In its 2025 annual report released last month, Bank Negara Malaysia projects headline inflation to hover between 1.5% and 2.5% this year. In 2025, the headline inflation averaged 1.4%.
Economist Ahamed Kameel Mydin Meera expects the inflation rate to be much higher this year, given that oil is used in almost every production and distribution process.
He also noted that 30-40% of Malaysia’s fertiliser imports pass through the Strait of Hormuz, which could drive up the price of fresh produce.
This comes at a time when household spending is already on the rise. According to data from the statistics department, the average Malaysian household spent RM5,556 in 2024, compared with RM5,150 in 2022.
Against this backdrop, how can Malaysians stretch their ringgit? FMT Lifestyle speaks with Jarvic Lau, a certified financial planner and senior portfolio consultant, for his insights.
“For me, the biggest risk from the war is inflation. For that reason, everyone is advised to have a savings plan in place to weather the storm,” Lau said.
Being proactive matters, and it often starts with small, everyday decisions. For instance, he recommends cooking at home more often instead of impulsively turning to food delivery.
Choosing hawker stalls over frequent café dining is another way to keep costs in check.
Transportation is another area where expenditure, and hence savings, can add up. Using public transport more regularly instead of driving daily can ease the burden of rising fuel costs.
When shopping, prioritising local brands over imported goods can stretch your ringgit further. For those planning a break, a domestic holiday may be a more budget-friendly alternative to travelling abroad.
Growing your money
With extra savings from careful spending, what should Malaysians do next – and at what point does holding too much cash become a missed opportunity?
“For me, anything more than six months of emergency funds is too much,” said Lau. “The balance should be put into some form of investment – at the very least into a money market or bond fund.”
Money market funds are short-term investments that offer high liquidity, while bond funds invest in corporate or government bonds.
In times of uncertainty, Lau added, there are both risks and opportunities. “But before making any investment decisions, you must first understand your risk profile,” he said.
This refers to one’s ability and willingness to take on financial risk, based on factors such as financial goals and emotional tolerance for market fluctuations, among others.
“This is very important because investing can affect you emotionally, and not everyone can stomach huge losses over a prolonged period before the market rebounds or corrects.”
Lau outlines a general and simplified allocation strategy:
- Individuals with low-risk appetite: Keep 80% in cash and 20% in regional equity funds, which invest in stocks from companies from a specific region.
- Individuals with moderate risk appetite: Keep 20% in cash, 30% in bond funds and 50% in regional equity funds.
- Individuals with high-risk appetite: Keep 20% in cash, 30% in regional equity funds and 50% in a single-country fund, which invests in stocks from a specific country. Alternatively, this 50% can be split into two single-country funds.
“Cash in the bank provides security. Having enough gives you confidence, but holding too much can be a loss of opportunity,” Lau shared.
He stressed that it is important to be well-informed before you begin investing. If you are unsure, consider seeking guidance from a licensed financial planner.
At the end of the day, stretching your ringgit is not just about cutting back – it is about making thoughtful choices, balancing caution with opportunity, and building financial resilience in the future.