Investing money in term deposit is a safe and guaranteed way to get higher interest for your excess money. Time deposit or certificate of deposit is a bank product nearly similar to savings account but money on time deposit is on lock-in period before you can get it.

One disadvantage of putting money in time deposit is that you will be burdened a penalty if you get your money before the finish date. So you should not put all your savings in time deposit, you should put aside a particular amount of cash in your bank account.

The valuable thing in putting money in time deposit is knowing how to compute the interest you can get in inveting a particular amount of money in a term deposit. Once you know the interest you will receive, you can have a clue how much money you will invest in time deposit.

Term deposit is one of the guaranteed investments you can do for your money. In the Philippines, term deposit is insured up to P500,000, meaning you will not lose your capital invested in term deposit.

To calculate the total profit in time deposit, you may use the equation underneath:

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 formula above, you may observe that to increase your net gain in investing in time deposit, you must increase the days of time deposit and the principal money you will invest. The interest rate of time deposit rest on the withholding period. Obviously, the better the period, the higher the interest rate for term deposit will be.

These days you can choose where to invest your money depending on the risk level and the percentage of profit. Several investments are very risky, others are normal or without risk at all. Investing in term deposit is one of the investments with no risk at all since it is insured by the government.