Change FD arrangements

[Snudgeo]

Hi all

My current FD (2 a/c 100k + 50k) 1 year fix expires in September. I wish to obtain a substantially higher interest rate (4.7%), currently available and payable at Malaysia Building Society. My plan would be to have both accounts with MSB, 100k fixed for 5 years to obtain the higher rate and the other 50k on a shorter term,but still at a higher rate than any of the banks. I have 2 questions:

1.  Can I open FD's at MBS now and have the lien transferred to the new accounts straight away? Presumably, I would then be free to deal with the existing FD's normally in September.

2.  Is any specific form required, or do I simply write an explanatory letter of request to Motour?

Thanks.

[Chris1855]

wow, 4.7% is nice.  what's the catch

[Steph]

Here you go - all the info on how to change from one bank to another:

http://www.my2home.info/index.php/topic,1879.0.html

[Gunnar45]

I think the catch is that the money is not 'insured' like in the commercial banks.
Meaning that if thy go bust, you risk getting zero.

Isn't it so that the building societies in UK also used to give premium rates in interest?

[Snudgeo]

Thanks for the link to the procedure, which seems pretty straight forward. Details of MBS deposit rates are here:
http://www.mbsb.com.my/deposits_fixed.html Note the higher rates for those over 49!

It's correct that as MBS is not a bank, deposits are not insured by the government scheme, but MBS's main shareholder is the EPF (government pension/national insurance fund), so it should be OK.

[Chris1855]

sounds like it should be safe then.   Do any of you guys leave much larger sums in a FD in Malaysia (your main retirement cash).   If you had no proper pension but were relying on the income from a FD would you leave it all in Malaysia,  even the government insurance would surely have a cap and not cover it all. 

 I can't think of anywhere else where they pay such high returns (perhaps Panama) so leaving it all in Malaysia makes the most sense

[austlaw]

Hi Chris,

I think that you will find Australia is paying about the same on government paper and about 5%+ from banks.  There is forex risk, of course, but very limited risk of default.

Is it possible for My2ers to freely bring money in and out or MY - say to take advantage of interest rates?

[Snudgeo]

I believe there are several countries paying higher rates then Malaysia - Australia and The Lebanon to name but two. Details of what the PIDM guarantee scheme covers can be found here: http://www.pidm.gov.my/About-Deposit-Insurance/Coverage.aspx

Personally, I maintain cash deposits and other investments here and in the UK. I have no pension as yet, so have to generate as much as possible in other ways. My local friends are all predicting a reduction in Malaysian rates soon.

I wouldn't put all my eggs in one basket either. The simmering political dissatisfaction here could lead to instability and financial volatility. One just never knows...........

[Chris1855]

sorry,  i forgot Australia was paying high rates. The exchange volitility wouold concern me but I am not expert on how stable the AUD is

[donohue]

 The A$ is one of the most wildy fluctuating currencies in the world.
This is because it is agressively traded by many players.
At present it is high due to the demand for resources. If China's GDP forecast were to drop by 1 or more per cent the A$ would go down signifcantly.
Swings of 5% in the course of a month are common. In the course of a year it is nothing to swing 10 -20% from high to low.
check out the link below to see it movement against the MYR over the last two years.

Its appreciation agianst the UK Pound has been around 60% over the last couple of years.

The one positive thing I would say about a non Australian holding $A is that its currency closely reflects and tracks Asian growth. If you are living in Asia it might make some sense to link your nest egg with that part of the world. And of course the banks are seen as being amongst the safest in the world.

http://finance.yahoo.com/q/bc?s=AUDMYR=X&t=2y&l=on&z=m&q=l&c=

[scott]

hi,

There's a long topic on PIDM on this site : http://www.my2home.info/index.php/topic,24.msg17054.html#msg17054

[papaya]

Hi Chris,

I think that you will find Australia is paying about the same on government paper and about 5%+ from banks.  There is forex risk, of course, but very limited risk of default.

Is it possible for My2ers to freely bring money in and out or MY - say to take advantage of interest rates?

Nothing to stop you having a deposit IN Aussie Dollars IN Malaysia and some good rates available too, and tax free.  (Not as part of the MM2H FD though.)

[austlaw]

Thanks Papaya,

Anyone know the rates on AUD deposits in MY?

For non-residents Aust tax on interest is usually 10% (subject to any specific treaty arrangements).  It is worth doing the sums because rates outside Australia for AUD deposits are often at rates more than 10% lower than the rate in Australia.  ie It can be better to pay the AU tax than have it tax free outside, although the is the hassle of ID etc to open the account.

[papaya]

Hong Leong quoting 5.25 percent for 12 months here www.hlb.com.my/pfs/dep/depffd.jsp?flag=depffd