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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 interest rates compared to regular savings accounts. Depositors will be required to retain their deposits in the account for a pre-determined tenure in order to enjoy the 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. Fixed deposits offer lower but stable returns, and it is protected by Perbadanan Insurans Deposit Malaysia (PIDM) up to 250K for each depositor.To view PIDM's brochure, click here

  • Capital investments: Most unit trusts require an initial amount of RM1,000 providing investors with a basket of stocks – diversification reduces investment risk. Fixed deposits require a minimum deposit of RM5,000 for one month tenure and RM1,000 for two months and longer tenures.

  • 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 CIMB offers unfixed deposit which allow multiple withdrawals from your Fixed Deposit account before the maturity date. However, no interest will be paid on the withdrawn amount.

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 fixed deposit account if you think you’ll need access for emergencies or unforeseen expenses. Instead, place fixed deposits across different tenures to ensure you can uplift 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 for informational purposes only and CIMB does not make any representation and warranty as to the accuracy, completeness and fairness of any information contained in this article. As this article is general in nature, it is not intended to address the circumstances of any particular individual or entity. You are advised to consult a financial advisor or investment professional before making any decisions based on the information contained in this article. CIMB assumes no liability for any consequences arising from your reliance on the information presented here.