Term deposit accounts are among the low-maintenance savings options. You deposit the money and then sit back and wait out the specific time you have chosen – six months to five years in general — while the interest builds. The interest tends to be better than in a regular savings account, making term deposit one of the best ways to diversify your long-term investments.
But when the maturity date rolls around, there are several options you might consider to continue the benefit of your term deposit:
Take no action and let the fund roll over automatically. Doing this will maintain the account at the current interest rate. Review interest rates before making the decision. Obviously, if rates are trending downward, you might want to consider another savings scheme.
Cash out the interest and roll over the initial investment. This approach allows you to balance spending and savings and maintains the investment to earn more interest.
Increase or reduce the investment. If you have more money to invest or need some of the term deposit money for some other purpose, make that analysis the guide to what you do as the term deposit matures. Take into consideration your personal circumstances and your long-term investment goals before acting.
Adjust the term. If you went with a longer period for the initial term deposit, but feel that your current financial status might benefit from a shorter term, re-deposit the money at a shorter term, say six months to a year. Some institutions allow you to make additional contributions to the account for the duration of the term. Flexibility is what allows you to make the best savings decisions over time.
Cash out the account. If you had a specific savings goal in mind when you deposited your money in a term account, such as home repairs or a new car, simply cash out the entire amount. Restart a new account when you are ready and have a new objective in mind.