When investing or planning for financial freedom, one must consider the time deposits in Kenya as an option. time deposits are types of bank accounts in kenya

What are time deposits in Kenya

Time deposits in Kenya are investments that are placed the funds are not easily available to the investor before the time of the deposit has elapsed or expired. The time deposits in Kenya may be for as short as 7 days or as long as the options are availed. Time deposits are also referred to as fixed deposits or term deposits.

Time deposits in Kenya

The investor gets a fixed interest at the end of the investment period. This amount is higher the longer the funds are invested. For example, the investor will earn a higher interest for depositing the funds for 1 year than they get for 1 month. The very long term time deposits may not give very attractive interest rates compared to the middle term time deposits.

When the time agreed on the time deposit in Kenya lapses, the investor can either roll over the investment, that is, invest the funds again or the amounts may be returned to the investor.

The investor of time deposits in Kenya is charged a penalty fee if they withdraw their funds from the time deposit before it matures. In most cases the investor losses the interest they had negotiated and even have to refund the bank as part of the penalty. When investing in time deposits, the depositor must consider what the time span he or she has idle funds for, that can be put aside to earn higher interest.

There are three types of time deposits traditional certificates of deposits, liquid certificates of deposits and broker bought certificates of deposits. These are explained below:

Time deposits in Kenya – Liquid certificates of demand

Liquid certificates of demand are time deposits that the investor negotiates with the bank on amounts that can be withdrawn before the maturity of the time deposit. The amounts that one can withdraw are decided by the bank and are usually a percentage of the deposited funds. Sometimes the bank also restricts the number of times the investor can withdraw. The bank may allow one withdrawal per quarter. If the investor requires taking more than the bank allows, the investor is then subjected to a penalty fee.

Time deposits in Kenya – traditional certificates of deposits

Traditional certificates of deposit are time deposits where the investor is charged a penalty if they withdraw before the maturity of the deposit. The funds could be invested for even five years.

Time deposits in Kenya – broker bought certificates of demand

Broker bought certificates of deposits are time deposits that are sold to investors by brokers. The brokers buy the certificates and they sell them to investors for a profit or commission. The time deposits can be for a period from seven days to one year.

It is important to make your money work for you. You must look for save investment options that can bring a return higher than what the bank savings accounts may offer.  Time deposits in Kenya can be used by people who are interested in investing and making good returns on investment.