subject: Computing Net Gain of Time Deposit [print this page] Computing Net Gain of Time Deposit Computing Net Gain of Time Deposit
Investing money in time deposit is a secure and sure way to earn higher interest for your excess money. Time deposit or certificate of deposit is a bank product nearly same to savings account except money on term deposit is on holding period before you can get it.
One not good thing of investing money in time deposit is that you will be burdened a cost if you get your money before the finish date. So you must not invest all your money in time deposit, you must leave a certain amount of cash in your savings account.
One important thing in putting money in time deposit is learning how to compute the net profit you can receive in putting a particular amount of money in a term deposit. After you know the net profit you will receive, you can have an idea how much money you will put in time deposit.
Time deposit is one of the secured investments you can do for your funds. In the Philippines, term deposit is guaranteed up to P500,000, meaning you cannot lose your principal money invested in time deposit.
To compute the total profit in time deposit, you can use the formula underneath:
Net Interest = [(principal x rate x days) / 365]*0.8
0.8 comes from 1 minus 20% withholding tax
For illustration: P2,630 = [(P1 million x 0.04 x 30) / 365 ]* 0.8.
From the formula above, you can observe that to escalate your profit in putting in time deposit, you must beef up the days of term deposit and the capital you will invest. The interest rate of time deposit depends on the withholding duration. Definitely, the better the period, the higher the interest rate for term deposit will be.
Presently you can select where to put your money based on the certainty level and the percentage of net gain. Several investments are too risky, others are average or no risk at all. Investing in term deposit is one of the ventures without risk at all since it is guaranteed by the government.
