Once you have saved a significant amount of money, you can consider placing it in an instrument that is more profitable for you. Here’s how to save using a term deposit.
What is a term deposit?
A term deposit, colloquially known as a fixed term deposit, is a savings instrument. In this you place your money in a financial institution, for a previously established period. During this period, your money will generate interest payment, but you will not be able to withdraw money from the institution, or you will receive a penalty.
These savings instruments
Are protected by the Deposit Insurance Fund or FSD, so they are very safe. In addition, because the money remains stationary, the interest rate of this instrument is higher than that of a savings account.
Depending on the product, you may be able to dispose of the money generated by interest even before the expiration of the term. And that you put your money in soles, dollars or euros.
When should you save using a term deposit?
You must go to the savings in term deposit, when you have an extra amount of money in your budget, not committed to ordinary expenses. It is recommended that it exceed $ 1,500 or equivalent in soles. This so that you can leave in reserve about $ 500 to face unforeseen events, and place the rest in an installment deposit.
This instrument is ideal for saving the initial installment of a mortgage loan. We recommend that you always place it in the short term, that is, between 30 and 90 days. Going beyond three months implies a risk, because of the following:
- Increase the likelihood of an unforeseen event that demands money. This will require you to incur a penalty, or request a loan in case you cannot withdraw it before the deadline.
- The interest rate varies over extended periods, which can play against you.