Most prospective entrepreneurs find it difficult raising seed capital to start a business. They probably have some savings in their bank account but it’s not enough to start a business. Thousands of Nigerians experience this situation. They don’t know what to do. But one of the easier ways to prep up your money for investments in future is through fixed deposits. Some banks offer 10 percent annual interest or more on fixed deposits depending on your negotiation power and the amount of money involved.
A fixed deposit account is an investment account and a type of savings account in which money is deposited for a stated period of time and a fixed interest rate is paid at the end of that period. It is a safer investment option when compared to other investment types such as shares or the money market.
Some benefits of a fixed deposit account
Investing in a fixed deposit is one of the easier ways of making your money work for you. Opening a fixed deposit account is both quick and easy and all you have to do is to deposit money into the account for a given period of time, for it to earn interest for you.
Fixed deposit also:
1. Encourages a savings habit as the money you deposit needs to be in the account for a period of time without you making any withdrawal.
2. Earns you a higher interest rate than depositing your money in a savings account.
3. Assure you of returns for your investment.
4. The account helps to act as a fall back for your business in the event of a cash flow squeeze or can be used to meet your future cash requirements.
5. Interest is payable at maturity; annually or monthly depending on the term you choose or you could use the money to buy assets if you want.
6. You get to choose how long you want to invest your money in a fixed deposit account ranging from 30 days to 10 years.
7. You can choose to have more than one fixed deposit account if you want to save for different goals.
Please note that it is important to get the tenure right while investing in a fixed deposit because, making a premature withdrawal of your money will lead to being penalized.