Calculating Profit of Time Deposit

  
     
  By Gilbert Tenorio
  
   
     
  Investing funds in time deposit is a safe and guaranteed method to earn 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 holding duration before you can get it.

One disadvantage of putting money in term deposit is that you will be burdened a cost if you withdraw your money prior to finish date. So you should not invest all your money in time deposit, you should leave a certain amount of money in your savings account.

The valuable thing in putting money in time deposit is knowing how to calculate the net profit you can receive in putting a particular amount of money in a term deposit. After you know the interest you will receive, you can have a clue what amount of money you will invest in time deposit.

Term deposit is one of the secured investments you can do for your funds. In the Philippines, time deposit is guaranteed up to P500,000, in other words you cannot lose your capital invested in time deposit.

To calculate the total profit in time deposit, you may 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 formula above, you may notice that to escalate your net gain in investing in term deposit, you must increase the days of term deposit and the principal money you will invest. The interest rate of term deposit depends on the withholding duration. Definitely, the longer the duration, the bigger the interest rate for term deposit will be.

Presently you can choose where to invest your money depending on the risk level and the percentage of profit. Some investments are too risky, others are normal or no risk at all. Investing in time deposit is one of the investments with no risk at all since it is insured by the government.



  
   
  Article Source: http://interpret.zar.vg   
     
  About The Author
To get more information on how to save money and apply a bank account at Canara Bank, you must visit India Bank blog for helpful articles on saving, investing and make money online. 		 
     
 
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