Investment Ideas – Why You Should Consider a Term Deposit Account


Your passbook savings account has been a great investment, but the interest on the account is really not yielding as much as you expected or wanted. The money has been in the account a few years, and while you do have plans for it, your financial goals will not be met at this rate. Yes, there are a number of options, but most of them require committing the sum for a protracted term, much longer than you needed.

However, there is a solution. Term deposits are a great way to invest large sums of money, whether it is to save short-term or long-term. Term deposit accounts differ from your standard passbook account in that they usually yield more interest, especially from online accounts. Typically, those who open these types of accounts are saving for a particular financial goal (house, car, or college education) and do not want to wait a long time for the account to mature.

Continue reading to earn just some of the reasons you should consider choosing a term deposit account.


Unlike investing in the stock market or funds that have some risk, the term deposit is one of the safest ways to save money. While the interest on many of these accounts is much lower than opening other types of savings accounts, the funds are federally insured up to $250,000. Furthermore, unlike many funds that might gain or lose value, the term deposit fund guarantees that you make money, primarily because there is very little risk involved.

Deposit Amount

The amount required to open any one of these accounts is much smaller. The minimum deposit amounts can range anywhere $1,000-$2,500, which is much smaller than other types of accounts. This is convenient for people who have to save quite a bit, but not enough to open other types of accounts that require more money.


One of the greatest benefits of this type of account is they offer more flexibility in terms of the types of accounts they offer and the maturity dates. These accounts are more appropriate for those with short-term or long-term financial goals. The three main types of accounts are short-term, long-term and ladder accounts.  

With short-term accounts, the investor has the option of investing between one and five years, and long-term accounts are anything beyond five years. The ladder accounts are stratified ones where investors can save a lump sum but have varying amounts mature at different times. For example, someone with $20,000 wanted to open a term deposit account but did not want to tie up all their money in one account. They could theoretically split up the funds into three amounts equalling $20,000, but instead of having one maturity date, each sum would mature at different times.

No Account Fees

Unlike funds you would set up through a brokerage account, there are no management fees. Because many of these accounts are set up through financial institutions (banks, credit unions, and online institutions), you can essentially set up an account, much like you would a standard savings account. Term deposit accounts do not charge management fees to open the account. In fact, the only time savers are penalised is if they withdraw money before the maturity date.

Money Earns Money

The greatest benefit of term deposit funds is that this money earns money. Depending on the interest on the account and the account stipulations, you can earn interest on your account monthly, quarterly, semi-annually, or yearly. For the most part, these accounts can yield more in interest depending on the amount. The higher the amount, though, the more interest accrued.

Term Deposit Fund For Your Financial Goals

The term deposit is great for a number of reasons. However, the main one is because it helps people save money for short- and long-term goals. Whether saving for a child’s college fund or for remodelling on your home, the term deposit fund is probably one of the most flexible ways to guarantee the money will be there when you need it.