Money market fund will invest in fixed income securities like Malaysia Government Securities (MGS) which is also known as Malaysia government bond; Treasury Bills, and Bank Fixed Deposit.

Investor who are looking for short term return should consider money market fund. These type of funds are suitable to those investor close to retirement age or already retired. Money market fund return is best position in between Saving Account and Fixed Deposit Account. Money market fund are highly liquidated. It is suitable to be used as emergency fund. Investor can park their emergency fund there to earn some interest income and when there is emergency usage, they can liquidate easily. Depends on the fund house, money market can be liquidated within one to three days.

One of the common example to use Money Market Fund is to park our very short term money that we do not use and earn some dividend income. For example if we have lump sum of money that we expect not to use in two months’ time, if we allocate that sum of money into bank Saving Account which will not make any good interest in such a short period of time. If we allocate that sum of money into Fixed Deposit account, it may not be suitable as the duration is too short. Even you consider allocate to one month Fixed Deposit, you may lose the interest rate if you change your mind by cashing out the Fix Deposit earlier than the duration stipulated i.e. one month in this case. In this scenario, one of the best solution is to allocate that sum of money into Money Market fund as general speaking you can liquidate the Money Market fund any time you like without losing the dividend as it is calculated daily basis.

Other ways of maximising your dividend income from Money Market fund, if we are getting our monthly salary earlier and we do not need to pay our monthly bill that soon. We can move the salary into Money Market fund during the waiting period, when we need to pay the bill then we can cash out the Money Market fund. If we have the discipline to manage our fund well, over the long period of time, we can earn some extra dividend with our existing resources.

Generally equity fund is investing in stocks. It is higher return compare to money market fund and bond fund. With higher return always come with higher risk. Equity can be categories into small cap, mid cap and large cap or also named as blue chip. The categories is calculate base on market capitalisation.

Generally Malaysia Small Cap is categories RM1.25 billion and below. Mid Cap is between RM2 billion to RM1.25 billion. As for Large Cap or Blue Chip, thear are invested in the largest stocks in term of market capitalisation. When writing this in Oct 2019, stocks like Maybank at around RM95 billion market cap, Public Bank at around RM74 billion market cap and Tenaga at around RM78 billion. As the large cap grow rate will be lower than small cap. Investing in large cap risk generally is lower than small cap in exchange the return in large cap will be lower than small cap. Large cap usually distribute their profit through dividend as they do not need to retain much of their profit for business expansion. As for Mid Cap and Small Cap, their distribution will be lower as they will use the profit for business expansion. Therefore investing in Mid Cap and Small Cap is more on their growth.