Smart ways to save as rates drop

[MALAYSIA] As global interest rates continue to trend downward, savers are seeking secure and effective ways to preserve and grow their wealth. Traditional savings accounts and fixed deposits may no longer offer the returns they once did, prompting individuals to explore alternative low-risk investment options. This article examines some of the safest and most accessible alternatives available in Malaysia as of April 2025.​

In recent months, central banks worldwide have reduced interest rates to stimulate economic growth. While this has led to lower borrowing costs, it has also resulted in diminished returns for savers. For instance, major banks in the UK, such as Virgin Money and Santander, have announced cuts to their savings account interest rates, affecting millions of customers . Similarly, in Malaysia, traditional savings accounts and fixed deposits are offering lower yields, prompting a shift toward alternative low-risk investment options.​

Top Safe Investment Alternatives in Malaysia

1. Employees Provident Fund (EPF)

The EPF is a government-backed retirement savings scheme that offers stable returns. In 2024, the EPF declared a dividend rate of 6.30% for conventional savings and 6.30% for Shariah-compliant savings . While funds are generally locked until retirement, early withdrawals are permitted for specific purposes such as housing, education, or medical needs.​

2. High-Yield Savings Accounts

Several banks in Malaysia offer high-yield savings accounts with attractive interest rates. For example, Standard Chartered's Privilege$aver account offers up to 6.15% per annum, contingent upon meeting certain conditions . These accounts typically require maintaining a minimum balance and fulfilling specific banking activities, such as deposits or bill payments.​

3. Money Market and Cash Management Funds

Money Market Funds (MMFs) and Cash Management Accounts are low-risk investment options that invest in short-term debt instruments. They offer higher returns than traditional savings accounts while maintaining high liquidity. Funds like StashAway Simple™ and RHB Cash Management Fund 2 provide projected returns ranging from 3.48% to 3.66% per annum.

4. Fixed Deposits

Fixed deposits remain a popular choice for conservative investors seeking guaranteed returns. In March 2025, banks in Malaysia offered fixed deposit rates ranging from 2.00% to 3.45% per annum, depending on the tenure . While these rates are lower than in previous years, fixed deposits continue to provide capital protection and are insured by the Perbadanan Insurans Deposit Malaysia (PIDM) up to RM250,000 per depositor per bank.​

5. Bonds and Sukuk

Bonds and Sukuk are debt instruments issued by corporations or governments that pay periodic interest. In Malaysia, these investments typically offer returns between 3.5% and 5.5% per annum . While they carry slightly higher risk than fixed deposits, they provide an opportunity for diversification and potentially higher returns.​

Considerations for Savers

When selecting an investment option, it's essential to consider factors such as risk tolerance, investment horizon, and liquidity needs. For instance, while the EPF offers attractive returns, funds are generally inaccessible until retirement. Conversely, high-yield savings accounts and MMFs provide more flexibility but may require meeting specific conditions to earn the highest interest rates.​

Additionally, it's advisable to stay informed about changes in interest rates and economic policies that may impact investment returns. For example, recent developments in global markets, such as trade tensions and policy shifts, have influenced investor sentiment and asset performance.

As interest rates decline, it's crucial for savers to explore alternative low-risk investment options to preserve and grow their wealth. In Malaysia, instruments like the EPF, high-yield savings accounts, money market funds, fixed deposits, and bonds offer varying degrees of return and accessibility. By carefully assessing individual financial goals and preferences, investors can make informed decisions that align with their long-term objectives.​