Make the Most Out of Your Hard Earned Money - The Best Long Term Fixed Deposits in Sri Lanka

Introduction

Are you looking for ways to make the most out of your hard-earned money? Why not consider long-term fixed deposits in Sri Lanka? Long term fixed deposits offer a safe and reliable investment option, with a potentially higher return on your investment than traditional savings accounts.

With long term fixed deposits available from 12 months to 60 months, you can find an option that best matches your financial needs. By carefully researching the annual effective rates of each bank, you can find which bank offers the best return on your investment. Plus, you’ll be able to feel confident knowing that you’ve invested in a low risk, secure product.

We understand that choosing the right long term fixed deposit can be a difficult task. That’s why we have compiled a comprehensive guide to help you find the best option for your hard-earned money. In this article, we will provide information on the different types of long term fixed deposits offered in Sri Lanka and how to select the right one for you.

Introduction to Long Term Fixed Deposits

Are you looking to invest your hard earned money into a long-term investment option? If so, then a long-term fixed deposit may be the perfect solution for you. With long term fixed deposits, you can invest your money for up to five years and gain an impressive return on your investment. This article will guide you through the different options available in Sri Lanka and help you find the best long-term fixed deposit for your money.

We’ll explore how the annual effective rate works and discuss which banks offer the best deals on their long-term fixed deposits. With this information, you’ll be able to make an informed decision about where to put your money and which option will provide you with the highest return. So, let’s take a look at what a long-term fixed deposit is and how it can help your finances grow over time.

How to Find the Best Long Term Fixed Deposit Rates in Sri Lanka

In order to make the most out of your hard earned money by investing in a long term fixed deposit, you should consider the following factors:

Interest rate: This is one of the most important considerations when looking for a long term fixed deposit. Generally, the higher the interest rate, the better the return on investment. It is advisable to compare different banks and their offered rates to identify which offers the highest return.
Tenure: The length of time for which you are willing to lock in your funds is also important when selecting a long term fixed deposit. In Sri Lanka, long term fixed deposits are available for periods ranging from 12 months (1 year) up to 60 months (5 years).
Additional features: Each bank offers various value-added features with their long term fixed deposits such as higher rates for senior citizens or additional bonuses on specific occasions. Look into these extra features and identify which could benefit you best before making your decision.

Benefits and Drawbacks of Investing in Long Term Fixed Deposits

When you invest your hard earned money in long-term fixed deposits, you can enjoy a number of benefits. The most obvious one is the safety assurance that comes with FDs as they are typically fixed deposits, hence the name. Other benefits include higher interest rates compared to short-term deposits and regular returns. These returns can be more easily forecasted and are usually more generous than what you’d get in savings accounts, making long-term FDs a great option for those looking to maximize their profits.

However, there are also drawbacks that come with investing in long-term FDs. One of these is the lack of liquidity; since you cannot access your money until the end of the deposit term, it may not be feasible for those who need quick cash due to financial emergencies or other unforeseen circumstances. Another drawback is that since long-term FDs don’t take inflation into account, investors may find that their investments are not able to keep up with the current market indexes and purchasing power over time. Finally, it should be noted that long-term FDs can also experience negative effects from policy changes made by central banks or governments.

Types of Long Term Fixed Deposits Offered by Banks in Sri Lanka

Are you looking for a reliable investment? Long term fixed deposits offer a great way to invest your hard earned money in Sri Lanka. Banks in Sri Lanka offer several types of long-term fixed deposit accounts with terms ranging from 12 months (1 year) to 60 months (5 years).

The annual effective rate (AER) is the key factor that determines your return on investment. A higher AER means higher returns while a lower AER will yield lower returns. Banks also give different rates based on the amount of deposit, so it is important to compare different banks and offers and find the right one for you.

The most popular types of long-term fixed deposits offered by banks in Sri Lanka are:

Standard Long Term Fixed Deposit: This type of long-term fixed deposit account is suitable for investors who are looking for a guaranteed return with low risk. The interest rates are generally lower than other types of fixed deposits, but the reliability and security make it an attractive option for many investors.
Tradable Long Term Fixed Deposit: This type of long-term fixed deposit account offers higher returns than standard accounts and is suitable for investors with a higher risk tolerance. The interest rate varies depending on market conditions and can be traded with other investors at any time during the duration of the deposit.
No Penalty Long Term Fixed Deposit: This type of long-term fixed deposit account offers greater flexibility as there is no penalty if you decide to withdraw your money before maturity date. However, this will result in lower returns compared to other types of accounts as there is no guarantee that your principal amount will be maintained throughout the period of the deposit.

Calculating Annual Effective Rates of Fixed Deposits

When it comes to long-term deposits, understanding the annual effective rate (AER) is important for getting the most out of your money. AER takes into account the interest rate and any additional fees/charges on your deposit. It is the rate at which your money will grow, and is calculated as a percentage of the total capital invested.

Calculating AER can be done easily with this formula:

AER = (1 + Interest Rate/365) ^ 365 - 1

For example, let's say you are considering a long-term fixed deposit offering 3% interest rate per annum. In this case, AER would be equal to 3.08%. This means you can expect your money to grow at an average of 3.08% over the course of one year. Keep in mind that AER calculation depends on the duration of your investment; it may vary from one bank to another. Therefore, check with your bank for specific rates when choosing a long-term fixed deposit plan.

FAQs on Investing in Long Term Fixed Deposits

Investing in Long Term Fixed Deposits can be a great way to make the most out of your hard-earned money. However, it is important to understand the investment process, understand the risks and rewards associated with it and make an informed decision. Here are some FAQs that will help you get started:

What is the difference between a fixed deposit and a savings account?

The major difference between a fixed deposit and a savings account is that with a fixed deposit, you will earn interest at rates predetermined by the bank; whereas with a savings account, the interest rate is usually much lower than that of a fixed deposit and also fluctuates over time. With a fixed deposit, you also have the option to withdraw funds before maturity but you may incur penalties for doing so.

What are the advantages of investing in long-term fixed deposits?

The main advantage of investing in long-term fixed deposits is that they offer higher returns than those of short-term deposits. Moreover, they are considered to be low-risk investments as they provide guaranteed returns even if market conditions change during the term of the investment. Additionally, they provide liquidity; as they can be withdrawn before maturity without incurring any penalties.

How do I select which long term fixed deposits to invest in?

When selecting which long term fixed deposits to invest in, it is important to compare different banks’ offers on terms of annual effective rate (AER) and other factors such as minimum balance requirements and other charges. It is also important to consider customer service and reputation when making your decision as this could make all the difference in terms of your experience with the bank.

Conclusion

With the best long term fixed deposit rates in Sri Lanka, your money is in the best of hands. From the guaranteed security of your funds to the higher returns, fixed deposits are ideal for those looking to make the most of their hard earned money. With different term ranges and varying annual effective rates, you can find one that best suits your needs. Make the right investment decision and start earning today!

Refer the Long term Fixed deposit rates here