Time deposits still best option - Veterans Bank

MANILA, Philippines - One of the simplest, safest and most rewarding investments in money instruments is sill a time deposit with a reputable bank despite the many options available to investors and depositors such as mutual funds, trust funds, bonds, stocks, foreign exchange trading.

Jesus Vicente Garcia, executive vice-president and branch banking head of Philippine Veterans Bank, explains that a time deposit is a sound option to grow one’s investment because they enjoy higher interest rates.

In contrast to regular savings account, for instance, an individual’s initial time deposit investment is assured of a maximized return. For example, a P500,000 investment on Veterans Bank’s Maxi-Return Time Deposit with a monthly compounding interest rate of six percent will net for the depositor an interest amount of about P174,000 at the end of five years. The actual interest amount will depend on the date the time deposit was opened.

Garcia, however, adds that the interest rate alone does not make a time deposit a viable investment option. “Aside from the high interest rate that you’ll get on your time deposit, it’s also a safe way to grow your money,” he says. “Your investment is intact from the start as a time deposit is not driven by market factors like investments in stocks, or in mutual funds, or UITFs (unit investment trust fund).”

“If you make a P100,000 time deposit today and keep it for five years, then you’re sure to get the P100,000 principal plus interest earned at the end of the term if you decide to withdraw,” he states.  

Added safety to depositors is the fact that time deposits are covered by the Philippine Deposit Insurance Corp. (PDIC) guarantee. “Since these are traditional bank products, they are guaranteed by PDIC up to P500,000 per depositor,” assures Garcia. “UITFs are not covered by the PDIC guarantee.”

According to Garcia, some businessmen place their funds in short-term time deposits to take advantage of the higher interest rates that they would not be able to get if they deposited their money in regular savings. This in turn, will provide them with some measure of financial flexibility as the interest earned is an additional resource to keep their businesses going.

On the other hand, a long-term time deposit is more suitable to those individuals whose financial goal is not immediate, such as retirement or saving up for a child’s education. Time deposits with longer terms have higher interest rates and additional incentives.