Fixed Term Investments

Fixed term savings and bonds secure your money for a set period of time while earning competitive interest rates. With a fixed-term investment, the investor parts with his or her money for a specified period of time and is repaid his or her principal investment only at the end of the investment period. At that time, you know how much money you are going to get.

Usually, you have the option of locking in a fixed or choosing variable interest rate. The interest can either be calculated daily or monthly and is set up to be paid into a bank account of your choice. Sometimes they have certain minimum deposits that have to be made to lock in a term or even a rate.

Fixed term bonds are set up for a specified period of time before you have access to the money. This can be a short duration starting at six months or for a longer term that can last from one to five years.

In addition to locking in a rate, fixed term bonds force you to think about the important question: how long do you want your money tied up for? Most accounts will not let you withdraw money for the duration of the bond. Once that term is set, it cannot be changed or you will be penalized.