Fixed deposits are safe and predictable but can be expensive. You may need to deposit thousands of Ringgit and lock your money in for a few years to get the best rates. You could be penalized if you withdraw before the term ends. In addition to this, interest rates have fallen in recent years. The average six-month deposit rate for a bank account is now 1.8% p.a.
A few digital platforms now offer cash management solutions, which is a positive. These solutions may offer higher return rates than fixed deposits or even better, and there are no lock-in periods or interest penalties.
StashAway Simple is a Malaysian robo advisor platform that offers StashAway Simple. This portfolio includes cash management. Versa also has a digital cash management platform, and it was launched by Affin Hwang in partnership with Versa.
Then there’s Touch ‘n Go’s newly launched GO+. Although GO+ is marketed as an eWallet investment tool rather than a cash management system, we included it in our comparison because it allows users to digitally invest in money market funds.
How can they earn interest returns?
These platforms place your deposits in money-market funds. This includes short-term loans that can be loaned to government and banks. These funds can also hold deposits from banks. They are able to invest in high-quality debt that matures quickly and there is very little risk.
What are the benefits?
- No lock-ins.Interest returns are calculated daily so you don’t have to deposit money for a certain time in order to receive the best rates. You can withdraw your money at any time without paying interest penalties.
- Accessible from anywhere.These platforms are easy to sign up for in minutes. This is a great way to invest in money market funds.
- Potentially higher returnsFixed deposits can yield lower returns than money market funds, but they may offer higher returns.
- Low minimum deposit.A minimum deposit is required for investment products or savings. Savings or investments may not offer the best interest rates.fixed depositAccounts are available if you have the ability to place at least a few thousand Ringgit.Unit trustFunds usually require a RM1,000 initial investment. Cash management platforms do not have tiered interest rates and minimum deposits may be as low as RM1.
What are the down sides?
- It takes time to withdraw.You can withdraw your money instantly from a savings or fixed deposit account. With these platforms, however, withdrawals can take up to a day.
- There is no PIDM protection.Your bank deposits (e.g. Your bank deposits (e.g., in savings accounts or current accounts) are automatically protected.Perbadanan Insurans Deposit Malaysia(PIDM). PIDM will reimburse your bank with any money that you have deposited up to RM250,000 in the event of a bank failure. PIDM does not protect money deposited on these cash management platforms.
- Expected returns may change.These platforms may project an annual return of 3%, but your actual returns will depend on the actual money market fund. The platform can change the projected return if the fund performs poorly.
What happens if these platforms are closed?
You can make a deposit to any of these platforms but they won’t hold your money. Your funds are instead kept in a trustee account owned by a third party firm. You will have access to your funds even if the platform is closed.
Whenever you invest, make sure the platform is licensed by the Securities Commission so you know they’re following the proper procedures when it comes to handing your money.
Touch ‘n Go eWallet GO+
It’s simple to sign up for GO+ if you are an existing Touch ‘nGo eWallet user. Simply open the eWallet app, and click the GO+ icon.
Deposit funds can be made from either your eWallet balance, or your bank account. While withdrawals to your eWallet account are instant, withdrawals to your bank account take up to one business day. If your eWallet balance is insufficient to make a payment, the app’s Quick Reload Payment feature that is enabled by default can automatically withdraw the exact amount from GO+ to complete the payment.
However, don’t expect to earn high returns. At the time of writing, its projected interest rate was 1.5% p.a. It can fluctuate daily. This rate is lower than the 6-month average fixed deposit rate. This could result in a return of less that a cent per day if you deposit RM100. It is however a convenient way of getting returns on dormant balances in your eWallet that would otherwise just be sitting there.
GO+’s underlying funds are the Principal e-Cash Fund. It launched March 15, this year. It charges a 0.45% management fee and 0.03% trustee fee, which are higher than other cash management platforms’ fund fees.
You can currently only have a balance up to RM9500. There’s also an aggregate limit of RM5 billion – this means that if the total GO+ balances of all customers reach RM5 billion, you won’t be able to deposit any more funds into GO+.