Stop Settling for Less: Staying Ahead of Inflation

Many Malaysians keep their money in  savings products that gives low return without realizing how much value they lose over time. With inflation eroding your ringgit every year , it’s crucial to not settle for less – both in terms of faith and financial returns.

This article compares four popular savings options: Fixed Deposits (FD), Islamic Savings Accounts,  Tabung Haji and Wahed's Everyday Shariah Account (ESA). We will look into  four key criteria to consider for your savings: Returns, Accessibility & Liquidity, and Shariah compliance.

We’ll also explain why you should care about inflation and ensure your money works for you in a halal way.

The Hidden Cost of Idle Savings: Inflation Matters

Inflation in Malaysia has averaged around 2–4% in recent years. In August 2022, it spiked to 4.7%, and even in 2023 it was about 2.5%. What does this mean? Simply put, if prices rise ~3% annually, any money sitting in a savings account earning less than that is losing value in real terms. Unfortunately, the average interest rate on Malaysian savings accounts is only ~1.75% – far below inflation.

For example, if you had RM5 in 2021, it might buy you a nasi lemak then, but a few years later you’d need around RM5.55 for the same meal due to inflation. That’s an 11% increase in cost over 3 years, while your bank savings might have grown only ~5% in that time. The result is that your “safe” savings actually lose purchasing power. In other words, your money is sitting idle and shrinking in value as you trade off returns for safety.

This is why Malaysians should care about inflation. It’s not enough to just save; you need to grow your savings at least as fast as prices are rising. The goal is to beat inflation so your hard-earned money retains (and hopefully increases) its real value. The good news is there are options to do this without compromising your faith. As we compare Wahed’s ESA, FDs, Islamic accounts and Tabung Haji, remember: don’t settle for less – you can aim for better returns while staying true to your principles.

Below is a comparison table summarizing the four products across the key criteria we will discuss more here:

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1. Returns – What Do You Earn?

Wahed’s ESA (Wahed Invest)

Wahed is a Shariah-compliant digital investment platform (robo-advisor) that offers diversified portfolios. Returns are market-based and not fixed, varying by portfolio risk level. Historically, average annual returns have ranged from about ~3% for very conservative portfolios up to ~11% for very aggressive portfolios. For example, Wahed’s moderately conservative portfolio averages ~5.3% and a moderate risk portfolio ~7.1% annually. These returns are not guaranteed – they depend on market performance (stocks, sukuk, etc.) – but they offer growth potential higher than bank deposits over the long run. There is no fixed “interest” paid; instead you get investment profits/losses. Wahed’s portfolios are designed to beat inflation over time by investing in assets like equities, gold, and more.

Fixed Deposits (Conventional FD)

Fixed deposits offer a fixed, guaranteed return if you keep the money locked in for the agreed term. Rates in 2025 for 6–12 month FDs at major banks are roughly 3.0%–3.75% per annum (some promotional rates even hitting ~4% for certain banks). For instance, as of September 2025, banks were offering promotional FD rates up to 3.75% p.a. for 6-month or 12-month tenures. These returns are guaranteed and predictable – you know upfront how much you’ll earn. However, they are relatively low; in fact, banks have been lowering FD rates after a recent cut in Bank Negara’s policy rate. Traditional FDs do preserve capital and pay stable interest, but the rates (around 3–4%) only barely match or slightly exceed current inflation. They’re certainly higher than regular savings interest, but may not significantly grow wealth after inflation and taxes.

Islamic Savings Accounts

Islamic savings accounts with banks in Malaysia typically offer low profit rates, similar to conventional savings. Many such accounts have tiered profit rates ranging roughly from 0.2% up to around 1.5–2% at best for large balances or special conditions. According to financial sources, the average savings account rate hovers around 1.75% p.a. In practice, some Islamic accounts might advertise “expected profit” of ~1%+, but these are not fixed commitments (more on that in Shariah section). Essentially, Islamic savings give very modest returns, often under 2%. They are not meant for high growth – just a safe parking place for cash, with profit rates that track conventional interest rates in the market. Many banks do try to match market rates (for competitiveness) even though the mechanism is different, so you can assume an Islamic savings account will earn similarly low yields as a normal savings account. Bottom line: expect low but steady profit, nowhere near inflation-beating levels in most cases.

Tabung Haji

Tabung Haji (TH), the Malaysian Pilgrims Fund, declares an annual Hibah (profit distribution) to depositors. In recent years, TH has been distributing about 3.10% per annum (after zakat) on savings. For example, 3.10% was paid for financial year 2022, and again 3.10% for 2023. This rate is decided based on TH’s investment profits each year. It’s not a fixed or guaranteed interest; it can vary year to year (though it has stayed around 3% in recent times, which TH considers a “competitive” rate). The 3.10% hibah is given after TH pays zakat on behalf of depositors, so it’s effectively net to you. Historically, Tabung Haji’s returns have ranged a bit (some years higher in the past), but currently ~3% is the norm. So TH’s returns are similar to a long-term FD (slightly above typical savings account, but not dramatically high). The difference is, TH’s profit rate comes from wholly Shariah-compliant investments and the government ensures no loss of your principal (more on that later).

Summary

In terms of raw returns, Wahed’s ESA (investment) has the highest return potential (~5-8% expected in moderate portfolios, with higher risk) but no guaranteed rate. Fixed deposits offer around 3–4% guaranteed, low risk. Tabung Haji offers roughly 3.1% (recent) – not guaranteed but very likely and relatively stable. Islamic savings accounts lag with ~1-2% range, barely growing your money. Crucially, only the investment route (Wahed) has a chance of significantly outpacing inflation, whereas the others are closer to or below inflation. Keeping money solely in a 1% account means you are effectively losing money in real terms, so returns matter!

2. Accessibility & Liquidity – Can You Access Your Money?

Wahed’s ESA

Wahed is accessible online – you manage everything via the mobile app. There’s a low minimum to start (RM50). You can deposit or withdraw anytime, no lock-in period. However, because it’s an investment account, withdrawals are not instant – when you cash out, Wahed needs to sell your assets and transfer money to your bank, but it only takes about 2 days. So, liquidity is moderate: you’re free to withdraw without penalties, but it’s not as on-demand as swiping an ATM card. Wahed is suitable for goals where you don’t need immediate same-day cash. There are no fixed terms; you can top-up or take out money whenever, making it more flexible than a fixed deposit. Just remember that if markets are down, withdrawing could lock in losses – so ideally this is for longer-term parking of funds you want to grow, not your monthly spending money.

Fixed Deposits

FDs are not liquid until their term is over. When you place an FD, you choose a tenure (1 month, 6 months, 12 months, etc.) and you agree not to withdraw before that maturity date. If you withdraw early, banks typically forfeit the interest (you might get zero or a drastically reduced interest for breaking the FD). So, while your money is safe, it’s basically locked up. You should only put money in an FD that you won’t need until the term ends. Some banks have auto-renewal, or you can roll it over to continue earning. But if an emergency arises, you can withdraw before maturity – just expect no interest as a penalty. In short, FDs are good for capital preservation with guaranteed return, but poor for liquidity. You sacrifice access for the duration of the deposit. After maturity, accessing funds is easy (just transfer to your savings account). Also note, there is usually a minimum deposit (e.g. RM1k or RM5k) to open an FD. FDs are often insured by PIDM up to RM250k, adding security.

Islamic Savings Accounts

These are fully liquid, just like any normal savings account. You can deposit or withdraw anytime, via ATM, online transfer, or at the bank counter. There’s no lock-in – it’s day-to-day money. You typically get an ATM/debit card, chequebook (for current accounts) and access to online banking. So accessibility is excellent: funds are available on demand. There may be a minimum to open (often low, e.g. RM20 or RM100), but after that you can use it freely. In terms of liquidity, an Islamic savings account is ideal for emergency funds or regular transactions because you won’t lose any profit by withdrawing – profit (hibah or declared returns) usually accrues daily and is paid monthly or annually, regardless of transactions. Essentially it’s cash at call. The trade-off for this convenience is the low return. But from a liquidity standpoint, Islamic savings accounts give you immediate access to your money 24/7.

Tabung Haji

Tabung Haji accounts are fairly accessible, though not quite as instantaneous as a bank savings account. TH now offers online services via THiJARI portal and app, and it has partnerships with certain banks (Bank Islam, Bank Rakyat, Maybank Islamic, etc.) to allow transfer of funds between TH and bank accounts through ATMs or online banking. Withdrawals from Tabung Haji are typically done at TH branches or by transferring to your bank. There is no fixed term – you can withdraw your savings anytime you need (subject to some daily limits or procedures). However, you might need to plan a bit: if you don’t have the TH ATM/debit facility, you’d have to visit a branch or do an online transfer that might take a working day or so. In summary, Tabung Haji is liquid (no lock-up of your money) but with an extra step compared to a normal bank account. It’s designed for Muslims to save for Hajj, so it encourages leaving money in, but it doesn’t penalize you for withdrawing (except that if you withdraw before year-end, you won’t earn hibah on the withdrawn amount for that year). Another point: only Muslims can open a Tabung Haji account (since it’s meant for Islamic pilgrimage savings). So accessibility also depends on your eligibility. For those who have it, TH is a safe place to park funds with relatively easy access when needed – just not your everyday spending account.

Summary

In terms of liquidity, Islamic savings accounts are the most liquid – you have instant access anytime without conditions. Tabung Haji is also quite accessible (withdrawals on demand, though via TH channels). Wahed ESA allows free withdrawals but with a short processing time (not instant). Fixed Deposits are the least accessible – your money is locked for the term unless you break the deposit (losing interest). When deciding, think about your needs: for emergency funds or expenses, you need liquidity (savings account or TH); for money you can set aside longer, FD or Wahed might be fine.

3. Projected 5-Year Returns (Example Calculations)

Let’s illustrate how your money could grow (or not) over 5 years in each product, assuming a starting amount of RM10,000 and today’s typical rates/returns. This will show the power of compounding and why “settling for less” can be costly in the long run.

For simplicity, we’ll assume the average rate stays the same each year and that any returns  are reinvested (compounded annually).

Wahed ESA

This is variable, but let’s assume a moderate portfolio targeting ~4.29% annual return (midpoint of a conservative and aggressive mix). If it achieves 5% each year, RM10,000 would grow to about RM12,760 after 5 years (10k × 1.05^5) – that’s a gain of RM2,760. With a higher risk portfolio (say 8% p.a.), the 5-year outcome could be around RM14,700 (a gain of ~RM4.7k). Of course, if markets underperform (e.g. 0% return), you’d end up around RM10k still. The key is that with investing, you have a chance at significantly higher growth. Historically, Wahed’s moderately aggressive portfolio averaged ~8.5%ringgitohringgit.com, which would be over RM15k in 5 years on 10k principal. Note: These are projections, not guarantees – actual results will vary, but over a 5-year horizon a well-balanced Shariah portfolio aims to outpace inflation handily.

This is variable, but let’s assume a moderate portfolio targeting ~4.7% annual return (the current indicative ESA rate). If it achieves 4.7% each year, RM10,000 would grow to about RM12,310 after 5 years (10k × 1.0424^5) – that’s a gain of RM2,310.

Fixed Deposit

Using a typical rate of 3.5% p.a. (roughly in the middle of current FD offers), RM10,000 would become about RM11,880 after 5 years. That’s a gain of ~RM1,880. This assumes you continually reinvest the FD plus interest each year (compounding annually). The outcome is predictable since the rate is fixed. If you managed to get a 4% FD rate consistently, 10k would grow to ~RM12,170 in 5 years. On the flip side, at 3% it’d be ~RM11,593. So likely in the RM11.5k–RM12k range after five years. Takeaway: FDs do grow your money in absolute terms, but modestly. Over 5 years, ~3.5% barely beats expected inflation (you’d net only slightly more purchasing power than you started with, if inflation runs ~3%).

Islamic Savings Account

Assuming an average profit rate of 1.75% p.a.wahed.com, RM10,000 would grow to only about RM10,906 after 5 years【52†】. That’s an increase of a mere RM906. In other words, you’d earn less than RM200 per year on 10k. Some banks’ Islamic accounts might give higher promotional rates (say 2% on large balances), which would yield ~RM11,041 after 5 years; but conversely, many basic accounts pay under 1%, which might not even crack RM10,500 in five years. In real terms, this is likely a loss – RM10,900 in 2028 will probably buy less than RM10,000 buys today if inflation stays around 2-3%. So while your ringgit amount goes up slightly, your wealth might actually shrink relative to costs. This highlights why leaving too much in low-profit accounts is dangerous for long-term goals.

Tabung Haji

Using the recent 3.10% hibah rate as a guide, RM10,000 would grow to roughly RM11,650 after 5 years (compounded)【53†】. That’s a gain of about RM1,650. If TH maintains exactly 3.10% every year, that’s the outcome. If in some years they declare a bit more (say 3.5%) or less, it will adjust, but we can expect the 5-year result to be in the low RM11k range. This is a bit lower than a top FD, but higher than a savings account. It’s also net after zakat. So, compared to inflation, TH savers roughly keep pace, maybe gaining a small real return. Important: Tabung Haji’s profit isn’t compounded automatically in the same way as bank interest (the distribution is on your average balance for the year, including previous years’ profits if left in, so effectively you do earn “profit on profit” if you keep it there). Historically, TH’s payouts have kept savings growing steadily, if not spectacularly. It’s a safe, stable growth path – certainly better than idle cash, but obviously not as high as equity-based investments.

These examples show the stark difference: RM10k in a sluggish savings account might only earn ~RM900 in five years, whereas invested in a higher-return avenue it could earn 2–3 times that amount of profit. Over longer periods, the gap widens due to compounding. The lesson? Stop settling for low returns if you want to build wealth – especially when halal higher-return options exist. Even a difference between 3% and 5% return is huge over time: at 5%, money doubles in ~14 years; at 1.75%, it takes over 40 years to double! So choosing the right place for your money makes a big long-term impact.

(Note: All figures above are estimates for illustration. Actual future rates can change, and investing returns will fluctuate. Always consider your risk tolerance – higher return potential often means higher risk of short-term losses.)

4. Shariah Status – Faith Compliance (AAOIFI Standards)

Now let’s compare the products from the perspective of Shariah compliance, since as Muslims we must avoid riba (interest) and ensure our earnings are halal. AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) is a leading international standard-setting body for Shariah finance. According to AAOIFI Shariah standards, any guaranteed interest on loans or deposits is considered riba and therefore strictly forbidden. With that in mind:

Wahed’s ESA (Wahed Invest)

Fully Shariah-compliant. Wahed is an Islamic investing platform that operates under the strictest Islamic principles. It does not deal in riba at all – instead of interest-bearing instruments, it invests your money in halal assets: Shariah-screened stocks, gold, etc. Wahed has a dedicated Shariah Supervisory Board (which includes scholars familiar with AAOIFI standards) to certify that every investment is permissible. For example, companies with excessive debt or sinful activities (gambling, alcohol, etc.) are screened out. No compromise on faith here – you can be confident your returns are derived from halal business activities. Additionally, Wahed facilitates purification of any incidental non-halal income and even provides Zakat calculations, underscoring its commitment to Islamic values. In summary, Wahed’s ESA is aligned with AAOIFI standards and global Shariah norms, so you’re not settling on faith compliance while pursuing higher returns.

Fixed Deposits (Conventional)

Not Shariah-compliant. A conventional FD pays a fixed interest rate (and therefore almost like a guarantee) on your deposit. Essentially, banks will use the money you've deposited as loan and the interest they've earned from it is then shared back to you as returns on your deposit.Under Shariah (and AAOIFI), this is not allowed. Interest (riba) is strictly forbidden in Islam, as it’s an unjust gain without risk or effort. Earning money from interest on a cash deposit falls in that category. Therefore, a standard FD at a conventional bank is not an option for observant Muslims who follow Shariah finance rules. (There are Islamic fixed deposit equivalents – often called “Term Deposit-i” or “General Investment Account-i” – which use profit-sharing or commodity sale structures to "halal-ify" the return. Those would fall under Islamic accounts, not conventional FD.If one were to take a conventional FD, they’d be compromising their faith for financial gain.. There is an Islamic alternative for almost every conventional product, so there’s no need to settle for interest-bearing FDs.

Islamic Savings Accounts

Shariah-compliant. These accounts are offered by Islamic windows of banks or full-fledged Islamic banks. They avoid riba through various Shariah contracts. Common structures include Wadiah (safekeeping) or Qard (benevolent loan) with hibah (gift), or increasingly Commodity Murabahah (Tawarruq) to offer “profit rates” in line with conventional interest. In all cases, no interest is paid; instead, if you get a return, it’s either a share of profit (in mudarabah accounts) or a discretionary gift from the bank’s profits (in wadiah/qard accounts)adladvisory.coadladvisory.co. Many Islamic savings accounts nowadays use tawarruq which basically simulates a fixed return via buying and selling commodities – this allows the bank to quote a “profit rate” up front but within a Shariah-approved contract (endorsed by Bank Negara’s Shariah Advisory Council). While there is scholarly debate about excessive use of tawarruq, AAOIFI’s standards do permit it with conditions, and Malaysia’s Shariah authorities have accepted it. So, Islamic savings accounts are considered halal in thatyou are not earning riba, and the money is used by the bank in halal financing activities. , so even the source of profit is clean. Essentially, an Islamic savings account fulfills the same function as a conventional account but via Shariah contracts that eliminate interest. According to AAOIFI and general Islamic principles, these accounts are permissible, and banks often have Shariah boards ensuring compliance. One thing to note: any “profit rate” they advertise is indicative, not guaranteed like interest – legally, the bank can’t owe you a fixed return in a wadiah or qard account. In practice, they strive to give the expected rate to stay competitive, but that nuance means your halal return is actually a gift from the bank to incentivise you to deposit, and therefore not interest. Bottom line: Islamic savings accounts let you keep your money in a Riba-free manner, though at the cost of low returns. If your priority is liquidity and you refuse interest, they’re a safe bet for faith.

Tabung Haji

Shariah-compliant. Tabung Haji was created explicitly to provide a riba-free savings vehicle for Muslims preparing for Hajj. All funds in TH are invested in halal assets – the institution places money in Islamic instruments like sukuk, Islamic money markets, halal equities, real estate, etc., under the guidance of its own Shariah board. TH’s mandate is to ensure every depositor’s savings remain free from interest (riba) and other non-permissible elements. In fact, it was established because Muslims in the 1960s were wary of using conventional banks for hajj savings, fearing interest taint; TH solved that by being a fully Shariah-compliant fund. The profit (hibah) you receive from Tabung Haji is derived from halal investment returns, not from any interest-based operations. They also pay zakat on behalf of depositors each year from the fund’s earnings, which means your savings and gains are purified – a unique benefit. According to AAOIFI principles, profit-sharing or investment-based returns like those of TH are permissible. Additionally, the government of Malaysia guarantees all funds in Tabung Haji by law. This government guarantee (under the Tabung Haji Act) gives depositors peace of mind that their capital is secure and no loss will be incurred. That makes TH a very special institution: it’s both very safe (like a guaranteed deposit) and entirely Shariah-compliant. In summary, saving in Tabung Haji means you compromise neither your faith nor your security – you just might give up some liquidity and higher return potential. It’s an ideal “don’t lose sleep” Islamic saving option for many Malaysians, especially for hajj goals. The only limitation is you must be Muslim to use it. For those who are, TH is fully in line with Shariah (even arguably stricter in oversight than regular Islamic banks since it’s a dedicated pilgrimage fund).

To tie it together: “Stop settling for less” has a dual meaning here – don’t settle for less in returns by leaving your money in low-yield conventional savings and don’t settle for less in faith by accepting impermissible interest. All the Islamic options discussed (Wahed ESA, Islamic bank accounts, Tabung Haji) ensure you aren’t compromising your religious principles for financial gain. It is possible to have both: investments like Wahed show you can aim for robust returns and stay within AAOIFI-guided ethics. On the flip side, conventional FDs or interest accounts might give okay returns but at the cost of being non-halal – not worth it, especially when alternatives exist.

Don’t Settle – You Deserve Faithful & Fruitful Finance

Too often, people park money in a low-yield savings account or conventional FD because it’s easy or “safe,” inadvertently letting inflation nibble away their wealth and sometimes compromising on riba. You shouldn’t settle for less – not in your financial growth, and certainly not in your religious principles. The comparison above shows that there are options that honor both: you can maintain 100% Shariah-compliance and seek higher returns.

• If you have idle savings in a bank at ~1%, consider moving at least a portion to a halal investment like Wahed’s ESA or a higher-yield Islamic deposit. As one financial guidance put it, saving alone isn’t enough when inflation outpaces bank interest – “your hard-earned savings may grow over time but it’s losing value”. By investing, you allow compounding to work in your favor and keep your purchasing power rising, not falling.
• If you’re holding conventional FDs, know that Islamic banks offer equivalent FD-i products that give similar returns without the riba element. There is no need to compromise your faith for that extra 1%–2%; you can get competitive profit rates in a halal way (e.g. through commodity murabahah deposits). As Muslims, barakah (blessing) in our wealth is as important as the numeric value – an interest-tainted gain has no blessing. So switch to Islamic accounts or instruments where possible.
• Tabung Haji, for those eligible, is a unique gem: it marries safety, spirituality, and decent returns. It ensures your savings are pilgrimage-ready, purified (zakat paid), and protected by the government. While its returns won’t make you rich overnight, it exemplifies the idea of not settling for anything haram. You get peace of mind that every cent is halal and working towards a noble goal (Hajj).

At the end of the day, “stop settling for less” is a call to action: Don’t settle for keeping money in a low-yield account out of convenience – you deserve better growth. And don’t settle for interest-bearing products out of ignorance or apathy – you can fulfill your financial goals without violating your faith. With a bit of planning, you can have the best of both worlds: financial success that’s aligned with your values.

Inflation is a silent thief – but informed investing can beat it. And riba is a spiritual harm – but today’s Islamic finance tools have nullified any excuse to engage in it. So empower yourself with this knowledge and make your money serve you and your principles. Choose options that are both halal and high-performing (or at least reasonably so). In doing so, you’ll ensure your wealth grows in a blessed way and works harder for you. After all, you and your family’s future shouldn’t settle for anything less.

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