Deposit time periods

The term ‘fixed deposit‘ is commonly used to describe deposits that are made for specific time duration. The other way in which these are described are term deposits since they represent a specific term. The good part of the entire process is that the investor has a wide choice in terms of the time period for which the deposits can be made.

The time starts from a very low period like say 14 days and then there are slabs within which the deposits can be made. For example, there might be a slab of 14-29 days, then 30-45 days, and so on. The common time periods will include 3 months, 6 months, 1 year and above but below 2 years, 2-3 years, 3-5 years and 5 years and above. There are opportunities to keep deposits for all these time periods as per the requirement of the individual and there is an option available. The right period can be chosen depending upon the time frame available for the investment. In that sense, the fixed deposits cover the entire range of time periods that an investor would normally require.

Choosing a particular time period
There are various time slabs as far as the deposits are concerned and the investment decision depends upon the convenience and requirement of the investor. There is a way to ensure that a higher rate of interest is obtained and at the same time it is possible to stick to a particular time period too. One of the main reasons that impacts the decision-making for deposits is the interest rate that is available on the deposits. Often there can be a situation where the interest rate and the time horizon of the individual might not match. For example, there might be a high rate of interest for the time period of 181 days to 1 year but an investor might not want to make an investment for more than six months. In such a situation, the investor can make a deposit for 182 days or 185 days so that the objective on both the fronts is achieved. On one side, there will be the time horizon that is fulfilled and a higher interest rate can also be earned for the investment on the other. The investor will earn a higher interest rate for the specified time period for which the deposit is made, and this will be better than the lower rate earned for just a few days less.