The Edge: How Can Retirees Diversify Out of FDs?

As interest rates are expected to remain low, financial planners have been encouraging Malaysians who rely on fixed deposits (FDs) to fund their retirement to diversify into other investment instruments. Retirees are advised to place their money in three “buckets”, signifying short-term, mid-term and long-term needs. 

Ian believes that FDs can fit into the short-term bucket for those who are considering large purchases within the next few years as it is less risky and more liquid. He adds that money market funds are another option, however investors need to understand how it works first. His advice is that an investor should place 30% of their funds in this bucket and another 30% should be placed into the future bucket where it is relatively safe and comprises bond funds or good endowment plans among others.

Of the remaining 40%, 30% should be placed into the growth bucket with medium-risk funds, balanced funds and REITs, and the balance 10% can be placed into any asset class the retiree is interested in. 

This article can be found here.