Saturday, March 31, 2012

Islamic fixed deposit that pay upfront profit (interest) immediately when certificate is issued

I have sold a little shares recently, and thought that I am quite unlikely to reinvest the money into share market for the next 1 month. Short term fixed deposit is in my mind.

There is a kind of short term Islamic fixed deposit (Murabahah) that will pay upfront profit (interest) immediately when certificate is issued or account is opened. You will get your fixed deposit return immediately, without having to wait for its maturity date.

Such product in Maybank is called "Profit Now! Account-i (PNA-i)" and the one available in CIMB is called "Fixed Return Investment Account-i (FRIA-i) - WhyWait". Both their profit rate for 1 month deposit is 3% per annum, which is the same rate as most other 1 month fixed deposit products in Malaysia now.

I have chosen Maybank Profit Now! because it is very convenient. The account can be opened with Maybank2u online banking eFixed deposit placement function, and I don't even need to visit the bank to open this account.

I put in RM10,000 for 1 month fixed deposit, and immediately get back RM25.41 in return.

Of course, if I make an upliftment (take out the FD money before maturity date), I won't get back the full RM10,000 principal as the upfront paid profit will be deducted from it.

In this way, I could get triple-tiered interest for the short term deposit, which are:
  • 3% per annum for the FD
  • 0.3% per annum for the interest of the FD which was deposited back to my savings account
  • 5% bonus interest on interest
It is better than leaving the money in my share trading trust account, isn't it?


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