So you’re sold on the idea of a term deposit, but what's the optimal amount of time to lock your funds away for?
A long-term deposit usually means a term that is over 12 months in length. The main advantage to long-term deposits is they generally have a better interest rate. Typically, the longer amount of time you commit to, the better rate you will receive from the lender. This is a reward for letting them hold onto your money for a long period of time. Long-term deposits require less maintenance as they allow you to set and forget, which is a quality many people look for in an investment.
Deposits that are locked in for 1-12 months are usually considered short term. The benefit of short-term deposits is, as the name suggests, they are short term. Many people will not be comfortable knowing they cannot access that money for several years. If you end up with a large unexpected cost, and the bulk of your money is locked away, you could run into financial trouble. Also, when the term ends, you have the opportunity to shop around the market for a better rate, whereas with a long-term deposit you need to wait it out. Some banks may offer you a loyalty bonus if you roll over your term deposit when the term ends.
Which term deposit suits you best?
If you have a short-term savings goal, a short-term deposit may be your best choice. For example, if you’re planning to go on an overseas trip in 12 months or need to purchase a car next year, a short-term deposit is a good way to make sure you don’t spend your money in the interim. It is also suited for first-time investors, who may be nervous about committing to anything long term or who may not have other forms of equity or assets to bail them out in an emergency. Long-term deposits are suited to people who may have more cash or assets and are more comfortable with locking some of it away for a few years. If an emergency comes up, they know they will have access to enough money to deal with it. It is also suited for people who are looking for a long-term investment strategy, and already have, or a planning to have, a diversified investment portfolio.
fixed for 6 months
Term Deposit Offer
Earn a competitive interest rate of 3.00% p.a. on a 36 month investment. Start with a small investment amount of $1,000. Enjoy peace of mind with a fixed interest rate, no monthly account keeping fees and flexible term lengths.
- Minimum investment: $1,000.00
- Monthly fees: $0.00
How can I compare term deposits?
If you’ve decided what length term deposit best suits your savings needs, the next step is to compare the term deposits available.
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