Stage in life vital to investment decisions

The volatility of the economy is a risk for investors, especially for those who prefer to deposit money in banks as the lower interest rate is unattractive. However, bank deposits remain a priority savings instrument for Thai people, bankers said during a seminar at Money Expo 2012.
Kris Chantanotoke, executive vice president of Bank of Ayudhya, said that savings deposits are the basic investment of people who start saving. Savings deposits are suitable for first jobbers.
When savings depositors have more money and intend to start a family, fixed deposits are a choice for them, he said.
Insurance and mutual funds are additional products for people who want to create security in their life and for their family.
He said that depositors should plan their investments in five life stages, from a young age until retirement. The banks at present provide a full range of products suitable for all life stages.
Smith Banomyong, executive vice president of Siam Commercial Bank, said that deposits, in keeping with the age, would help less-risky investment. SCB has designed deposit products to match up to the lifecycle of customers, he said. Thaweelarp Rittapirom, executive vice president of Bangkok Bank, added that a deposit is the beginning of a relationship between customers and banks because banks can offer additional products to suit customer requirements.
Even though the deposit will give returns lower than other investment instruments, banks offer convenience and other products such as loans and mutual funds.
Smith said that when saving, depositors should allocate excess savings in long-term fixed deposits to gain a higher rate than the savings account.
If the interest rate trend is maintained or declining, a long-term fixed deposit is a suitable choice for depositors because they can secure a healthy rate. But if the rate trend is on the rise, a short-term fixed deposit is the best option, said Kris of Bank of Ayudhya.
Thaweelarp of Bangkok Bank added that savings account depositors should have fixed deposits in their portfolio if they want to save money for long-term expenses.
Weidt Nuchjalearn, senior executive vice president of Krungthai Bank, said that the life stage of a person is an indicator of the investment portfolio. He suggested that depositors who give importance to save long term should start depositing into a 24-month fixed account without paying tax.
Pakorn Partanapat, an executive vice president at Kasikornbank, said that the proportion of deposits had gradually declined to 50 per cent of total savings from 90 per cent in the past because there were many more options for investment that offer higher rate of returns than deposits.
Thaweelarp said that depositors who want sustainable returns with low risk should consider a money market fund as an alternative choice because the product is similar to a deposit. The product is expected to be strongly promoted by the bank after bills of exchange might be moved out of the market due to the premium collection.