How to Invest in Time - Deposit Account? A Compete Guide and Advice

Guide To Investing In A Time - Deposit Account

How to Invest in Time - Deposit Account? A Compete Guide and Advice
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If you’re a first-timer in investing and you don’t know where and how, putting your funds in a time-deposit account is one good way to start. Let us learn everything about time-deposit account and how to invest your money in it.

What is a Time Deposit Account?

Simply like a combination of a savings account and a bond, time deposit function in a way of earning an interest with a maturity period (time) through banks. You only earn based on the amount of time you allow the bank to hold your money.

In this sense, the bank locks your money without any withdrawal. In case you really need to withdraw, you are allowed but you have to pay a corresponding penalty for violating the time you should’ve withdrawn your money.

How to Invest in Time-Deposit Account?

You can apply for a Time-Deposit Account in almost all banks in the country. It’s a good recommendation that before finally deciding to put your money in this vehicle, you have to fish first for the interest rates that banks has to offer. Local or rural banks are also offering time-deposit accounts and they have higher interest rates than the commercial banks. However, the only risk for putting money in rural banks is it may not survive for more than a decade.

Therefore, included in your fishing for the best bank to put your money is also to check the credibility and background of each bank of your options.

You also have to determine again your investment goals and objectives. How much are you willing to set aside for your time-deposit? How long will you entrust your money to the bank? You have to remember: The higher the amount of investment and the higher number of years you want to put your funds in the bank, the higher the interest rate.

How will it work?

Your money will be tied in the bank but the time as to when you are going to withdraw is dependent on your choice from what the bank offers. It can be months or years. And just as what I’ve told from its definition above, you can have your withdrawal anytime you need to but there are imposed penalties. This is called Pre-termination so if you urgently need to get your money but not at the agreed time of your withdrawal, make sure to understand and read the bank’s penalties for pre-termination.

Speaking of its risk, time-deposit is one of the safest instrument to invest but that doesn’t mean it can give you higher returns. Interest rates vary from 2-5% annually so it may or may not defeat inflation. On the average, commercial banks can offer a rate up to 2.5% while among rural banks, it is higher and is usually 3-5%.

In addition, time deposit accounts are covered by the Philippine Deposit Insurance Commission (PDIC). This is guaranteed and they can give back your money up to Php 500,000.00. It only applies the moment the bank is subject to closure or is under financial difficulty.

Is Investing in Time Deposit Account Right for You?

This investment is right for you if you are risk-averse and if your only purpose is to save without having much worries on its returns. This is better than just putting your savings under your mattress or your cookie jar or to your cabinet. It won’t even earn interest right?

Moreover, if you want to discipline yourself in saving just for the sake of not spending it for a short-term goal, then this might be a good try for you.


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This sounds like what we call a tax-shelter account here in my country. The time period they give us is five years. So for five years you cannot withdraw any money unless absolutely necessary. After the five years you have the option of closing the account after withdraw what is there or withdraw some and continue with account.

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