You have received notice that your 18 months fixed deposit has matured.
Time really flies.
It seems that only recently have fixed deposits been paying as much as 4.2% per annum
Well, a quick check tells me that the highest interest rate I can get right now from CIMB is 3.3% per annum
This is also for a much shorter period of 3 months.
The interest rate drops to 3% per annum if we choose a 12-month period.
This is probably because every institution takes into account interest rate cuts at the end of 2024 and also in 2025.
The news is that the European Central Bank will cut interest rates before the Fed.
This is good news for interest rate-sensitive risk assets like REITs, to be sure.
So, what should I do?
As I shared in a recent blog and YouTube video, I keep $250,000 in my emergency fund.
I put the money in fixed deposits.
I will continue to do so.
I’ll do this in $20,000 chunks because if I have to use my emergency fund, breaking out smaller amounts will avoid losing a lot of interest income.
So, if I had $100,000, I would split that into 5 fixed deposits of $20,000 each instead of having one fixed deposit of the full $100,000, for example.
It can be up to 10 fixed deposits of $10,000 each.
This explains what you see in the image below:
Anyway, this is just something I’m comfortable with and it makes sense to me.
We all have different circumstances and beliefs.
As long as we maintain a meaningful emergency fund that suits our circumstances and as long as we are able to access it reasonably quickly, we should be fine.
If AK can do it, so can you!