Gain insight on what are money market funds and income portfolio. Explore these alternatives to saving accounts and fixed deposits in a low interest rate environment as shared by a licensed financial planner.

Knowing your alternatives and options

Do you know what alternatives are available to savings accounts and fixed deposits? What investment options are there available to provide income, safety of principal, and liquidity? If you are unsure of your options, the time is ripe for you to learn about money market funds.

Once, I had a client who was strictly about three options when it came to parking his money. Fixed priced Amanah Saham Nasional funds, savings account, and last but not least fixed deposits. He had no idea about other alternative investments that guarantee principal yet offer liquidity.

It is not wrong to have conservative investment preferences. If a client prefers to preserve his nest egg than risk it in search of larger gains, or if he needs funds within the next few months for a down payment on a house or for emergency purposes, a more conservative approach will be recommended. For example, the most conservative allocation would be 100% investment in savings account or fixed deposits.

However, savings and fixed deposits have a lower rate of return. Referring to the figure below, as you take on more risk the potential returns are higher as well. Depending on your financial goals, you will want to find the right type of investments that meets your priorities. Below we will be exploring low risk investments that may serve as a good alternative to savings and fixed deposits while providing better returns and not taking on too much risk.