Why Time Deposits are Worth Investing In

Written by imoney

Investing in time deposit has become a favorite among first time investors, and it isn’t hard to see why. There are few other investment instrument that promises a decent, fixed return rate, while keeping your deposit secure

With time deposits, you essentially agree to keep your money in the bank for a pre-determined period, say 1 year, without making any withdrawals until it reaches maturity. The bank offers you a fixed interest rate provided that you do not make withdrawals or terminate the contract before the maturity term. You can, however, withdraw your money but you will be subject to pre-termination charges, and other applicable penalty fees such as break-cost and documentation stamp fees.

So why are time deposit preferred over other types of savings accounts. Let’s check on some of its advantages and disadvantages below.

Safe and Guaranteed Return on Investment

Even though you are technically “investing” your money in a time deposit, there is little or virtually no risk involved in it as you can still get your principal back whether you pre-terminate it or not. Time deposit is protected and insured by the Philippine Deposit Insurance Corporation (PDIC).

Higher Interest Rate

The interest rate offered by time deposits are higher compared to a regular savings account. Interest rates could go as high as 3.5% compared to a regular savings account which only earns between 0.5% and 1%.

Slow and Steady Investment Type

While the return is secured and higher than a regular savings account, your earnings with time deposits are usually smaller than with higher risk but higher return investments such as stocks and bonds.

Getting interested in time deposits? You may check out the current rates on our website.