Calculating Net Gain of Time Deposit
Go to: Previous Article Next Article
Investing funds in term deposit is a safe and guaranteed method to earn higher interest for your extra money. Term deposit or certificate of deposit is a bank product nearly same to savings account but money on term deposit is on lock-in period before you can withdraw it.
One not good thing of investing money in time deposit is that you will be charged a penalty if you get your money prior to finish date. So you must not invest all your savings in term deposit, you should put aside a particular amount of money in your bank account.
The valuable thing in putting money in term deposit is knowing how to compute the net profit you can get in inveting a particular amount of cash in a term deposit. After you know the interest you will receive, you can have an idea how much money you will invest in time deposit.
Term deposit is one of the secured investments you can do for your money. In the Philippines, term deposit is guaranteed up to P500,000, in other words you will not lose your capital invested in term deposit.
To calculate the total interest gain in term deposit, you can use the formula below:
Net Interest = [(principal x rate x days) / 365]*0.8
0.8 comes from 1 minus 20% withholding tax
For example: P2,630 = [(P1 million x 0.04 x 30) / 365 ]* 0.8.
From the equation above, you may notice that to increase your net gain in putting in time deposit, you should increase the days of term deposit and the principal money you will invest. The interest rate of time deposit rest on the holding period. Definitely, the better the duration, the higher the interest rate for term deposit will be.
Presently you can select where to invest your money based on the certainty level and the percent of profit. Several investments are very risky, others are average or without risk at all. Investing in time deposit is one of the investments with no risk at all since it is guaranteed by the government.
Article Source: Articlelogy.com
- Credit Cards A big selection of Cards in all flavors: Bad Credit Cards, Secured Cards, Prepaid Cards, Canada Cards, Low Interest Cards -
Word Count: 353
Reduce Your Debts Without Bankruptcy. See How Much You Can Save. Free Debt Analysis
