Savings has always been a paramount when it comes to being responsible for our near and dear ones. But knowledge of savings can really change the way we casually approach by putting the money in the bank and forget about it.

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When money is put in the bank, there is a deposit interest rate against which banks pay you an interest amount. This interest amount is calculated on your savings amount, the deposit interest rate and the duration.

For e.g. For a savings of $100 for an year with a yearly bank rate of 5% , the interest earned at the end of one year is $5.

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But what happens if the $5 from the interest is added to the $100 and saved again. Now we have $105 for an year with a yearly bank rate of 5% , the interest earned at the end of one year is $5.25.

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This is the power of compounded where the return interest keeps increasing, as the amount to be saved will keep increasing every year.

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NEVER UNDERESTIMATE THE POWER OF COMPOUNDING.

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Why Term Deposit?

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A term deposit is a fixed-term investment that includes the deposit of money into an account at a bank. The term could range anywhere from 7 days to 10 years. In a term deposit, money can be withdrawn only at the end of term. In case, money is withdrawn earlier, a penalty is applied which usually is no interest paid at withdrawal.

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Because of strict withdrawal rules, the interest earned on a term deposit is higher than that paid on savings or checking accounts. Term deposits are an extremely safe investment.