Saving Strategies

10 banks have reduced their fixed deposit rates following Bank Negara recent cut in the key interest rate. From Nov 25, the minimum rate set for 12 months FD is 3.5% per annum. The minimum rate set for one-month FD remains at 3% per annum.

We have seen outcry from the investors especially the pensioners who are not in the position to gamble on riskier investments. Chances are they would have to continue to place their hard earned savings into FD. It is a double whammy. In addition to battle higher inflation and paying more for the the necessity goods, now they are faced less income from their investments!

What about the younger investors? Generally the 40s and 50s are in the peak of their earning potentials. The suggested investment portfolio should be 60% equities and balance 40% fixed income. Start to reduce exposure on higher risk investments, as the age catches up.

As for the 20s and 30s, even though there might not be lot of money since you are just starting out but you have time on your side. The temptation to spend is great but do balance it by planning for the retirement age. At this age, you can afford to take more risks with the investments. Don't be too conservative. Let youth works to your advantage. Suggested portfolio allocation = 80% in equities and 20% in fixed income.