The Pros and Cons of Term Deposits and Market Investments

Investing is one of the best ways to grow your money over time. But with multiple investment options, it can be difficult to choose the right one for you. Young couples and investors often struggle to decide whether to opt for a term deposit or invest in the market. In this blog post, we’ll discuss the pros and cons of both options to help you make an informed decision.


Term Deposits:

Term deposits are also known as fixed-term deposits, where you can deposit a sum of money into a bank account or a credit union for a fixed period, usually ranging from 1 month to 5 years. The interest rate varies based on the term of the deposit, and there is no market risk involved. Here are some pros and cons of term deposits:


  • Guaranteed returns on your investment.
  • Insured by the Australian government up to $250,000 over each financial institution you hold money with, which means your money is safe.
  • No market risk involved.
  • Ideal for short-term savings goals.


  • Low-interest rates compared to other investment options.
  • Early withdrawal may result in penalties.
  • No flexibility in terms of deposit size, withdrawal, or interest rate.


Market Investments:

Market investments, such as stocks, ETFs and managed funds, involve buying a part of a company’s stock with the expectation of earning a return. In a market investment, there is no guaranteed interest rate, and the returns depend on the market’s performance.


  • Higher potential for returns and long-term wealth creation.
  • Easy to diversify your portfolio to reduce the risk.
  • Flexibility in terms of the amount invested, withdrawal, and interest rate.
  • High liquidity, which means you can quickly convert your investment into cash.


  • Higher market risk involved, which could lead to losses.
  • The investment value can fluctuate daily, which can be nerve-wracking for some investors.
  • No guaranteed returns, making it unsuitable for short-term investment goals.
  • Requires a good understanding of the market and the right investment strategy.


In conclusion, both term deposits and market investments have their own set of pros and cons, and it depends on your investment goals, risk tolerance, and financial situation. For short-term savings goals or if you need guaranteed returns, term deposits can be a good option. However, for long-term investments and higher returns, market investments could be more suitable. It’s always best to do your research and consult a financial advisor before making any investment decisions.

If you would like to start building a secure financial future, please click here to organise a complementary meeting with an EPG Wealth adviser.

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