Also known as Term deposit, Time deposit is one of the most preferred investment options available in the market today. With easy-to-understand terms and conditions, this traditional deposit vehicle satisfies the needs of both the rookie and the professional investor as it yields assured returns at the end of term while keeping the deposit amount intact. Nearly, all major banking and financial institutions in Philippines offer this instrument as a part of their savings/deposit portfolio. While Time deposits are nearly risk free, more often than not, we tend to make some common mistakes while investing in this humble product. Let’s explore these errors with a view to stay invested safely and to maximize returns.
Choose a Wrong Plan
Banks in Philippines offer a plethora deposit options, some with fixed terms and others with customizable options. Since the principal amount you invest remains frozen for a fixed period, ensure that you do enough research on the plans offered before opening a deposit account. Your quest for information should include details such as interest rates, available tenor options, premature withdrawal penalties and so on. It's better you take time, understand and invest than regret at a later time during the run period.
Unsuitable Tenor
Another area where we tend to make some mistakes in haste. Choosing the right tenor is critical since it's all about your hard earned money being frozen from being withdrawn for a certain time. Do give your immediate and short term goals a good thought before investing. You may have an short term requirement for money and not wish to invest every penny in a 5 year tax saving Time deposit plan and regret about being cash strapped in the near future. Always ensure that you have sufficient liquid assets in bank and in hand.
Choosing the Right Currency
Apart from Peso, most of the banks let you invest in other major currencies of the world that includes US Dollar. Investing in a foreign currency is likely to yield higher returns when compared to making a deposit in Peso. Therefore, if you have the required backup, inquire about the available currency options and chose wisely so that you get the best returns for your investment. Most of us fall short of exploring the currency options available with the bank.
Initiate a Withdrawal Before Maturity
One of the most common mistakes we tend to make. The purpose of investing in a time deposit is to stay locked for the entire tenor and reap the benefits at the end of term by being rewarded with interest charges. Though, most of the Time Deposit options can be encashed during the term, it's strongly advised that you don’t do so(unless you have a compelling need) since it comes with monetary penalties. Yes, that is right. The bank may charge a small percentage of the outstanding amount/applicable interest as penalty and you also lose the interest charges for rest of the period.
Therefore, keep calm and think twice before you decide to make a premature withdrawal.
Fail to Compare Online
Need we say more? In today’s internet driven world, almost every product/service is available online. There are a handful of web portals dedicated to providing information on banking and financial services in Philippines. Before investing, make sure that you use the resources available to compare Time deposits offered by different banks so that you do not regret your choice at a later date. These portals maintain up to date information on latest rates and terms offered by banks, thereby helping you in making well informed decisions.
Choose a Wrong Plan
Banks in Philippines offer a plethora deposit options, some with fixed terms and others with customizable options. Since the principal amount you invest remains frozen for a fixed period, ensure that you do enough research on the plans offered before opening a deposit account. Your quest for information should include details such as interest rates, available tenor options, premature withdrawal penalties and so on. It's better you take time, understand and invest than regret at a later time during the run period.
Unsuitable Tenor
Another area where we tend to make some mistakes in haste. Choosing the right tenor is critical since it's all about your hard earned money being frozen from being withdrawn for a certain time. Do give your immediate and short term goals a good thought before investing. You may have an short term requirement for money and not wish to invest every penny in a 5 year tax saving Time deposit plan and regret about being cash strapped in the near future. Always ensure that you have sufficient liquid assets in bank and in hand.
Choosing the Right Currency
Apart from Peso, most of the banks let you invest in other major currencies of the world that includes US Dollar. Investing in a foreign currency is likely to yield higher returns when compared to making a deposit in Peso. Therefore, if you have the required backup, inquire about the available currency options and chose wisely so that you get the best returns for your investment. Most of us fall short of exploring the currency options available with the bank.
Initiate a Withdrawal Before Maturity
One of the most common mistakes we tend to make. The purpose of investing in a time deposit is to stay locked for the entire tenor and reap the benefits at the end of term by being rewarded with interest charges. Though, most of the Time Deposit options can be encashed during the term, it's strongly advised that you don’t do so(unless you have a compelling need) since it comes with monetary penalties. Yes, that is right. The bank may charge a small percentage of the outstanding amount/applicable interest as penalty and you also lose the interest charges for rest of the period.
Therefore, keep calm and think twice before you decide to make a premature withdrawal.
Fail to Compare Online
Need we say more? In today’s internet driven world, almost every product/service is available online. There are a handful of web portals dedicated to providing information on banking and financial services in Philippines. Before investing, make sure that you use the resources available to compare Time deposits offered by different banks so that you do not regret your choice at a later date. These portals maintain up to date information on latest rates and terms offered by banks, thereby helping you in making well informed decisions.