Term Deposit

Submitted by Sharemarket News on 3 May, 2011 - 16:44

A term deposit is an account held in a financial institution that has a fixed term, generally with maturities ranging from a month to a few years. This means that your funds are tied up. In the event that you need to pull out your money, the banking institution will charge you a fee for breaking the term of your deposit.

For conservative investors, term deposits are attractive investments. If the RBA (Reserve Bank of Australia) drops rates during the term, the interest rates you get is still fixed. In general, you also get a higher rate with term deposits than demand deposits. Investors and share traders may like to use this financial product as part of a balanced investment portfolio.

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