Posted in Finance, Accounting and Economics Terms, Total Reads: 342
Definition: Fixed Term
Fixed term refers to a fixed time frame up to which an investor has to keep his funds with a financial institution. In this the investor keep his funds for a stipulated time period and is repaid his principal amount at the end of the period.
This is opposite of demand deposits wherein the investor is free to withdraw his funds anytime. Due to this only, the rate of interest is low in demand deposit as compared to fixed term deposits.
Common example is fixed term deposits or fixed deposits.
In these, the term may range from months to years and the rate of interest is higher than demand deposits. These are low risk investments as the term is fixed and the investor is assured to get his investment after the term is over. Thus these are highly save investments.