Living in Australia requires you to prepare for the future. One way to do this is through savings. However, this is only a valuable option when you can earn on your savings. This is where a term deposit comes in. You can now take advantage of a term deposit to earn interest on money. Loads of Australian banks make this option available.
What is a Term Deposit?
This refers to an investment option, usually low risk, that you can obtain from various Australian banks. It is a system through which you make a cash investment and earn interests on it over the period. This interest is usually at a fixed rate. Also, the period is generally set as you cannot opt-out of the investment. In cases where you do, you pay the penalty.
This deposit that earns you the interest spans between a month and five years, depending on your preference. Now, as long as you stick to the agreed duration, you earn considerably at the end of the financial arrangement.
How to Choose the Best Term Deposit
Getting a term deposit is a wise investment and savings option. However, it is only as effective as where you obtain your term deposit. As such, you will need to consider your available options carefully before making a choice. To do this, here are some main features to consider.
1. Interest Rate
You need to consider the interest you will be earning from the investment. This is your return for the deposit. As such, if you do not pick a favourable option, the whole enterprise would have been a loss. So, lookout for a high-interest rate. The higher you get, the better for you.
2. Minimum Deposit
This refers to the amount you will need to provide before you get your term deposit account open with a bank. This is especially important because this will determine if you can afford to join a provider. For instance, the interest rate may be great. Regardless, it would be impossible if you cannot afford the minimum deposit.
Note that the required minimum deposit ranges from $500 to $250,000.
3. Interest Payments
You will need to consider the payment schedule of your terms deposit. Typically, this can either be long-term or short-term. In the case of the former, you receive your interest payment at year-end. However, for shorter terms, you get your payment by the time the term ends.
4. Investment Terms
You will also need to consider the duration offer for the term deposit. Typically, the duration can span between one month to five years. And this will depend on the institution of your choice. However, ensure you choose an option that provides a term that satisfies your needs.
While this seems irrelevant, it is quite essential to ensure the security of your money. You need to ensure that whatever provider you opt for has the cover of the Australian Government Deposit Guarantee Scheme. This way, you can be sure your investment remains protected.