Choosing the Right Term Length for Your Fixed Term Deposit

Understanding Term Lengths

Fixed term deposits are available in various term lengths, typically ranging from 6 months to 5 years. The term length you choose will impact both your interest rate and your liquidity.

Short-Term Deposits (6-12 Months)

Short-term deposits are ideal if:

• You need access to your funds relatively soon
• You want flexibility to reinvest at potentially higher rates
• You're uncertain about your long-term financial needs

Typical Rates: 4.5% - 6.5% P.A.

Medium-Term Deposits (2-3 Years)

Medium-term deposits offer a balance between:

• Higher interest rates than short-term deposits
• Reasonable liquidity after the term expires
• Protection against rate decreases

Typical Rates: 6.5% - 8.5% P.A.

Long-Term Deposits (4-5 Years)

Long-term deposits are best for:

• Maximizing your interest rate
• Locking in current high rates for an extended period
• Long-term financial planning and retirement savings

Typical Rates: 7.5% - 9.25% P.A.

Making Your Decision

Consider these factors when choosing your term length:

1. Financial Goals: When will you need the money?
2. Rate Expectations: Do you think rates will rise or fall?
3. Liquidity Needs: Can you afford to lock in your funds?
4. Investment Amount: Larger deposits may qualify for better rates

Laddering Strategy

Consider splitting your investment across multiple terms (e.g., 1 year, 2 years, 3 years) to balance returns with liquidity. This strategy provides regular access to funds while maximizing overall returns.