Term Deposit Information

06th Aug, 2012

Whilst carrying advantages and disadvantages, term deposits are a good tool to have as part of your arsenal to help secure long term financial goals.

When opening a savings account, banks regularly present the option for a term deposit. For the bank, a secure cash flow. As opposed to a savings account, term deposits are different as investors will not be allowed to retrieve their money until the lock-in term has elapsed. Of course, the flip side is a higher than usual interest rate for the privilege.

Short to medium term accounts have a duration of anywhere between 30 days up to 5 years. It is considered a  highly secure investment option and it can pay interest monthly, quarterly, half yearly, annually, or at maturity, with the option to automatically reinvest . The main disadvantage, that the invested amount is not easily accessible,  could in fact be considered an advantage as it makes sure the entire amount is saved.

There are two types of term deposits, those which do not allow any withdrawals until maturity, and those that allow some withdrawals during the term. They varying in different interest rates depending on length of the term and the amount deposited. Some term deposits apply penalties for early withdrawals and also lower interest rates if more frequent withdrawals  are chosen.

Australian term deposits currently offer some of the highest interest rates in the world for fixed term deposits. In fact, because of this some offshore investors are borrowing money at extremely low interest rates, paying the appropriate exit taxes and still coming out ahead.

Although term deposits are short to medium term investments, they can play an important part in long term investment strategies by offering highly competitive cash interest rates compared to your every day bank accounts.

With so many products in the market place today, how do you find the right one for you? Talk to us today and let us help you create a long term investment strategy that meets your financial goals.


Opinions constitute our judgments at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Nathan Griffith and Samina Yip of The Wealth Creation Group Pty Limited are Authorised Representatives of Apogee Financial Planning Limited ABN 28 056 426 932, an Australian Financial Services Licensee, Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies.

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The Wealth Creation Group and its Financial Advisers are Authorised Representatives of WCG Financial Solutions Limited, Australian Financial Services Licensee 481610, Registered Office at 351 Moorabool Street, Geelong VIC 3220.
Disclaimer: The information contained in this website is of a general nature and has been sourced on good faith as such it should not be construed as personal advice. Whilst the writer has adopted care, diligence and competence, the information has not been prepared taking into account any particular investment objectives, financial situation or particular needs. The Wealth Creation Group and WCG Financial Solutions Pty Limited accept no responsibility for any content contained in external links on other company websites or externally sourced information.