Monday, June 17, 2019

Why You Should Consider a Term Deposit

by Peter Krence (writer), , June 06, 2019

While you won’t exactly be able to get wealthy from this method, there are some advantages to the term deposit.

There is no shortage of options for those looking to invest their money, from stock options, commodities, and bonds to real estate and other assets. Stocks can often have the fastest and possibly highest payout for investors, but they are complicated and it can take a great deal of time to learn the market. Real estate is seen by many as a safer investment, but it comes with the caveat of managerial responsibility.

Fortunately, there are some safer and easier alternatives to the more traditional investment options. Take the term deposit, for example. These are investments made with banks, credit unions, and other financial institutions. Money is invested for a set term at an agreed upon amount of interest. Once the term is up, you’re free to withdraw the money and all interest accrued. While you won’t exactly be able to get wealthy from this method, there are some advantages to the term deposit.


The biggest advantage to a term deposit is that it is nearly 100 percent safe. All term deposit rates are fixed for their duration, so there’s virtually no chance of losing money on the investment, which makes it great as a saving strategy. The Australian government also guarantees all deposits up to $250,000, so even if the bank fails, you still won’t lose money.

The fixed rate of interest also ensures your investment is protected from recessions and other market slumps, and there is essentially no maintenance involved. The biggest drawback to a term deposit is the fact that you’ll likely face some heavy penalties if you have to withdraw the money early. With the variety of options available for terms, however, this shouldn’t be an issue.

A flexible saving solution

Since term deposits are so flexible, it’s possible to set up multiple deposits with different financial goals in mind. All interest accrued is basically free money, so these deposits can be great long term saving strategies. You could set up a term deposit for a year to provide peace of mind knowing that you already have some money set aside. You could set up another for five years or more to help with your future plans, such as buying a car or making a down payment on a house. You can even set up a deposit for as short as 90 days if you have some money that you don’t know how to spend yet. Why not let it grow while you decide how to use it?

Convenient cash infusions

While it’s always good to have some idea of what you’ll use a term deposit for when it matures, a deposit can also be just the payday you need to afford the things you want in the moment. If you’re in good financial standing, a matured deposit can help you make some quality of life changes.

For example, a deposit could be just the money you need to remodel a room or upgrade some appliances. Even the smallest home improvements can make a big difference in your life and increase resale value. Alternatively, the money acquired could help you pay a security deposit on a new apartment, or afford some practical items to make a new place feel like it’s truly yours.

Of course, there’s no rule that says you have to spend your deposit on anything responsible. If you’re an enthusiast, the money can be a free ticket to follow your passion. It could also be an excuse to travel. Visit the rainforest in Cairns. Secure a paddle board rental in Palm Beach. Take a weekend getaway in the mountains. Term deposits can be a great help for any goal, whether it’s practical or a splurge.

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