Editor’s note: This article was first published in June 2010. The deposit rates it mentions, such as up to 5% on three-month deposits, and the usual minimum amounts are from that year; deposit rates have changed a lot since then.
When we talk about safe investments, the ones offered by banks stand out, although we take it for granted that a safe investment will earn us less than a risky one.
We have already covered this kind of safe investment in another article. The best thing about term deposits and savings accounts is that they are fixed income: we know in advance how much they will earn us at the end of the agreed term.
This kind of investment is ideal for people with no experience of investing at all, and for young people who don’t want to take on any risk.
You choose the term. You can decide whether you want your deposit to run for 1 month, 6 months, 1 year, 5 years and so on.
You also choose the amount you deposit, always within the limits set by the bank, which also requires a minimum investment; amounts usually range from 1,000 to 100,000 €/USD.
You can get all your money back whenever you ask for it, knowing in advance the percentage you will be penalized for withdrawing the deposit.
With savings accounts, the return is even lower, so they are best suited to young people and teenagers who are starting to build up some savings for the future.
You have several options when it comes to a savings plan: you can either pay in whatever amount you have available each week or month, or agree with your bank that every month it will take a fixed amount, set in advance, out of your current account and move it into your savings account.
As a safe investment that involves no risk, savings accounts and fixed-term deposits are undoubtedly the best option.
It’s a matter of keeping an eye on the banks, which every so often run campaigns to attract money from other banks and may offer returns of up to 5% on deposits of €3,000 over a three-month term. That is certainly a great risk-free investment.
Further reading
Featured image: Zarateman, CC0 1.0, via Wikimedia Commons.
