This articles explains investing in Fixed Deposit and how much you can make from it and how it is calculated.
A fixed deposit is an investment with a specific amount invested at an agreed interest rate and tenor. All banks in Nigeria offer this investment opportunity, however the rates you get when you invest in one bank may differ from what you get from another.
Features of a typical fixed deposit investment
Investment period (tenor) is a minimum of 30 days and a maximum of 360 days.
The Minimum opening balance for this investment is N100,000.
If the investment is terminated before maturity the total accrued interest not earned will be forfeited. Meaning only the portion of interest earned in the period that your money was in the bank is what will be paid to you.
The investment amount can be terminated at the customer’s discretion.
The interest paid to the depositor is subject to Withholding tax (WHT), which is usually deducted from the interest earned.
Advantages of Fixed Deposit Investment
Provides a higher rate compared to a Savings deposit.
Guaranteed returns – The returns from this investment is guaranteed.
Highly liquid – The money can be terminated to fund short term liquidity needs.
Flexible in nature – An individual can have several fixed deposit investments with different banks and at different terms.