A secure savings and investment option to help you achieve your goals
Short-term or long, redeemable or non-redeemable, registered or non-registered, guaranteed interest rate or market-based – term deposits come in many forms, with many options. There are key considerations to help you reach your savings goals by identifying a term deposit that works best for you.
In essence, a term deposit is exactly what it says it is – an investment of funds deposited into an account at a financial institution with a specific period. The term length (or time period) that the investment is to be held by the institution is stipulated up front with an investment rate of interest.
Similar in nature to Guaranteed Investment Certificates (GICs), term deposit investments typically offer a range of short maturity periods – from months to a few years, and others in between. Each specific term deposit offer will state a rate of return and a minimum amount required, both of which can vary depending on what is on offer at the time of your investment.
A safe investment option
While term deposits are not considered the most exciting investment option available, what they do offer is a safe and solid solution for your money, depending on your needs and goals. Term deposit investments are especially useful if you have specific term goals and concerns about your money during times of economic uncertainty and market volatility. Their resilience and conservative nature is a boon in such cases.
Here are a few features that set term deposits apart from other investments.
Guaranteed growth at maturity: Upon a term deposit’s due date, you get back the principal as well as a predictable rate of return as stated up front.
Low investment threshold: Term deposits can be purchased for as little as a few hundred dollars, with some as low as $100, making them a great tool for getting into investing.
No or low fees: Term deposits are very simple, typically offered without extra fees.
Flexible interest: With some term deposits you can compound your interest for higher growth, or receive regular interest payments monthly or annually. If you’re retired, this can be a particularly helpful boost to the investment income generated from your RRIF holdings.
Cashable options: If you need funds before maturity, cashable term deposits allow you easy access to your money, avoiding the risk of selling other investments at the wrong time. Cashable term deposits can also be a good choice for your emergency fund or other short-term money goals. But do consider that cashable term deposits normally pay a lower rate of interest than a locked-in term deposit. An advisor or BlueShore associate can help you determine the right strategy for you and your money .
