How a Personal Term Deposit Can Strengthen Your Portfolio

In an era of economic uncertainty, finding stable and reliable investment options is more important than ever. While high-risk assets may promise greater returns, they also expose investors to volatile market swings. A personal term deposit offers a secure alternative, providing guaranteed returns without the stress of unpredictable fluctuations.

Unlike everyday savings accounts with variable interest rates and monthly account fees, term deposits lock in a fixed rate for a set period. This makes them an ideal choice for disciplined savers and cautious investors alike. Whether you’re building an emergency fund, saving for a significant purchase, or diversifying your self-managed super fund (SMSF), a term deposit can play a crucial role in safeguarding your financial future.

Read this article for an in-depth look at personal term deposits and how they can be the next best step for you to have a stronger portfolio.

Why Consider a Term Deposit?

Term deposits are a low-risk financial product offered by authorised deposit-taking institutions, including Judo Bank and other Australian banks. Unlike savings accounts, which have variable rates, term deposits lock in a fixed rate of return for a set period. This means you know exactly how much interest you’ll earn, shielding you from market fluctuations.

For those looking for stability, a Judo Term Deposit offers flexible terms, ranging from short-term to long-term options. Whether you’re an Australian resident, a sole trader, or managing an SMSF, term deposits can help you grow your wealth with minimal risk.

Term Deposits vs. Inflation: Protecting Your Purchasing Power

While term deposits provide stability, savvy investors often wonder: ‘Can they outpace inflation?’ In Australia’s current economic climate—where inflation fluctuates between 3-6%—selecting the correct term deposit term and rate becomes critical. For example, a 12-month term deposit at 5% p.a. effectively preserves (or slightly grows) your money’s value if inflation sits at 4%. However, during high-inflation periods, pairing term deposits with other inflation-resistant assets (like indexed bonds or dividend stocks) can create a balanced defence.

Pro Tip: Ladder your term deposits (staggering maturity dates across three months to five years) to capitalise on rising rates while maintaining liquidity. This strategy lets you reinvest portions of your portfolio at higher rates if the RBA hikes interest rates further.

Key Benefits of Term Deposits

Through term deposits, you can take advantage of a secure and predictable way of increasing your funds while eliminating the stress of market volatility. Here’s how:

1. Guaranteed Returns with Competitive Interest Rates

Term deposit rates are typically higher than those on standard savings accounts, especially for longer investment terms. Many financial institutions offer an online bonus rate for digital applications, further boosting your earnings.

2. No Monthly Account Fees

Unlike some bank accounts, term deposit accounts usually don’t charge monthly account fees or establishment fees, making them a cost-effective investment option.

3. Flexible Investment Terms

Whether you need funds in six months or five years, term deposit options cater to different time frames. Some providers even offer a grace period or a variation period to adjust maturity instructions if needed.

4. Secure and Low-Risk

As a basic low-risk investment product, term deposits protect your original deposit while earning steady interest—ideal for conservative investors.

With guaranteed returns and flexible term options, they provide an ideal solution for risk-averse investors seeking stable, long-term growth.

How to Choose the Right Time Deposit

Before opening a term deposit, consider:

• Minimum deposit & maximum deposit requirements
• Applicable interest rate and whether a loyalty bonus is offered
• Access to funds—some term deposits require a notice period for early withdrawal
• Maturity instructions—whether funds roll over or deposit at maturity

Using a term deposit calculator can help compare rates for term deposits across different financial institutions.

Opening a Term Deposit

The application process is straightforward, whether done online, via mobile banking, or at a branch. You’ll need:

• Personal details (residential address, Australian phone number)
• Bank account details for funding
• Identity documents for verification

Some banks offer specialised term deposit products for business customers, with tailored features like aggregated deposits or Business Banking Online access.

Who Can Apply?

Term deposits are available to:

• Australian residents (individuals or joint account holders)
• Sole traders and small business owners (via business term deposit products)
• SMSFs (for long-term, low-risk portfolio diversification)
• Trusts and nonprofit organisations (subject to the institution’s policies)
• Non-residents (some banks offer term deposits to foreign investors, often with different rates or terms)

With options ranging from individual savers to SMSFs and international investors, term deposits offer accessible, low-risk growth opportunities for nearly every financial profile.

Conclusion