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What is a Fixed Deposit Investment?
A Fixed Deposit Investment in Malaysia is a savings instrument offered by banks and financial institutions that allows individuals to deposit a lump sum of money for a predetermined period at a fixed interest rate. This investment is considered low-risk, making it an attractive option for conservative investors looking to preserve their capital while earning a steady return. The interest rates on fixed deposits are generally higher than regular savings accounts, and the returns are guaranteed for the duration of the deposit.
How does a Fixed Deposit Investment work?
A Fixed Deposit Investment works by allowing investors to choose the amount to deposit and the investment tenure, which typically ranges from one month to several years. Once the deposit is made, the funds are locked in for the agreed period, and the investor cannot withdraw the money without incurring penalties. Interest is calculated daily and paid out at maturity or can sometimes be credited to the investor's account periodically. At the end of the tenure, the investor receives the principal amount plus the accrued interest, providing a predictable and secure return.
How to invest into a Fixed Deposit investment?
To invest in a Fixed Deposit in Malaysia, individuals can visit a bank or financial institution of their choice, either in person or online. The process typically involves filling out an application form, providing identification documents, and depositing the desired amount. Investors can choose the tenure and may have the option to reinvest the interest earned. It’s essential to compare different banks and their offerings to find the best interest rates and terms that suit individual financial goals.
What is the difference between Syariah and Convential Fixed Deposit?
The key difference between a conventional fixed deposit (FD) and an Islamic fixed deposit lies in the principles they follow. A conventional FD is based on interest (riba), where the bank pays a fixed interest rate over a set period. In contrast, an Islamic fixed deposit adheres to Shariah principles, meaning it avoids interest and instead operates on profit-sharing or other permissible contracts, such as "Murabaha" (cost-plus financing) or "Mudarabah" (profit-sharing). Returns on Islamic fixed deposits are based on the bank's profit from investments rather than a predetermined interest rate, ensuring compliance with Islamic law.