Daniel Foo, founder of http://SilverInMalaysia.com/ shared about the pros and cons of investing in silver using the Maybank Silver Investment Account. Watch the video below:
Maybank’s Silver Investment Account is the first paper silver offered by a local bank in Malaysia. It was launched in year 2012, July.
When you open an account, you need to buy a minimum amount of 20 grams. The price right now is something around RM2 per gram. That comes to about RM40 for the initial purchase. For every subsequent amount that you want to purchase, the minimum amount is 10 grams. Using today’s price, the minimum amount that you need to top up is about RM20, which is a very, very small amount.
So, how do you open a Silver Investment Account with Maybank? Just go to any Maybank branch and let the customer service officer know that you want to open a Silver Investment Account. The officer will then give you some forms to fill up and sign. Pay the initial amount plus the Stamp Duty Fee of about RM10, and you’re done – as simple as that.
Now, let’s go through some of the pros and cons of the Maybank Silver Investment Account:
Advantages
First advantage is it is quick and easy. Unlike buying physical silver where you need to confirm the price with your dealer, worry about the delivery, and after getting the physical silver, find a place to keep it. With this paper silver, you wouldn’t have to face this kind of problem. You go to the bank, you queue up, and you buy it. That’s it. You’re done – very quick and easy.
Second, it is backed by this reputable bank known as Maybank. Who doesn’t know Maybank? You’re buying from Maybank rather than buying from some unknown enterprise. So, this investment account is backed by a reputable brand.
Third, there is a low start-up capital. Earlier, we mentioned that the initial purchase is 20 grams, and the price for each gram is RM2. That comes to RM40 plus another RM10, which is RM50. You can get in to this silver investment with just RM50.
Fourth is low premium top up. Earlier, we also mentioned that the minimum top up is 10 grams. So, that translates to RM20 for each top up using today’s price.
Fifth is the liquidity. You don’t have to worry about finding a new buyer for your silver. Maybank will buy back your silver any time.
So, these are the advantages of Maybank’s Silver Account.
Disadvantages
The silver account also has its disadvantages. First, it is not insured by PIDM (Perbadanan Insurance Deposit Malaysia). What this means is, if for whatever reason Maybank closes down, whatever amount you have in Silver Investment Account is gone. It’s not insured by anything.
I’m not sure any you have heard, but earlier this year in Cyprus, which is a small country near Europe, two of the largest banks got in to financial trouble and many of their depositors lost their money in the bank. With the silver investment account not being insured by PIDM, what happened in Cyprus can potentially happen here.
Second disadvantage is the physical aspect. Naturally, when we buy the paper silver from Maybank, we assume that the bank already have the physical silver. That may not be the case. When you invest in Maybank’s Silver Investment Account, your silver is potentially not backed by physical silver.
Why do I say that? In the agreement that you sign when you open your silver investment account, there’s a clause, which comes in both English and Malay version, that says Maybank has no official obligation to back your order with physical silver and that you have no right to request them to do so. So, this is another thing that we need to take caution on.
Third disadvantage is a “Spread.” In layman’s term, “Spread” basically means how much money you lose for each transaction. For example – I took the price on the 9th of July earlier this month – the selling price is 2.09 and the buying price is 1.9. So, the spread will be 2.09-1.9. You buy it by 2.09, which is equivalent to slightly more than 9%.
That means when you buy 1 gram of silver and then sell it immediately, you have just lost 9%. I don’t know what you think about losing 9%, but for me, that’s a lot. I mean, why would I want to consciously lose 9%? This is one of the major reasons why I didn’t allocate too much of my capital to Maybank’s Silver Investment Account.
The fourth disadvantage is you cannot buy using Maybank’s online banking system. You have to go down to a Maybank branch, and queue up for both buying and selling. That seems to be a little bit troublesome.
So, these are four advantages and four disadvantages of Maybank’s Silver Investment Account. Daniel Foo discusses about this silver account a little bit more in depth in his book. If you are interested, just grab a copy of Daniel Foo’s ebook here.
For Premium Webinar Members, you can watch the full session of Daniel Foo’s webinar here:
