Are you interested in saving your money but you are confused whether to go with savings or term deposit? For saving, both methods are highly beneficial, but which is better?
While both attempts are considerably a saving method, each owns distinct characteristics from one another. Prior to jumping to the conclusion of which is better, let’s briefly review both subjects.
Also Read: Is a Term Deposit Safe? The Pros and Cons
Savings: An Overview
As the name suggests, savings refers to any income that you do not spend and the activity to save that income. In so doing, you have to open a regular savings account in a bank.
Basically, a regular savings account allows flexibility in real time fund transfer and withdrawal. The interests, in addition, greatly depend on government’s regulation. In other words, you may get surplus, but there will also a high possibility that you will not get any.
In short, accessibility and flexibility are the two factors why a savings account is worth considering. Also, it restricts you from directly spending your cash in some objects you want to afford although you can still withdraw it at any time to make a purchase.
Term Deposit: An Overview
Term deposit is a secure, low risk investment strategy. Put simply, it is an investment method in which you put a fixed amount of money for a fixed amount of term to gain interests. The interests are unchanging too.
The deposit permits you to gain a consistent interest although markets are fluctuating. Additionally, there is almost no possibility that you will lose your money through a term deposit.
The features speak for its very quality as a novice-saving-starter pack. This form of passive investment enables you to make your wealth grow slowly but steadily. Also, it is also a fine option as a long-term investment solution.
Savings vs. Term Deposit: How do They Compare?
To argue which is better between savings and term deposit, it all comes back to you. Accordingly, factors to consider involve financial goals, usability, and so forth.
For instance, savings allows flexibility while a term deposit gives you stability. Thus, if you plan to make your stashed money an emergency fund, it is better to go with savings. However, if you truly want to cultivate your wealth while saving, a term deposit is the better choice.
Another case is pertinent to the financial goals you want. If you want to save but, at the same minute, you want to use your saving for a not-too-distant needs, savings is clearly a better option. That said, a term deposit is more preferable if you do not have plan on using the money soon.
Also Read: Do We Need More Than One Bank Account?