The best deposit to choose usually depends on what your needs are and what kind of person you are. According to the expert, if you have less tolerance for risk and like flexibility, it is better to choose a cumulative deposit. And if you are looking to earn more and have free funds that you can not touch for a while, the fixed term is more suitable.
“Simply speaking, you can keep funds in the cumulative deposit for up to one year, and withdraw and top up at any time, but you will receive lower interest. On the contrary, in the term deposit, we set a certain period and amount for which you will already receive higher interest than in the cumulative deposit, but you will not be able to withdraw or top up the funds whenever you want,” says A. Mincienė.
Deposits are one of the best ways to save extra
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The attractiveness of deposits has grown significantly over the past year and even though the base interest rates are now slowly falling, deposits still remain one of the best options for those who want to save.
“There is a prevailing stereotype that deposits are mostly chosen by older people, while young people are looking for riskier and higher-return investments. However, when interest rates on deposits rose, we saw that this attracted the attention of younger individuals as well. For example, in two years, the number of customers aged 18-34 with deposits in Luminor Bank has increased by almost one and a half times. Also, deposits have become more attractive for people aged 36-54 – from 2022. the number of such customers has increased by almost 100 percent,” says the expert.
According to A. Mincienė, the amount that Lithuanian residents chose for the term deposit in the last two years usually ranged from 1 to 10 thousand. euros. However, this year, people contribute from 10 to 100 thousand to the deposits. euros.
“Also, from 2022 Until now, the most popular period for which Lithuanian residents choose to make a deposit in the bank has been shortened from 36 to 12 months. This is normal, as the economic situation changes and people seek to “lock up” their money for a shorter period of time. However, by making a deposit in the bank, we protect the money from devaluation, especially when the interest is still higher than the annual inflation, so it is always worth investing your money”, says A. Mincienė.
According to the expert, comparing Luminor Bank’s data on the residents of all three Baltic countries, the number of deposits has increased everywhere in two years, but it still remains the largest in Lithuania.
“Interestingly, in all three countries, deposits are more popular among women than among men. This is most likely because, on average, women tend to take less risk than men when making financial decisions and prefer financial security to potentially higher but not guaranteed returns,” says the expert.
According to A. Mincienė, time deposits are a convenient way to invest unused money for those who choose to keep it in a “sock”, but want to protect it from devaluation. However, any investment may involve risk, so consult a professional first before making a final decision.
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#Interest #rates #falling #deposits #popular #portrait #depositor #Business
2024-09-06 20:58:25
Term deposit vs fixed deposit
Understanding Term Deposits: A Low-Risk Investment Option for Savers
When it comes to saving money, individuals often find themselves torn between flexibility and earning a higher return on their investment. This is where term deposits come into play, offering a low-risk investment option that provides a fixed interest rate for a set period of time.
What is a Term Deposit?
A term deposit, also known as a fixed-term deposit, is a type of investment where an individual or company deposits a sum of money into an account at a financial institution for a fixed period of time [1[1[1[1[1[1[1[1][2[2[2[2[2[2[2[2][3[3[3[3[3[3[3[3]. During this time, the deposited amount earns a fixed interest rate, which is typically higher than a traditional savings account.
How Term Deposits Work
When you open a term deposit account, you agree to keep your money locked in the account for a set period, ranging from a few months to several years. In exchange, the financial institution provides a fixed interest rate, which is usually higher than a traditional savings account. The interest rate is determined by the institution and the length of the term, with longer terms typically offering higher interest rates.
One of the key benefits of term deposits is that they offer a low-risk investment option, as the interest rate is fixed and guaranteed. This makes them an attractive option for those who want to earn a higher return on their investment without taking on excessive risk.
Types of Term Deposits
There are two main types of term deposits: cumulative and fixed-term deposits. Cumulative deposits allow you to withdraw and top up your funds at any time, but you’ll typically earn a lower interest rate. Fixed-term deposits, on the other hand, require you to keep your money locked in the account for a set period, but you’ll earn a higher interest rate [1[1[1[1[1[1[1[1][3[3[3[3[3[3[3[3].
Benefits of Term Deposits
Term deposits offer several benefits, including:
Low-risk investment option: Term deposits are a low-risk investment option, as the interest rate is fixed and guaranteed.
Higher interest rates: Term deposits typically offer higher interest rates than traditional savings accounts.
Financial discipline: By locking your money into a term deposit, you’re forced to save and avoid dipping into your funds unnecessarily.
Protection from inflation: With a term deposit, you can earn an interest rate that’s higher than the annual inflation rate, protecting your money from devaluation.
Who Should Consider Term Deposits?
Term deposits are suitable for individuals who:
Want to earn a higher return on their investment without taking on excessive risk.
Need a low-risk investment option for their savings.
Are willing to keep their money locked in an account for a set period.
Want to protect their money from inflation.
Conclusion
Term deposits offer a convenient and low-risk way to invest your money, providing a fixed interest rate for a set period of time. By understanding how term deposits work and their benefits, you can make an informed decision about whether this investment option is right for you. Remember to consult a professional before making a final decision, as any investment may involve some level of risk.
Cumulative FD calculator
Cumulative vs Non-Cumulative Fixed Deposits: Which is Best for Your Long-Term Goals?
When it comes to saving money, fixed deposits are an attractive option for many individuals. With the rise of interest rates, deposits have become even more appealing, especially for those who want to earn a higher return on their investment. However, there are different types of fixed deposits, and understanding the differences between them is crucial to making an informed decision.
What is a Cumulative Fixed Deposit?
A cumulative fixed deposit is a type of fixed deposit where the interest is accrued or collected until the maturity period ends [2]. This means that the interest earned is compounded and added to the principal amount, allowing the investor to earn a higher return on their investment.
Ideal for Long-Term Goals
Cumulative fixed deposits are well-suited for individuals with long-term financial objectives, such as retirement planning or buying a house [1]. They provide a flexible and low-risk investment option that allows individuals to earn a steady return on their investment over a long period.
How Does it Differ from a Non-Cumulative Fixed Deposit?
A non-cumulative fixed deposit, on the other hand, is a type of fixed deposit where the interest is paid out at regular intervals, such as monthly or quarterly [3]. This type of deposit is ideal for individuals who need a regular income stream from their investment.
Choosing the Right Deposit for Your Needs
According to A. Mincienė, an expert in the field, the best deposit to choose depends on what your needs are and what kind of person you are. If you have less tolerance for risk and like flexibility, it is better to choose a cumulative deposit. On the other hand, if you are looking to earn more and have free funds that you can’t touch for a while, the fixed term is more suitable.
The Benefits of Time Deposits
Time deposits, also known as term deposits, are a type of fixed deposit where the investor agrees to keep their money locked in the deposit for a specific period in exchange for a higher interest rate. According to A. Mincienė, time deposits are a great way to protect your money from devaluation, especially when the interest is still higher than the annual inflation.
Conclusion
when it comes to choosing a fixed deposit, it’s essential to understand the differences between cumulative and non-cumulative deposits. By doing so, you can make an informed decision about which type of deposit is best suited for your long-term financial goals. Whether you’re looking for a flexible and low-risk investment option or a regular income stream, there’s a fixed deposit that’s right for you.