KCLau's Money Tips Forum

[wlm]

Is now a good time to invest in FCFD for short to medium term investments? Lets say for a tenure of around 6 mths to 1 yr in currencies like AUD or NZD? Just need an opinion from someone who knows better about finance compared to myself here.

There is so much going around saying that a recession is impending. What will happen to the Malaysian ringgit against currencies like AUD or NZD if there really is a recession? Will the Ringgit fare better against these currencies or will it get worse?

[KCLau]

frankly, I don't have experience in foreign currency investment.
Hopefully I can get some expert to give you insightful opinion.

[Edmund Tan]

KC Lau,

Hope this will help your reader.

WLM-The whole is against US. Technically, you are betting against US. If you want to bet against other currency, you wont make much percentage gain. If US currency get stronger, the world get weaker and vice versa.
WLM-my advise to you is dont waste your time in currency, sometimes good money is just around you. You just have to start looking somewhere closer to you.

Edmund Tan

[KCLau]

Thanks Edmund,

I agree that there are many ways to make money. However, I am not into currency trading because I really don't have much knowledge in it. It was perceived that only highly technical trader like some hedge fund managers who can access and monitor global news within split second are competent for it.

There are many issues that can cause a nation's currency to fluctuate such as central monetary policy, and economic growth.

[Alvin Soong]

Hi KC

Thanks for the invitation to the forum.

The macro look of monetary and fiscal policies affecting the currency rates in both countries, will lead to foreign exchange risk when one places in a dual currency deposit. There are also other intrinsic things to note about such plans.

In Singapore, the banks are very smart to package such plans as structure deposits or "dual currency fixed deposits". (not sure if it is the case in Malaysia). Dual Currency deposits are not simply fixed deposits in this case, as it is often options packaged in the plan. The bank protects its own risk by placing the liabilities to the public. If one eg. places his RM deposits in AUS money, and the currency in AUS falls to a certain rate, the bank will short or place the loss into the public's account, making a possible loss.

But of course if market situations is the countries are favourable, as some bankers would say on AUS or NZ, the returns would be good. All returns come at a risk involved. One may have to check if this also applies to Malaysia banks on such a product carefully.

Alvin Soong
http://www.skcagency.com/blog

[wlm]

thanks for the reply guys.

the thing here for me is that i am currently working overseas, but i am being paid in malaysia, therefore i have a situation where there is some extra money sitting for me in the bank account while i'm not there to utilise it.

therefore i'm just looking for a better way for the money to do some work for me rather than just leave it dormant in the account. well, because i'm not there, thus it's hard for me to monitor other kind of investments and i'm rather looking at something short to medium term.

[KCLau]

WLM,

Since you don't want to actively monitor your investment, you are left with not much choices. Unit trust might suit you well in this circumstances.

[midnight_pn]

wlm,

with the advent of online everything (almost), you need not leave your funds parked in a bank account although you're not physically around in our glorious country.

you could still trade on KLSE online using the various online brokers available (and use online banking to pay up at T+3), put the money in FD (very uncreative, i know, but while you evaluate your options, why not put it in a 1 or 3 month FD online?) or buy unit trusts (the lazy man's way). property is another way to go - if you are back frequently enough to take care of the S&P signing, etc.

another fun alternative is look at what the locals (wherever you are) invest their money ... some put it in commodities such as metals such as gold (india/sri lanka) & silver, real estate, etc..

[KCLau]

Great suggestion from Midnight_pn -- welcome to this forum!