Term deposits are a type of investment that offer a fixed interest rate over the life of the investment. They are considered to be extremely secure, as they are backed by the FDIC or the NCUA and insured in the same way as savings accounts or money market accounts. The higher the interest rate, the faster your money will grow. Term deposits have a low minimum deposit amount and multiple maturities, allowing investors to stagger the end dates to create an investment scale.Term deposits offer a higher interest rate than most transaction and savings accounts, and generally, the more money you invest or the more time you invest, the higher the interest rate.
Whether you want to start investing, diversify your portfolio, save for a down payment, or simply earn more interest than a savings account alone, term deposits can help you achieve your financial goals. They are guaranteed safe investments with very little risk.You set the amount, your financial institution sets the interest rate, and both of you decide when you can withdraw money with your return. The great thing about term deposits is that you can use them for both long-term and short-term needs. However, you may be able to make more money investing in properties or stocks, but you're at greater risk of losing it.A term deposit allows you to deposit money into a bank or credit union account for a predetermined term, usually from a few months to a few years.
Being hesitant about investing in a fixed-term deposit and deciding where to store your hard-earned savings can be an overwhelming process. Term deposits will generally give you a better rate of return than a savings account and a much better rate than a checking account. Depending on your financial plan, you can invest in a term deposit with terms ranging from one month to five or more years.You'll also find Guaranteed Investment Certificates (GICs), which are basically the same as term deposits. But at the same time, you can get a higher interest rate if you deposit money in a longer-term deposit.
Unlike other forms of investment, where the potential to win is balanced with the risk of losing money, a term deposit guarantees growth at a predetermined interest rate. With the exception of terms linked to the market and the market, term deposits are not adversely affected by the market.Even if the interest rate for the term you deposited changes before it matures (which can happen at any time), you'll earn the original rate you earned on the day you made your deposits. You can't redeem a non-redeemable term deposit without incurring penalties, but you can generally redeem redeemable term deposits before their term ends. Responsible investing incorporates environmental, social and governance (ESG) factors into its term deposit strategy.