Other Markets and investment options

• Cash Deposits


  Accounts held with banks or savings institutions by various types of depositors, including retail investors, companies, governments, and financial institutions
• Cash Deposits


  • Return consists solely of interest income without potential for capital growth
  • The full amount invested (capital) is repaid at the end of the investment term
• Types of Accounts


  • Instant Access
  • Fixed-Term
  • Notice Accounts
• Instant Access


  Allows withdrawal of money at any time
• Fixed-Term


  Requires the money to be held for a specific duration, often a year or more
• Notice Accounts


  Demand a notice period before funds can be withdrawn
• Factors Affecting Interest Rates

  • Amount Deposited
  • Duration
  • Competition
• Amount Deposited


  Larger deposits typically earn better rates due to economies of scale for the bank
• Duration


  Longer-term deposits may offer higher rates
• Competition


  Interest rates vary due to competition among deposit-taking institutions
• Tax Implications


  • Income Tax
  • Tax Deduction at Source
  • Gross vs. Net Interest
• Income Tax


  Interest received is generally subject to income tax
• Tax Deduction at Source

  Tax is deducted by the deposit-taker before paying interest to the depositor
• Gross Interest


  The interest rate before tax deduction
• Net Interest


  The rate of interest after tax deduction
• Islamic Savings Accounts


  Adhere to Islamic principles of finance
• Key Features of Islamic Savings Accounts

  • Prohibition of Interest (Riba)
  • Profit-Sharing (Mudarabah)
  • Risk-Sharing (Musharakah)
  • Asset-Backed Investments
  • No Penalty for Early Withdrawal
  • Transparency and Accountability
  • Zakat Deduction
• Types of Islamic Savings Accounts

  • Wadiah
  • Mudarabah
  • Musharakah
• Islamic savings accounts differ from the types of accounts mentioned above and have been designed to meet the needs of Muslims who need accounts that are Shariah compliant
• These accounts are, however, not restricted to Muslims and offer an ethical alternative to traditional banking accounts
• Shariah law as set down in the Qur'an and Sunnah forbids the earning or paying of interest, therefore, the traditional deposit and lending methods that are based on interest payments are unacceptable
• Shariah law goes beyond forbidding interest and requires an element of shared risk
• Islamic accounts, therefore, differ in that interest is not paid, but also that there is no certainty that the investor will get their money back in full. They, therefore, carry investment risk
• Advantages to investing in cash

  • Liquidity
  • Interest return
  • Relative safety
• Drawbacks of cash investments

  • Creditworthiness of banks
  • Inflation reducing real return
  • Interest rate variations
  • Negative or flat returns during low interest rates
• Factors to consider when depositing cash overseas

  • Currency conversion costs and exchange rate risks
  • Creditworthiness of banking system and deposit protection
  • Tax treatment of interest
  • Exchange controls
• Cryptocurrencies


  A type of digital currency or asset that can be traded, stored and transferred electronically
• There is no single definition of cryptocurrencies, but one from the European regulatory authorities is that they are a virtual currency that is represented by a digital record and is not issued by a central bank or similar institution
• Bitcoin used blockchain technology to build a decentralised network that has no central trusted authority and is open to anyone to participate
• Kinds of Cryptoassets


  • Payment tokens
  • Security/asset/investment tokens
  • Utility tokens
• Fiat Currency


  Money that is not able to be converted into gold or any other type of asset
• Functions of Money


  • A store of value
  • A medium of exchange
  • A unit of account
• Money Markets


  The wholesale or institutional markets for cash and are characterised by the issue, trading and redemption of short-dated negotiable securities
• These can have a maturity of up to one year, though three months or less is more typical
• Owing to the short-term nature of the money markets, most instruments are issued at a discount to their face value to save on the administration associated with registration and the payment of interest
• Although accessible to retail investors indirectly through collective investment (mutual funds), direct investment in money market instruments is typically limited to institutional investors
• Money


  Serves three functions: 1) A store of value, 2) A medium of exchange with which to make payments, 3) A unit of account with which one can measure the value of any particular item that is for sale
• Money markets


  The wholesale or institutional markets for cash, characterised by the issue, trading and redemption of short-dated negotiable securities
• Money market instruments


  • Have a maturity of up to one year, though three months or less is more typical
  • Issued at a discount to their face value to save on the administration associated with registration and the payment of interest
  • Accessible to retail investors indirectly through collective investment (mutual funds), but direct investment is often subject to a relatively high minimum subscription and tends to be more suitable for institutional investors
• Money market instruments


  • Treasury bills
  • Certificates of Deposit (CDs)
  • Commercial Paper (CP)
  • Bills of Exchange