I think that's only his emergency (the most liquid) fund.I am sure he has much more than that.

Bro Wong

Sorry a bit of miscom.

The chart is for FD rates. i was refering to bank lending interest rates.....apologies

That lending rate, in 1997/1998 was around 12% but if you noticed, FD rates did not follow the lending rates in 1998.
Just pointing that to cherroy whos adamant that even FDs better than gold

No problemo - i was too focused on FD to mentally register mortgage loan cost diff than FD, one-track mind like what most women complains about moi

Aiya - it's all about time-value of $ and value-timing mar, tiuk boh.
Based on certain time-segments, some assets great, other time-segments no lor.
Like we borak borak earlier - U baaaaaad (bad as in good lar, mai-kai jiahk shun) 2002 gold entry and kept accumulating with conviction

This post has been edited by wongmunkeong: Sep 17 2011, 02:27 PM

There was 10%-11% FD for 60 months during 1998, this I can be certain of.

In the old day, normally lending rate is 200-300 basic point above deposit rate.
But now BLR vs deposit rate gap is widening further.

cherroy
lookie at the chart for the FD rates incase you missed it
There was NO 10%-11% FD for 60 months during 1998, 60 MONTHS?

The lending rates was more than 12%

This post has been edited by prophetjul: Sep 17 2011, 02:34 PM

Hi, a question here, when u all mentioned cash rich, do u mean save it in a bank or hide in a house? tq

I don't need to look at the chart to know,
because I placed it before....
It was more like promotion campaign.
Just like now interest rate is 3%, but you can find 3.5%, 3.6% FD out there.

You can see 1997 the rate is 9.3% for 1 year.
But the 10-11% I mentioned, is for 60 months FD, and with this FD, they even gave you free Astro decoder + subscription for 1 year.
At that time, banks were hunger for money/deposit.

Why I remembered? because it was a double digit FD rate, and first time I had Astro.

This post has been edited by cherroy: Sep 17 2011, 02:46 PM

So you had a 10% FD from 1998 to 2003.........dont believe you.......no bank would give such high rates
for such a long period.

What bank is that?

IMHO, cash as in stay liquid - may be in bank, bonds, under tilam or buried in backyard.
Some considers gold, silver, etc. as "cash" too.

Generally i think it's for opportunities during downturns and of course to make ends meet.
Further extremes would be like a fellow forumer pointed out - keep food, weapons, self sustaining land (food, water, etc), when all gold, silver, cash, stocks, bonds, etc. is useless until civilization comes about again. Scary thought but it may happen . However, if it doesnt happen and one is totally out of those "normal investment assets", hehe another different hell gua.

If 1997 listed interest rate for 1 year is 9.3%, what is so surprise with there were banks gave 10%? Just a 0.7% difference.

Remember also the rate published generally is an average, because interest rate was fluctuation a lot during that time.
Yes, after Malaysia shut the door aka capital control 1998, our interest rate become stagnant throughout generally.

Now with low interest rate + cheap money environment, interest rate is 3%, yet there are banks give 3.5% for 6 month, 4.5% for 2 years.

As compared 1997-1998, when there was credit squeeze time and chaotic in financial market, with as significant higher SRR and money flowing out non-stop during that time.
So a 0.7% extra is not something "surprise" or huge, when banks were "fighting" their survival during that time.

The bank/finance company (there were plenty of finance company at that time) name start with "A..

I reckon you are old enough to experience the situation back then, or no?

I don't need one to believe me or not. The fact, it was happening before and placed it before.

This post has been edited by cherroy: Sep 17 2011, 03:20 PM

The extreme case, we don't need to discuss or bother already.
It is your life bother only.

The 2011 March Tsunami is the closer we can see in our naked eye.
Whether you have cash, or physical gold bar in your safety box, or whatever is irrelevant already, all wipe out.

Hehhe i beg to differ and grovel on a bit of details bro. Tsunami is natural disaster (unless U ask someone's wife lar ). Skarang ni is about economic havoc and human nature going nuts leh

Whether i am old enough is not the issue as i was told.
Whther the banks gave 0.7% over the listed rates is also not an issue.

The issue really is i cannot remember any banks giving 10% for a long period of FIVE years......

One year is quite acceptable but FIVE years?

I can confirm what Cherroy said is true. I don't understand why you cannot understand banks will give 10% for 5 years. They don't care whether interest level is at 2% or 10%. What they care is match their asset/liabilities exposure. They are also giving out loans at much higher interest rates. Banks just earn the spread between what they charge and what they receive. So hard to understand? Be more open. Just because you cannot understand does not mean it does not exist.

You can also place a 60 months FD now with 4%, which is roughly 0.9% more than 1 year.
It is same situation with 9.3% vs 10% with 0.7% difference.

5 years FD most of the time is available one.

Unless bank is facing problem in loan growth, difficult to loan out, then they may make it unavailable or put up unattractive rate, for eg. lower than 1 year, automatically nobody will put a 5 years FD already.



Banks just earn the spread between BLR vs deposit rate. Banks generally do not speculate how rate will be, nor care much what is the rate. The spread is always there.

When they take in your 5 years FD, they also give out 20 years housing loan with lock in period of 5 years.
As long as the loan is performing, they are earning the spread already.

At that time, as I said before, banks were fighting for their survival, and money/deposit was highly sort after.
The longer duration deposit they can get, the best, especially in crisis time, it secured them the liquidity needed for the next 5 years.

Banks just want to secure their funding. At crisis time, the worst situation bank can face is everyday need to source for massive liquidity needed, just like what is currently feared in Europe banking market right now.

Remembered money was flowing massively out during that time, so banks were very welcomed most long term deposit.
A prolonged liquidity freeze in financial market, bank can close shop overnight.

This post has been edited by cherroy: Sep 17 2011, 05:37 PM

SeeD,

1) You still not answer the question. How LONG can you SURVIVE without income and selling anything?? Before you say it is or it is not a big deal, I would like to know how well can you SURVIVE.

<<Well, RM72k is a huge sum of cash to be staying idle. >>

2) It may be a HUGE SUM of money to YOU. But, it might just be a small percentage of somebody else total asset.

3) I have 2 years of emergency fund. They are EXCLUDED from my total investment portfolio.

Dreamer

Why is it excluded from the investment portfolio?

All you need to do is to allocate it to the asset classes that do not go through long economic cycles, like properties, etc

EMERGENCY fund is not investment per se.

if you need money one day, where would you source it from? selling their illiquid, immovable property? at discount?

there were time where FD rates reach double digits, maybe some of the forumers are to young to know abt it. In 1990s, there are many koperasi giving out 12%p.a. fd for 1 year placement.

Read previous post - 2 years.

You need two years of emergency funds in CASH upfront? Cash under your tilam?

This post has been edited by howszat: Sep 17 2011, 07:30 PM