Where do time deposits fit in today’s portfolios?

Editor’s note: This content is sponsored by Salmon Bank and was produced by BrandRap, the sales and marketing arm of Rappler. No member of the news and editorial team participated in the production of this piece.  

Investing today often comes with more visibility than it used to. With more financial companies adopting automation — giving investors direct access to real-time data and their portfolios — it’s easy for one to monitor every uptick and downturn constantly, or even sometimes, obsessively.

For investors managing large portfolios, this raises the question of whether such an approach is sustainable or meaningfully improves outcomes. For some, easing away from constant monitoring is less about disengagement and more about being deliberate in how different investments are deployed. Rather than relying primarily on market-driven instruments, portfolios are structured so that each component serves a defined role — some to pursue long-term growth, others to provide predictability and support liquidity planning.

This helps explain why even high-net-worth individuals continue to consider longer-term instruments for capital intended to be planned over time.

One such option is time deposits. Offered by banks as part of a broader set of financial instruments, time deposits allow capital to grow at a defined rate over a fixed period, without the need for constant monitoring.

Recently, Salmon Bank has introduced its Bank On Eight time deposit, which is one of the higher interest rates currently available in the market. It offers up to 8% per annum for placements of P1 million and above, and 6% per annum for placements of at least P 10,000, but below P1 million.

Funds can be placed for one to five years, with returns defined from the very beginning. Once the placement is made, returns follow a set trajectory without requiring the same level of oversight as more market-driven instruments. This way, investors get a clearer sense of how much their money may earn over a given period.

Putting this into perspective

A P1 million placement in a time deposit with Salmon Bank, held for one year may earn around P82,388 in gross compound interest. Over a five-year period, gross earnings could reach P469,945, based on the terms of the time deposit. Both are subjected to withholding tax.

In comparison to average inflation rates, returns at this level may help offset inflation over time, depending on prevailing economic conditions.

So what happens when you stop trying to outsmart the market?

Investments that are left uninterrupted may have more room to compound steadily rather than being reset by short-term fluctuations. This may lead to a more predictable approach, with trust placed in the structure of the investment itself.

While time deposits are generally regarded as a less volatile form of investment, they are not entirely risk-free and are best suited for funds that can be set aside for a sustained period. What they offer instead are more predictable returns over a defined timeline.

How to get started

Interested investors can open a time deposit account online by downloading the Salmon app on Google PlayStore or Apple AppStore. For those who prefer an in-person experience, accounts may also be opened at Salmon Bank’s branches in Sta. Rosa, Laguna and Bacoor, Cavite.— Rappler.com