Which is better? Time deposit ormutual fund?Which long-term investment should you choose? Here's a useful guide

Krista Garcia

Published 7:31 AM, Oct 01, 2014

Updated 11:36 AM, Oct 14, 2014

MANILA, Philippines – We Filipinos have a common notion when it comes to saving money: keepit in a savings or time deposit account. We usually set aside a portion of our incomet, just let it sitthere, and access the money when we need it.

Putting our money in time deposits gives us a sense of security, knowing that there's a fund thatwe can dip into for household needs and emergencies. But should we be happy and content withthe interest that we're getting from our time deposit account?

If we want to grow our money, we need to complement it with a long-term financial instrumentsuch as mutual funds. These could boost our money’s value and help address long-term goals(usually 3 years or more) such as funding for retirement, education, a dream vacation or even abusiness idea.

BRIGHTER LIFE (/BRANDRAP/BRIGHTER-LIFE)

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This is where the practice of diversifying comes in. We can have our time deposit account forimmediate or short-term needs (usually 6 months to 1 year), and we can have another baskettaking care of our money for the future.

The latter not only ensures that our money’s value is growing at a good rate; it also helps uscombat inflation, or the general increase in prices of commodities and services.

A lot of us keep our money in a time deposit because it's "safe." The amount that we put inremains intact and the interest is guaranteed. Think again. There's a silent thief(http://www.rappler.com/brandrap/sun-life-financial/60723-inflation-silent-thief) called inflation thatslowly depletes the value of money over time. So if a time deposit gives 1% annual interest andthe inflation rate is 3%* this means that the real value of money actually shrinks by 2%.

If we’re looking to beat inflation and at the same time be financially prepared for the future, thenit’s high time to re-allocate a portion of savings or time deposit to invest in mutual funds.

So which is better between the two? The answer is we need both - time deposits for immediateexpenses and short-term needs; and mutual funds for long-term goals. Each has a differentobjective and time frame.

Here’s a useful guide on the difference between time deposits and mutual funds. – Rappler.com

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Filed under: Brighter Life (/previous-articles?filterMeta=Brighter+Life) • Investing (/previous-articles?

filterMeta=Investing) • how to be rich (/previous-articles?filterMeta=how+to+be+rich) • mutual funds

(/previous-articles?filterMeta=mutual+funds) • time deposit (/previous-articles?filterMeta=time+deposit) • SunLife (/previous-articles?filterMeta=Sun+Life)

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* 2013 full-year inflation based on NSO data

To know how Sun Life (http://sunlife.com.ph/) can help you achieve a brighter life, visitwww.brighterlife.com.ph

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Jonn Marvy Santamaria

I feel that mutual funds are risky. Is my money secured even thou the profit isnt? I want to know that. I can do with mutualfunds as long as i know my moneys isnt going anywhere, coz most insurers go bankrupt after few years. Aaaaand yourmoneys is gone. Unlike when its on a bank even if the bank fails your money is ensured by up to 500k.

Donigot Ursal

To me this is a no-brainer.:-) Mutual Funds is way way better than Time-deposits. Inflation is higher that the yields your money will earn if it's in a TD.

In mutual funds, your investment portfolio will be your guide where to put your money. Example: If you are risk-averse, then put your investment in Bond funds. If you have a strong risk-appetite, then put your money in equity. If you are half of the other and half of the other one, then put it in Balance. Time Deposits, limit your option. Truth is, it doesn't give you any. Mutual Funds can help your money maximize its earning potential to the fullest or at its most prudent level, depending onthe investment profile of the investor.

So which is which? No-brainer,d:-) This is like comparing apples to guavas. MF is the apple.

Marissa Neri Mangitngit

does it cover V.U.L OR UNIVERSAL VARIABLE LIFE???

CHANGED HEART

John MS there are two trusted providers/companies now in the market with long years of experience in handling financialinvestments - SUN Life Financial and PRU-LIFE UK. Banks as experienced here in the Philippines and anywhere are riskysolutions for your money - they get bankrupt and you get nothing out of your money. Yes deposits are insured up to 500Kbut you have to fight nail and tooth in legal battles or delays before you get your money. Ask those people whose bankswent bankrupt-they lost their sweat and blood to dirty businessmen. And yes any investment is risky - the higher the gains,the higher the risks. Similarly in LIFE and in LOVE - you will not get the best without pains and sacrifices

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Ting Enriquez

Time Deposit ! You can lose your money on mutual funds! Finance companies play with your money and get commissions!

Jose Asuncion

I have invested in ETFs instead of mutual funds because of the higher management fees of the latter.

Juls Terobias

To be secured have them both. Problem?

Rebecca Ferry

me too, when you say that returns are not guarantee is actually risky, i still prefer to put my money on a time deposit, iknow the return is not actually big but it's safe that i can withraw it when i need it.

Jude Soronio

i would rather earn money from a non-traditional method called... "WORKING"...

Miguel Hernandez

inflation is at 4.4%

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