Boost your retirement fund with a term deposit

In a financial market battered by uncertainty, a term deposit may help grow your money with virtually no risk.

Here's a closer look at what term deposits are and their advantages for retirement outside of super.

What is a term deposit and how do they work?

A term deposit is a type of investment product offered by banks and other financial institutions that offers a fixed interest rate over a specific time frame – typically 90 days to five years.

Term deposits may be an ideal option for boosting a retirement fund, as they offer the certainty and stability of guaranteed capital and a known rate of return.

What are some of the benefits of a term deposit?

If you're looking to boost your retirement income stream outside of your super, a term deposit can offer some attractive key benefits. These include:

· Higher interest rates.When working out how much you’ll need for retirement, you’ll need to take into account the cost of goods and services in the future.Term deposits offer attractive interest returns to grow your wealth faster and help combat inflation.

· Guaranteed rate of return. Interest rate cuts can make a dint in your retirement savings plan. No matter what the market is doing, the interest rate on a term deposit is locked, so you always know in advance how much you'll earn.

· Peace of mind. When you purchase a term deposit from an Authorised Deposit-taking Institution (ADI), your money is guaranteed up to $250,000 by the Australian Government, so you know your future is in safe hands.

· Low maintenance. Once you set up your term deposit, there's nothing else you need to do until the maturity date. With no need to invest extra funds or keep tabs on performance, term deposits are a stress-free way to grow your nest egg.

· No fees. Term deposits are typically fee free, so they won’t eat into your retirement savings.

· Flexibility. Choose when you want to access your retirement fund with a range of term lengths. There is also the option to have interest paid quarterly, biannually, annually or at maturity.

How much can I potentially earn with a term deposit?

To help you understand how much you could earn with a term deposit, here’s a quick example.

If you were to invest $15,000 over a period of 12 months at 2.55% per annum, with interest paid annually, it would deliver a return of $382.50.

Alternatively, if you were to invest $15,000 for three years at the higher interest rate of 3.15% per annum, it would deliver $1,462.62 in interest.

Get an estimate of your potential earnings with our Term Deposit Calculator.

Protect your retirement by investing wisely. With different term deposits offering a variety of rates, terms and conditions, be sure to shop around to find the best financial product for your needs.

Start comparing term deposits now.

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