The benefits of long-term deposits

Unlike short-term deposits which allow you to invest your money for a short period of time to get a quick (but most likely smaller) return, longer-term deposits will lock your funds away for a longer term from one year up to 10 years.   

Long-term deposits are an appealing savings plan and a common rival to high-interest savings accounts. There is no hard or fast rule when deciding which way you should invest your money so factor in the points below, compare term deposits and high-interest savings accounts, look at the interest rates and keep your eye on the market.

• Term deposits are fixed-term investments so once you’ve locked in the term you can’t withdraw any funds, which is a great savings tool
• Long-term deposits are usually less volatile than other types of investments
• As a general rule, the longer you invest money, the higher the interest rate
• Some high-interest savings accounts require you to deposit a minimum amount each month in order to earn interest. This isn’t the case for term-deposits so they can be easier to manage.

While term deposits are a great forced-savings option, you should do some forward-thinking before you put all your money into a term deposit account. When you invest money into a longer-term deposit your money will be tied up for the agreed term duration – which means you cannot touch that money for that period. If you did need to access it for an emergency you may be able to but fees will apply.

Check with your financial institution about what early termination fees they charge should you wish to terminate your agreement.

There are no guarantees when it comes to investing your money, so while longer-term deposits are a great savings option, make sure you conduct your own thorough research before making a final decision.