With time deposits, you’ll know exactly how much you’ll earn and when you’ll get your money. When your chosen maturity date arrives, you get to decide what to do next with your earnings.
Here are 3 options when your time deposit matures.
1. Withdraw everything to save, spend, or invest
You can choose to move all your money, including the principal and the interest earned, to your preferred bank account. You can keep the amount in that account as part of your savings, or make use of it in 2 ways:
- Spend the money according to your plans
What were your plans before you started your time deposit? You may have allotted the money for a specific purpose, like a major purchase or a big event happening soon.
Once the time deposit matures, you can go ahead and withdraw everything to cover the planned spending.
- Invest it elsewhere
Time deposits offer a safe place to store your money, but the returns can be relatively modest. If you’re ready to explore other investment options, you can consider other assets that offer higher potential profits, like pooled funds, bonds, or stocks.
As the growth potential increases, so do the associated risks. When investing in a new product, always remember to keep your risk appetite in mind.
2. Place everything in a new time deposit
If you don’t need the money yet and you’re fine with the rate of return of a time deposit, you can start a new one in a method called a rollover.
Your chosen bank or app may allow you to automatically set this maturity option when you apply for your original time deposit.
You can also do it manually by placing the principal and interest in a new time deposit through your current bank or another one that offers you a better option.
3. Rollover only your principal
When opting to rollover your money into a new time deposit, you can choose to reinvest only the principal and withdraw the earnings to your settlement account.
This may allow more flexibility, but it can also limit what you might earn since you’ll be reinvesting same amount instead of going all in with the principal and the interest.
Things to remember
- It’s ideal to have a plan for your time deposits before they mature. If you’ll let fixed income investments mature without reinvesting or replacing them, the earning potential of your portfolio may shrink over time.
- It helps to assess your overall portfolio when choosing where to reinvest. You may find that you could use the stability of another time deposit or that you’ll benefit from an investment that offers better potential growth and suits your risk tolerance.
- You can grow money through the power of compounding if you’ll reinvest both your principal and interest. Compounding is when the money you earned starts earning money as well, helping you reach your money goal faster.
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