to add one point
NID is not the same with FD.
FD is guaranteed until 60K by PIDM.
NID is not (If not mistaken)

This post has been edited by cherroy: Jul 26 2010, 12:19 AM

Gov is planning to revise the 60K to 250K, which they need to amend the PIDM act before it become effective.