Jul 08, 2022 / Money Tips
These days, it seems that economic uncertainty is everywhere you look. Supply chain and labor shortages have disrupted many industries, inflation is at a 40-year high, and the stock market has been incredibly volatile. While no one knows exactly what the economic picture will look like moving forward, all that uncertainty can be too much for many investors.
If you have extra money to set aside—and you’re feeling uncertain about all that’s going on—you might be wondering what your options are. Fortunately, there’s one type of account that gives you the benefits of both security and guaranteed growth—a term deposit account. It’s an easy, risk-free investment that’s perfect for people who are uneasy about market conditions, but unsatisfied with the low returns that traditional savings accounts provide. Here are a few of the most important benefits of term deposits and how they compare to other forms of investing.
Just as its name implies, a term deposit allows you to deposit money in an account at your bank or credit union for a predetermined term, usually a few months to a few years. In exchange for your deposit, your financial institution will invest your funds and reward you a return on your investment.
Like savings accounts (and unlike many other investments), term deposits are considered extremely safe. Because your investment is with your financial institution, your funds are insured, similar to a savings account or money market account. That means you get to grow your investment without having to worry about losing your money if the market changes unexpectedly.
One advantage of a term deposit is that you get a fixed rate of return. Unlike other forms of investing, where you balance the potential to earn with the risk of losing money, a term deposit guarantees growth at a predetermined interest rate.
Because you agree to deposit your money for a specified term, interest rates on term deposits are typically higher than traditional savings accounts. Plus, your rate isn’t subject to fluctuation as market conditions change, making it a safe investment that also gives you guaranteed growth.
Investing can be incredibly complicated, with many thousands of stocks, bonds, mutual funds, and other options to choose from. Each investment vehicle has its own set of pros and cons and, with every investment you make, you should also factor for how it fits within your overall portfolio. That’s a lot to think about—and few people have the time or the interest for optimizing their own investments. For those looking to simplify, term deposits offer a great alternative to traditional investing.
Plus, term deposit accounts can be a great way to ensure that your money keeps working for you. Because they require you to give up access to your money for a specified term, that money isn’t available for any impulse purchases or investment whims, so it keeps growing until the time of maturity.
Right now, you can get a 5-year term deposit at Utah First that gives you 2% APY guaranteed growth. That’s double the earnings of the average market rate. If you have a little extra savings laying around and don’t want to hassle with the uncertainty of investing, a Utah First term deposit gives you elite earnings and peace of mind that your money is safe.
If you’re interested in learning more about the benefits of a term deposit, come talk to one of our helpful financial experts. We’ll walk you through your options and help you decide if a term deposit is right for you.