What is KLIBOR?

To those who are new to KLIBOR, or Kuala Lumpur Interbank Offer Rate, you’d need this article badly, and you have to read them all to understand. MHL explains them all.

KLIBOR, or Kuala Lumpur Interbank Offered Rates is an interesting formula calculated for structured investments made by individuals pertaining a specific floating interest rate. A floating interest rate is a fluctuating interest rate charged by lenders, or rather banking institutions.

For interest rate-linked structured investments, KLIBOR plays a pivotal role on the statistics of interest rate movements. The general rule of thumb when you’re in the KLIBOR business is:

If KLIBOR rates move within the agreed band within the investment period, investments return positively whereas if KLIBOR rates move outside of the agreed bands, there will be no ROI for you.

Structured investments are what you banking institution would offer you – Even for home loans to follow KLIBOR rates. If you’re applying for a home loan and the bank offers you interest rates based on KLIBOR, you must always remember to weigh certain factors before considering. Fixed rate home loans are sometimes the better way to go if you don’t want to take the risk or go through a lot of hassle.

Also to note, structured investments are linked to the performance of various underlying assets such as interest rates, foreign exchange, market indices, equities or fixed income items.

As complex as it may sound now already, KLIBOR isn’t for everyone. And if you’re looking into structured investments, you better gear up on your knowledge and watch the market trends closely. Don’t forget to look at the health of the banking institution – They are your main instruments to your investments. Consider these before getting more interested in structured investments

  1. You will have to bear all charges and fees if you decide to move this product to another before it matures. This usually happens when your product investment does not meet your needs or you’re taking a high risk waiting for this particular product to mature.
  2. Every investment have their own set of high and low risks. Some risks are not worth taking, although it looks beautiful on the outside or the cute saleslady offered you her products.
  3. Beware of products that have too many high risk assets – Make sure you get some low risk assets like fixed deposits.
  4. Non-principal protected structured investments pose higher risk because there’s no guaranteed amount of money you will receive as ROI even after your product has reached maturity.

The mortgage and financial consulting services are offered to you FREE of charge without any obligations. Kindly contact us or email to consultant@malaysialoan.com.my if you need any enquiry. Thank You.

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