Let’s assume you have RM50,000 in excess cash, which you intend to hold on to as an emergency fund and have quick access to.

With rates of between 2% and 2.5% a year, as well as a time frame before you can withdraw the money, fixed deposits (FDs) are a viable but not entirely optimal option. What alternatives exist for managing your cash efficiently?

Here are nine vehicles where you can park your excess cash. Note that one is not necessarily better than another and, in practice, a combination of these 10 – including FDs – could be used to your advantage.

1. Digital cash-management platforms (DCMPs)

These offer depositors an easy way to earn daily interest and, unlike FDs, do not have locked-in periods, allowing users to withdraw money without forfeit.

Key providers in Malaysia include KDI Save, Versa, and StashAway Simple. As of Oct 1, the interest offered is as follows:

• KDI Save: 3.5% per annum until Dec 31 for the first RM50,000
• Versa: 3.2% per annum until Dec 31
• StashAway Simple: 2.9% per annum

2. Skim Simpanan Pendidikan Nasional (SSPN)

SSPN is a savings scheme that allows you to earn yearly dividends by funding tertiary-education fees for local students. SSPN paid out 4% in annual dividends between 2015 and 2020. Last year, this was lowered to 3%, which is on par with DCMPs.

Does this mean DCMPs are better than SSPN? Not if your tax bracket is above 21%, as you are entitled to tax relief (RM1,680, based on 21%) if you placed a net deposit of RM8,000 into SSPN. Your tax savings will be more if your bracket is above 21%.

Hence, if you earn more than RM100,000 a year, you should consider placing RM8,000 into SSPN to claim this tax benefit, collect dividends, and enjoy the flexibility of withdrawing from the scheme.

3. Employee’s Provident Fund (EPF)

Employees can voluntarily contribute up to RM60,000 into their EPF account, which is a good way to build up your retirement funds. While you would forgo your rights to withdraw money as you please, you would still have access to these funds in the event of emergencies such as critical illness, disability and death.

4. Home loan accounts

Typically, mortgage rates are higher than FD rates. As such, if you have a full-flexi or semi-flexi loan account, you could use it to save on interest costs from your mortgages.

Note, however, that semi-flexi loan account holders may incur small charges from the bank if you decide to withdraw money from the account.

5. Foreign currency accounts

This is suitable for those who are interested in converting excess cash into other currencies, and could offer some hedge if the ringgit falls against these denominations. Most local and oversea banks offer such accounts.

6. Stocks

It is possible to build a stock portfolio that acts like a FD portfolio by including only fundamentally solid stocks that pay consistent dividends. Done correctly, you would receive dividends on a regular basis, typically eight to nine months a year.

But, given that there is some degree of volatility in the stock market, this is mostly suitable for experienced investors.

7. Cryptocurrency

While this is an increasingly popular route, you would be wise to factor in the volatility and unpredictability of cryptocurrencies in the short-term. The jury is out on whether this is a suitable method of accruing an emergency fund.

8. Unit-trust funds (UTFs)

Unit trusts are funds that are pooled for appointed investments such as stocks, bonds, and money market instruments. While some UTFs pay income distributions to investors, most use capital gains as a measure of performance, which subjects investors to market fluctuations.

9. Exchange-traded funds (ETFs)

ETFs are similar to unit trusts but involve a more passive-style approach. While this is an option, it is crucial for you to be knowledgeable about ETFs to begin with, otherwise you could end up losing money.

This article first appeared in KCLau.com. Ian Tai is a financial content writer, dividend investor, and author of many articles on finance featured on KCLau.com in Malaysia, and ‘Fifth Person’, ‘Value Invest Asia’ and ‘Small Cap Asia’ in Singapore.