Government College University, Faisalabad

Name: Momina Irfan

Term Deposit

Fixed Term:
A fixed deposit (FD) is a type of savings account offered by banks and financial institutions that
provides a fixed rate of interest for a specific period of time, usually ranging from a few months
to several years.

Features:
 Here are the key features of a Fixed Deposit (FD):
 Fixed Interest Rate: Earn a fixed rate of interest for the entire term.
 Fixed Tenure: Choose from various tenure options, ranging from a few months to
several years.
 Low Risk: FDs are considered a low-risk investment, as they are insured by the bank or
financial institution.
 Guaranteed Returns: Earn a guaranteed return on your investment, with no market-
related risks.
 Liquidity: Access your money at the end of the tenure or opt for premature withdrawal
(with some penalty).
 Compound Interest: Earn interest on interest, with periodic compounding.
 Higher Interest Rates: FDs often offer higher interest rates compared to traditional
savings accounts.
 Tax Benefits: Some FDs offer tax benefits, such as tax deductions or exemptions.
  Nomination Facility: Nominate a beneficiary to receive the proceeds in case of your
demise.
 Loan Facility: Avail loans against your FD, in case of emergency needs.
 Auto-Renewal: Option to auto-renew your FD, for continued earning.
 Online Management: Manage your FD account online, with ease.
 These features make Fixed Deposits a popular choice for conservative investors, retirees,
and those seeking a low-risk investment with guaranteed returns.

Recurring:
In the context of term deposits, recurring refers to a type of deposit where a fixed amount of
money is deposited at regular intervals, typically monthly, quarterly, or annually, for a specified
period. This allows individuals to invest a fixed amount of money at regular intervals, earning
interest on their deposits.

Features:
Here are the features of recurring term deposits:

 Regular Deposits: Deposit a fixed amount at regular intervals (e.g., monthly, quarterly).
 Fixed Interest Rate: Earn a fixed rate of interest on your deposits.
 Flexible Tenure: Choose from various tenure options (e.g., 6 months to 10 years).
 Compounding Interest: Earn interest on interest, with periodic compounding.
 Disciplined Savings: Encourages regular savings and investment habits.
 Guaranteed Returns: Earn a guaranteed return on your investment, with no market-
related risks.
 Low Risk: Recurring term deposits are considered a low-risk investment.
 Auto-Debit Facility: Automatically debit the deposit amount from your account.
 Flexible Deposit Amount: Choose the amount you want to deposit regularly.
 Liquidity: Access your money at the end of the tenure or opt for premature withdrawal
(with some penalty).
 Loan Facility: Avail loans against your recurring term deposit, in case of emergency
needs.
 Online Management: Manage your recurring term deposit account online, with ease.

These features make recurring term deposits a convenient and disciplined way to invest and save
regularly.

Re-investment :
Reinvestment in term deposits refers to the process of reinvesting the maturity amount (principal
+ interest) of a term deposit into a new term deposit, upon maturity.

Features:
Here are the key features of a Term Deposit:

 Fixed Interest Rate: Earn a fixed rate of interest for the entire term.
 Fixed Tenure: Choose from various tenure options, ranging from a few months to
several years.
 Low Risk: Term deposits are considered a low-risk investment, as they are insured by
the bank or financial institution.
 Guaranteed Returns: Earn a guaranteed return on your investment, with no market-
related risks.
 Compound Interest: Earn interest on interest, with periodic compounding.
 Liquidity: Access your money at the end of the tenure or opt for premature withdrawal
(with some penalty).
 Flexibility: Choose from various deposit amounts and tenure options.
 Auto-Renewal: Option to auto-renew your term deposit, for continued earning.
 Nomination Facility: Nominate a beneficiary to receive the proceeds in case of your
demise.
 Loan Facility: Avail loans against your term deposit, in case of emergency needs.
 Online Management: Manage your term deposit account online, with ease.
 Tax Benefits: Some term deposits offer tax benefits, such as tax deductions or
exemptions.
 High Returns: Term deposits often offer higher interest rates compared to traditional
savings accounts.
 Disciplined Savings: Encourages disciplined savings and investment habits.
 Insured Deposits: Deposits are insured by the bank or financial institution, ensuring
security.

These features make term deposits a popular choice for those seeking a low-risk investment with
guaranteed returns.

Difference:
Here's a summary of the differences between Term Deposit, Re-investment, and Recurring
Deposit:

Term Deposit
 A one-time deposit for a fixed tenure (e.g., 6 months to 10 years)
 Earns a fixed interest rate for the entire term
 Maturity amount (principal + interest) is paid at the end of the term
 Low risk, guaranteed returns, and compounding interest

Re-investment
 Re-investing the maturity amount (principal + interest) of a term deposit into a new term
deposit
 Continues earning interest on the re-invested amount
 Can choose a different tenure or interest rate for the new term deposit
 Encourages disciplined savings and investment habits

Recurring Deposit
 A series of regular deposits (e.g., monthly, quarterly) for a fixed tenure
 Each deposit earns interest and is compounded periodically
 Flexible deposit amounts and tenure options
 Encourages regular savings and investment habits

Key differences:
 Term Deposit: One-time deposit, fixed tenure, and maturity amount paid at the end.
 Re-investment: Re-investing the maturity amount into a new term deposit.
 Recurring Deposit: Regular deposits, flexible amounts, and tenure options.