{"id":800,"date":"2021-04-27T09:36:47","date_gmt":"2021-04-27T09:36:47","guid":{"rendered":"https:\/\/enorcerna.com\/wiki\/what-is\/fixed-term\/"},"modified":"2021-04-27T09:36:47","modified_gmt":"2021-04-27T09:36:47","slug":"fixed-term","status":"publish","type":"post","link":"https:\/\/enorcerna.com\/wiki\/what-is\/fixed-term\/","title":{"rendered":"Fixed term"},"content":{"rendered":"
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What is a fixed term?<\/h2>\n

A fixed term is a money placement<\/strong> carried out by a natural or legal person in a financial institution <\/strong>for a specified time and at an established interest rate. Once the term has expired, the entity delivers to the investor the capital contributed plus the interest earned on said placement.<\/p>\n

The longer the placement term, the higher interest will be charged.<\/p>\n

Fixed terms are considered one of the safest investments, since their conditions are known in advance and this gives the investor confidence. Also, being a placement quite safe<\/strong>, their profitability is lower than those with higher associated risk.<\/p>\n

Parts of a fixed term<\/h2>\n

The basic components of a fixed term are the following:<\/p>\n

    \n
  • Capital<\/strong>: amount of money to invest in the fixed term. In general, financial institutions offer a special rate when the amount of the placement exceeds a certain limit.<\/li>\n
  • Term<\/strong>: the duration of the placement. The most common periods are 30, 60, 90, 120, 150, 180, and 360 days.<\/li>\n
  • Interest rate<\/strong>: the nominal annual rate (TNA) is used to compare, for example, fixed terms and personal loans from different banks, allowing the investor to choose the best option.<\/li>\n
  • Collection frequency<\/strong>: the perception of interest can be scheduled on a monthly, quarterly, semi-annual basis, etc.<\/li>\n
  • Rate condition<\/strong>: the reference rate can be fixed (negotiated prior to the placement of the money) or variable (adjusted monthly by a stock index).<\/li>\n<\/ul>\n

    Advantages and disadvantages of a fixed term<\/h2>\n

    Advantage<\/h3>\n

    The advantages of making an investment in a fixed term are the following:<\/p>\n

      \n
    • Safety<\/strong>: It is considered one of the safest investments, since it has little risk of bad debts associated with it.<\/li>\n
    • Protection<\/strong> against inflation: it constitutes a good option against the loss of purchasing power, since the interest charge compensates in whole or in part that difference.<\/li>\n
    • Standardized product<\/strong>: the central banks of each country report the different market rates on a monthly basis, which facilitates the investment decision.<\/li>\n<\/ul>\n

      Disadvantages<\/h3>\n

      The disadvantages of the fixed term are the following:<\/p>\n

        \n
      • Associated costs<\/strong>: in general, when an investment is made in a fixed term, the financial institution establishes the opening of a bank account as a condition that entails maintenance costs.<\/li>\n
      • Early withdrawal<\/strong>: you must wait for the expiration of the term to be able to have the capital and interest. If the early cancellation of the fixed term is required, the bank will deduct a significant sum for the breach of the agreement.<\/li>\n<\/ul><\/div>\n\n\n
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        What is a fixed term? A fixed term is a money placement…<\/p>\n","protected":false},"author":1,"featured_media":801,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-800","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-what-is"],"_links":{"self":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/posts\/800","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/comments?post=800"}],"version-history":[{"count":0,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/posts\/800\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/media\/801"}],"wp:attachment":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/media?parent=800"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/categories?post=800"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/tags?post=800"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}