I want to build my 6 months emergency fund as my first step towards savings. My expense is currently around RM3k per month, which means I have to save around 18-20k emergency fund.

Currently I have rm10k sitting in a 1 year FD (3.35%) and going to mature in mid March next year. I also have a few savings here there and combined with this FD, I will be having rm15k by March.

What should I do with the RM15K? continue with FD? But sifus here like @Ramjade said FD is a waste of time. Putting into ASM is suitable as emergency fund?

emergency fund are for "emergency", place them at somewhere u can easily access it.
if u placed in fund/ut, there might b withdrawal fee or loss when u wanna withdraw for emergency use.
if fd, the most u get is no interest for early withdrawal gua.

*not financial advise.

edited: its ok, found out

This post has been edited by NGV22: Dec 28 2018, 04:35 PM

I am not sifu but let me ask you a question.
Why put FD when amanah saham function exactly the same?
Emergency fund means you need access to it on weekends and public holiday.
Both FD and amanah saham can't be access via public holidays or weekends.

FD max 4.5%
Lock up your money depending on your term.
Principal is guaranteed by bank.
You forfeit the interest if you withdraw early.

Amanah saham fixed price fund min 6%.
Money not lock up.
Principal is pseudo guaranteed as you buy and sell at RM1/unit. You can't sell below/above RM1
You don't forfeit returns if with draw early.

Forget FD and dump your money into amanah saham fixed price fund. Don't get conned by banks trying to sell you variable price fund.

I know I did not regret it.

I am not sifu but let me ask you a question.
Why put FD when amanah saham function exactly the same?
Emergency fund means you need access to it on weekends and public holiday.
Both FD and amanah saham can't be access via public holidays or weekends.

FD max 4.5%
Lock up your money depending on your term.
Principal is guaranteed by bank.
You forfeit the interest if you withdraw early.

Amanah saham fixed price fund min 6%.
Money not lock up.
Principal is pseudo guaranteed as you buy and sell at RM1/unit. You can't sell below/above RM1
You don't forfeit returns if with draw early.

Forget FD and dump your money into amanah saham fixed price fund. Don't get conned by banks trying to sell you variable price fund.

I know I did not regret it.

you can hardly see any money with 10k in FD, depending on your risk appetite, go for something with higher risks with greater returns.

but if its efixed deposit, can take out anytime i want including weekends/public holidays, no?

what would you suggest for 6 months emergency fund?

Take out and forfeit the interest? No thank you. Ocbc 360. Phillip money market (Phillip only available on weekdays only)
There's this plastic thing call credit card where your limit is high and it can function well. Of course you must have the cash behind it to use it. They give you 21 days to pay up. More than enough if you have money in like amanah saham. Not enough if you are broke.

First rule of credit card is make sure you have cash to pay.

I keep only 1-2 months expenses with me in real liquid cash in ocbc 360 where I can access anytime I want. Rest just Taruh in amanah saham.

Of course I have move on from amanah saham.

This post has been edited by Ramjade: Dec 28 2018, 05:46 PM

Amanah Saham is the way to go.

First of all, wishing everyone in this forum a Happy New Year!

With regards to above post on emergency fund and having access to it during holidays and weekends, let’s clarify what is an emergency fund.

Referring to Investopedia, an emergency fund is for unexpected events such as losing one’s job or an unexpected huge financial expense as in medical expenses. It is not for everyday and minor events, though unexpected and unfortunate, such as losing your wallet when on vacation or fracturing your arm due to an accident.

Though the latter events may also be deemed an emergency to you, they don’t warrant such a high savings to last 6 months or about 18k. It is not necessary to have access to the whole 18k at anytime.

But in an event such as losing work, being jobless and without income, and yet having to pay the monthly instalments on a house and car, and other bills and living expenses on yourself and family, having enough emergency fund till you can be gainfully employed again is crucial. Otherwise, you may lose the house and car…

While it is not necessary to have immediate access to the emergency fund, it is equally important not to tie it to any investments (such as unit trust or mutual funds or equities) that have a high investment risk even if the investment allows you to withdraw at anytime and you will receive back the money within a week or two.

Remember that the emergency fund is in reserved for an unexpected event such as losing your job. You will want to put it into a safe and sound financial vehicle to have peace of mind and not worry about investment risk and risk losing any part of it.

Lastly, regarding equally sound and safe investments comparable to FD…

First, look at the picture of the total money involved. 18k is not that ‘a large amount of money’. FD rate is currently at about 4%. A 4% annual return on 18k is $720 or $60 a month.

Let’s say the other financial investment tool gives 7% return. This means an extra 3% above FD’s 4%. 3% of 18k is $540 or $45/month.

So the big picture is this… put the emergency fund into a bank’s FD to gain an extra $60 a month, and hope there will not be a bank run anytime soon… put it into a mutual fund to chase a further $45 and hope that the fund is run transparently without any scandal that will cause a ‘bank run’ on the fund.

Do note that in event of a ‘bank run’, the withdrawal policy can be suddenly changed and the withdrawal amount can be limited at each withdrawal. During the Greece financial crisis in 2015, the ATM withdrawal was up to 60 euro only. It will take 300 days or 10 months to withdraw 18k.

Once again, Happy New Year. Don’t worry too much. Live and let live.

A bank run is a possibility but don’t let it worried you. If you get freaked out on every mere possibilities, how to survive another year?

Well said !

Nice post ! happy new year to you too

Good points to take note of !
Happy New Year 2019 to you too !

Hi, may i know where to get fixed price amanah saham? thought is for limited time and limited amount only.

You can refer to the another thread on this forum:
https://forum.lowyat.net/topic/4677986

Bank run theoretically possible, but it is very unlikely.
As we have interbanking borrowing mechanism and even swapping facilities between countries central banks nowadays for any cash needed instantly.

While central bank (that has the ability to print money) is the last lending resort, aka bank can borrow from central bank if really desperate time.

People withdraw (bank run) from Bank A, when it doesn't have enough cash money, it will request Bank B to borrow them to facilitate the "bank run". By then those people have the cash money from bank A, will go to bank B to deposit back. (so pocket A to B only), unless everyone withdraw billion and keep under pillow, then yes, a real bank run may occur that collapse the bank.

It is better to worry on "personal financial bank run" aka run out of cash to survive instead of bank run.

The reason why investment like unit trust, or equities are not suit to be emergency fund, because, at the point of emergency, those investment may be making a loss. Unit trust is not guaranteed to be making money one.
There are fairly a number of unit trust out there are still making a loss despite invested for 3,5 years or even longer.

Just a point here : a Credit Card with a large spending limit can also act as an emergency fund source.

Not if the place you need to pay cash doesn't accept CC.

True I always keep at least one credit card that has a large spending limit that sits in my drawer.