I Found Where To Park Money For Emergency Use

After a bad start even for myself (due to being unwell) in 2016, I'm finally back to the blogging sphere. In order to increase frequency of posting I will likely be linking articles, ideas and putting comments where appropriate.

As many of you know I'm an account holder in FSM and have various fund holdings but what I do with my cash? Savings account? Fixed deposit? Hold hard currency? I think money market funds will serve my needs very well. I shall explain.
THE NET INTEREST RATE* ON CASH MANAGEMENT FUND

I got the idea from this FSM article:
http://www.fundsupermart.com.my/main/research/-View-Idea-Of-The-Week-How-to-Save-for-a-Rainy-Day-11-Dec-2015--6606

1. RELATIVELY ATTRACTIVE RETURNS AS COMPARED TO SAVINGS RATE
- Maybank offers - Money market funds ~3.50%.

2. NO LOCK-IN PERIOD & LIQUIDITY
- Fixed deposits rates are higher than savings and possibly money market funds but they suffer from lock-in periods. Not ideal for emergency cash.
- Money market funds have no lock-in period, hence better liquidity and can redeem their money without forfeiting the interests gained.

3. REQUIRE A MINIMUM INVESTMENT AMOUNT ONLY
- Money market funds have low minimum initial investment (RM500) and subsequent amount (RM100).
- All money market funds on Fundsupermart platform are at 0% sales charge.

Other smaller benefits I see by parking cash here are:
Parking facility – I can park your money in this fund while waiting for the right time to invest in unit trusts in FSM.
Visibility of daily interest rate – I will be able to know the interest rates on a daily basis since the fund invests into deposits.
Facilitates the execution of the Regular Savings Plan (RSP) – Monies can be deducted from the fund to buy selected unit trusts on a regular basis.

Is it safe? Yes.
The fund houses that manage these funds, being the Capital Markets Services License holders for Unit Trust Management Company (UTMC), are strictly regulated by the Securities Commission (SC). Also, these funds’ mandate is to invest in money market instruments and deposits of financial institutions with a maturity period of no more than 1 year. As such, these funds provide investors with the similar sense of security that the banks offer.

Investors will be rest assured as these funds have been able to deliver a positive 1-year rolling return with an astounding probability of 100% over the past 4.5 years (ended Dec 2015).

The only thing to remember is that money market funds are not insured under the Perbadanan Insurans Deposit Malaysia scheme so they do carry slightly more risks than savings and fixed deposits.