Time deposits are quite conservative when it comes to investments. However, with the recent fluctuations in the market, time deposits could be a solution for you if you are looking for low-risk investments or if you are a beginner investor.
What are time deposits?
Time deposits are essentially a type of savings accounts with a fixed interest rate and fixed date of withdrawal. Users deposit a certain amount of money to the account and earn a higher interest rate than a regular savings account.
An alternative to time deposits with slightly more return and flexibility are money market funds, but if you’re intent on getting a time deposit, we’ve compared the best plans in Hong Kong for you:
What’s so good about time deposit?
No prior investment knowledge is needed. Compared to investing in the stock, bond or real estate markets, time deposits are easier for investment beginners to understand and to pick up basic investment skills.
Stable returns. Since the interest rates of time deposit plans are fixed, it is guaranteed that investors can earn a certain amount of return after the agreed term length. Therefore, the investment risk is much lower than investing in the stock market or property market because of the certainty.
Low threshold. The threshold for time deposits are lower than other financial assets, where it can go as low as HK$10,000.
More choices. Different banks provide different time deposit plans, as such investors can choose according to their budget.
It’s simple. Unlike investing in the stock market, you don’t have to spend hours researching on trends or doing scenario analyses. The only thing you need to do is to choose a bank, the amount of deposit and the duration. Then, you can sit back, relax, and wait for your returns. You can refer to our calculator to see which plan is best for you!
Points to note about time deposits
Sometimes, a longer term length does not necessarily mean higher yield. Banks often launch some short-term high-rate plans, like a 2.7% interest rate for a three-month time deposit. However, most of these will have certain restrictions like minimum deposit amount, term length or even bank account type, and any breach of these restrictions many result in a penalty. Be sure to check twice before committing to a time deposit plan.