Fixed Term Deposit

Choosing a term for your fixed investment can be a good place to start in making decisions about your overall investment strategy. If you are able to settle on a term which meets your goals and fits comfortably within your budget, then you can more easily determine the amount you can invest for that period of time, and the goals you are aiming to achieve at the end of it. To learn more about the fixed terms available on deposit accounts, follow these few simply tips to help you clarify what you need from your term, and how to find a fixed term deposit which meets those needs.

The Fixed Term Deposit Terms Available

It is important to consider the terms of your investment deposit account with regards to what you want and can afford, but you must also look at the options which are available for this type of investment account. Fixed terms and features available include:

• A fixed term of between one month and five years. Typically term deposit providers will offer a range of fixed terms for as little as 30 days to as long as 60 months and in some cases you can choose your exact maturity date, for example you can invest for a term which is six months and six days, and in others you can choose from nominated terms such as one month, three months, six months or nine months.
• The terms available depend on the provider. Each bank and financial institution will determine which terms they would like to offer as fixed investments. Therefore, your term can be guided by the provider you choose because some provider will offer terms up to only 12 or 24 months, rather than offering long term investments as well. The result is that there are often very competitive specials on the shorter to medium terms which can also help you decide which terms to consider for your needs.
• Fixed terms can be unfixed. When you are considering the fixed terms which are best for you, you also have the choice of flexible fixed terms. These are available on accounts like the NAB Trade Up account with a 24 month term and the ability to increase your term deposit rate if NAB increases their variable rate; or the Bankwest Early Release term deposit account for a 12 month term, which allows you to make at call deposits or withdrawals without affecting your interest rate. If a term deposit account which gives you flexible options during your term appeals to you, then these accounts mentioned offer set 12 or 24 month terms, where you are able to control your account, without risking an interest rate penalty.

The Best Terms to Fix

As you consider the terms on offer, remember that in most cases, once your term is fixed, you can’t change it, so it needs to be the best from beginning to end. To help you determine which terms and the best ones to be fixed, and which terms shouldn’t be fixed, follow these pieces of advice:

• A lot can happen during a long term so find the best rate and fix it. When you look back over the last five years of your life, you’re probably in a very different place, financially, personally, in every sense. However, a lot can change outside of your personal situation in five years too so when you find a good long term deposit rate, fix it so it is locked in to secure your financial future. A good long term deposit rate will be calculated for future rate rises, rises in the cost of inflation and will ensure that your investment amount and returns retain a meaningful value over the long term.
• Fix terms you can afford. Once you choose a fixed term and activate your account with your investment deposit, you can’t access your funds again until maturity. Therefore, you need to make very sure that you won’t need to use the funds you have invested to cover bills, expenses, events or emergencies during your term. If you know you have a big expense coming up in four months time when you need to throw a 21^st party for your daughter, then choose a fixed term for three months so you can afford to throw a fabulous party, without resorting to the credit card.
• Fix a term which coincides with your goals. If you have worked hard to save your funds, and you want to deposit them securely in a fixed term deposit account until you need them, you want to make sure your savings really will be there when you need them. So while you don’t want to choose a term which is too short because you may be tempted to spend your savings before you need them, you don’t want to miss out o a goal purchase because you couldn’t access the funds you have saved to make it. Again, it is important to remember that you will be charges early access fees and earn a lower interest rate if you access your funds before maturity, so don’t have that as your Plan B.

For more information about the fixed terms available on investments, deposit and savings accounts, view our comparison tables here. When you have found the fixed term which suits your goals and your budget, follow our secure links directly from the comparison table to start an online application today, and lock in the perfect deal you have found.