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Whether you’re a seasoned investor or new to the world of investing, you should be exploring ways to diversify your investments to earn the best return on investment (ROI). Making the right decision can be difficult with the variety of options available. So here are two of the most popular investment options: unit trusts and fixed deposits. 

What is a unit trust?

A unit trust is a fund comprised of investors’ money managed by fund managers. This fund will then be invested into various assets such as cash or money market instruments, fixed income or bonds, equities and commodities. 

What is a fixed deposit? 

Fixed deposit accounts are offered by banks to help you earn higher earning rates compared to regular savings accounts. For most fixed deposits, investors must retain their deposits in the account for a pre-determined tenure to enjoy the investment returns. 

Unit trusts vs fixed deposits: what you need to know

  • Risk: Fixed deposits are a safer form of investment with a steady income stream and guaranteed capital returns. While unit trusts are subject to market risk – which means that your investment is vulnerable to fluctuating market changes. The best way to secure your unit trust investments is to diversify your assets by spreading them across different units.

  • Returns: Unit trust investments are advantageous when you look at the promise of potential returns and quick capital liquidity, which means it can be readily converted into cash. The higher the risk, the higher your potential returns. Although fixed deposits may be a low risk option, the potential returns may not be as attractive. 

  • Capital investments: Most unit trusts require an initial amount of RM1,000 providing investors with a basket of stocks – diversification reduces investment risk. While fixed deposits require a minimum deposit amount depending on the tenure. One-month tenures are higher, while two-month or longer tenures tend to be more affordable.

  • Accessibility: Unit trusts are more flexible as there are no fixed tenures – the recommended holding period is from three to five years – but it can be liquidated without penalties when necessary. Fixed deposits range from one month to five years and are subject to penalties should you decide to withdraw before the term ends.

So which suits you best?

First, look for an investment strategy that suits your short-term and long-term needs.


With unit trusts, diversifying your assets into various unit trust funds lowers your potential risk. It’s best to have some understanding of the facility before committing.


For fixed deposits, look at the term length. Don’t lock away all your money into a long-term FD if you think you’ll need access for emergencies or unforeseen expenses. Instead, invest in fixed deposits across different tenures to ensure you can liquidate in a shorter time frame.


With a plethora of investment options out there, it can be overwhelming. Speak to professional advisers to learn more about the best choices for unit trusts and fixed deposits options before making any commitments. 



This article is brought to you by CIMB as part of our ongoing efforts to raise the level of financial literacy among Malaysians. Financial knowledge and understanding are key to making well-informed and meaningful financial decisions that will improve all our well-being. This, in turn, achieves CIMB’s purpose of advancing customers and society.