15 Mar 2021

What is a term deposit?

What is a term deposit?

A term deposit is a financial mechanism by which an individual can deposit money for a set amount of time. During that period of time interest accrues and, at the end of the term, the consumer can withdraw the funds along with any interest accrued during the term. This article will go over the pros and cons of the term deposit.

The major reason to enter into a term deposit is that it is a guaranteed product. The term deposit has a guaranteed interest rate set by the bank and at the close of the term, you get your money. The major advantage is the low-risk nature of the investment. The term is also generally a short period of time which means you will generally get your money back in a matter of a few months.

The reason to not enter into a term deposit agreement is that your money is not available during the term. A term deposit is different from a standard call deposit. Under a standard call deposit, you deposit one day and several days later you can go in and request your money. This is not the same with a term deposit. You must wait until the term ends to get the money you have deposited. If you will have need of the money during the term, do not enter in a term deposit agreement.

Limited to “Sophisticated Investors”

If you are looking for a short-term investment with a guaranteed return, a term deposit is a good investment vehicle. If you cannot tie up your cash, this is not the investment for you.

If you are looking for a short-term investment with a guaranteed return, a term deposit is a good investment vehicle. If you cannot tie up your cash, this is not the investment for you.

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