Versa vs Best Fixed Deposits in Malaysia: Which Offers Higher Rates?

What makes Versa stand out from the best fixed deposit platforms in Malaysia?

When it comes to saving and managing your cash, the two conventional methods you hear about the most are savings accounts and fixed deposits. While both of these accounts guarantee an assured rate of interest, there are certain requirements you have to fulfill. The minimum amount for a fixed deposits in Malaysia is around RM 5,000. On top of that, you need to lock away your cash for a fixed period to earn the full rate of interest. These requirements make fixed deposits less of a viable option, especially during this pandemic when emergency funds are more important than ever.

With Versa, there’s no need to worry about such requirements. Versa earns you interest up to 2.4% p.a.*, calculated on a daily basis, you can withdraw your money whenever you want without penalties, and you can start from as low as RM 1.

How does Versa allow this flexibility compared to fixed deposits?

Versa can do this as it invests in Money Market Funds (MMF). In particular, we invest your funds in Affin Hwang Enhanced Deposit Fund (EDF), which is managed by AHAM Capital Asset Management. This fund only invests in the deposits of the multiple banks, making it highly liquid and low-risk.

When you join Versa, you become part of a group of investors. The money you deposit into Versa goes into a large cash pool contributed by other investors as well. All of this money goes into Affin Hwang Enhanced Deposit Fund (EDF).

The fund manager (AHAM Capital Asset Management) invests the funds in multiple bank’s deposits and sets aside a small portion of cash for customer’s withdrawals. This is why you can withdraw your money whenever you want with no penalties.

Whereas, fixed deposits do not have the same flexibility. If you withdraw your money even one day before the maturity date, you end up losing all your hard-earned interest.

Did you know that in 2020 the OPR rate has dropped 4 times (From 3.0% – 1.75%)?

Since the pandemic happened, looking for high fixed deposit rates in Malaysia has been tough as fixed deposit rates have dropped significantly. Currently, the best fixed deposit in Malaysia has an interest rate of 1.8% (with lock-in period of up to 12 months and with a high minimum deposit). This drop is due to the reduction in the overnight policy rate (OPR) set by the Central Bank of Malaysia (BNM).

Basically, a low OPR causes local banks to adjust the interest rate it will lend to consumers. This means people with existing loans will end up paying lower monthly repayments, and subsequently, new loans will follow the current rates. Naturally, fixed deposit accounts also lower their interest rates because of this.

Earn higher rates with Versa than fixed deposits out there

So, how is Versa able to earn a projected rate of 2.4% p.a.*? This is because the fund can negotiate better interest rates from the banks.

When you deposit money into Versa, the Fund Manager (AHAM Capital Asset Management) takes that large cash pool and negotiates for higher rates with multiple banks. The bigger the fund (larger deposits), the higher the negotiating power, and the better the chances of getting higher interest rates for you!

Versa is a low-risk option

Money market funds are considered to be low-risk because they invest in highly liquid, short-term money instruments. They regularly harvest mature deposits and put new funds into new deposits allowing them to always stay liquid.

Unlike fixed deposits, money market funds are not protected by PIDM. However, your funds are being diversified in multiple deposits of different banks. In the case that one bank goes under, there would only be a slight change in the fund return.

Rest assured as our fund manager, AHAM Capital Asset Management (formerly known as Affin Hwang Asset Management), has never had a negative return in the past 10 years. Not only that, Affin Hwang Enhanced Deposit Fund has been rated 4 out of 5 stars by Morningstar, which is a reputable Investment Research website.

In summary: Versa vs. Fixed Deposits in Malaysia

Versa: An alternative platform to fixed deposits in Malaysia

Versa provides an alternative for those who may be hesitant about locking up your money in a fixed deposit. With no lock-in period and low minimum deposit, you can use Versa for your emergency fund, for short-term goals, or simply to grow your cash for future investments.