what are term deposits?

term deposits are essentially savings accounts with a fixed term and interest rate. the commission for the financial market (cmf) defines them as sums of money delivered to a financial institution, to generate interests in a certain period of time. this makes them a reliable and easy-to-understand option for those just beginning to invest.

bancoestado: a gateway to investing

bancoestado stands out by offering term deposits with low minimum investment amounts and flexible terms, starting from just seven days. this allows chileans to start investing gradually, aligning with their individual financial needs. the convenience of online banking and the mobile bancostado submission further simplifies the investment process.

pesos vs. uf: understanding your options

bancoestado offers term deposits in both chilean pesos and unidades de fomento (uf), a unit of account that is adjusted daily to reflect inflation. here’s a breakdown:

• pesos: the final amount is fixed and known from the start.
• uf: profitability adjusts based on the uf’s variation throughout the deposit period, protecting purchasing power against inflation.

potential returns: a simulation

let’s examine potential returns on a 500,000 chilean peso investment across different timeframes with bancoestado.note that interest rates are subject to change.

• 31-day fixed term deposit: with a 0.4030% interest rate, a $500,000 investment yields $502,015, resulting in a $2,015 gain.
• 60-day fixed term deposit: at a 0.7800% interest rate, a $500,000 investment grows to $503,900, providing a $3,900 gain.
• 90-day fixed term deposit: a 1.700% interest rate on a $500,000 investment results in $506,000, with a $6,000 gain.
• 122-day fixed term deposit: with a 0.4030% interest rate, a $500,000 investment reaches $507,727, yielding a $7,727 gain.
• 180-day fixed term deposit: at a 0.7800% interest rate, a $500,000 investment grows to $511,400, providing an $11,400 gain.
• 364-day fixed term deposit: a 1.700% interest rate on a $500,000 investment results in $523,054, with a $23,054 gain.

vital considerations

term deposits typically do not allow early withdrawal of capital.investors must wait until the term’s expiration to access both the invested money and the earned interest.

faq

• what is a term deposit? a fixed-term investment account that earns interest.
• what is uf? a unit of account adjusted daily for inflation in chile.
• can i withdraw my money early? generally,no. term deposits usually don’t allow early withdrawals.
• how do i open a term deposit with bancoestado? thru online banking, the mobile app, or at a branch.

Navigating the world of investments can be daunting, especially for newcomers. In Chile, though, simple and accessible options exist, such as term deposits. These offer a straightforward way to grow your money by placing it in a financial institution and earning interest over a fixed period.

What are Term Deposits?

The Commission for the Financial market (CMF) defines term deposits as sums of money delivered to a financial institution, to generate interests in a certain period of time. This definition underscores their reliability and ease of understanding, particularly for novice investors.

BancoEstado: A Stepping Stone to investing

bancoestado offers term deposits with low minimum investment amounts and flexible terms, starting from just seven days. This allows Chileans to gradually enter the world of investing, aligning with their individual financial circumstances.

Moreover, BancoEstado provides convenient access through online banking and its mobile application, BancoEstado Móvil. Term deposits can be made in both Chilean pesos and Unidades de Fomento (UF), a Chilean inflation-indexed unit of account.

Pesos vs. UF: Understanding Profitability

The primary difference between peso and UF deposits lies in their profitability.With peso deposits, the final amount is fixed and known from the outset. However, in the deposits in UF, profitability is adjusted according to the variation of the UF throughout the period of the deposit, which allows to protect the purchasing power against inflation.

simulated Returns: Investing $500,000 in BancoEstado

Let’s examine potential returns on a $500,000 peso investment across various terms:

1. Fixed term deposit at 31 days: Investment of $500,000 with an interest rate of 0.4030%. At the end of the deadline, the total to be received is $502,015 with a $2,015 gain.
2. Fixed term deposit at 60 days: Investment of $500,000 with an interest rate of 0.7800%. At the end of the deadline, the total to be received is $503,900 with a $3,900 gain.
3. 90-day fixed term deposit: Investment of $500,000 with an interest rate of 1.700%. At the end of the deadline, the total to be received is $506,000 with a $6,000 gain.
4. Fixed term deposit at 122 days: Investment of $500,000 with an interest rate of 0.4030%. at the end of the deadline, the total to be received is $507,727 with a gain of $7,727.
5. Fixed term deposit at 180 days: Investment of $500,000 with an interest rate of 0.7800%. At the end of the deadline,the total to be received is $511,400,with a $11,400 gain.
6. Fixed term deposit at 364 days: Investment of $500,000 with an interest rate of 1.700%. At the end of the deadline, the total to be received is $523,054 with a gain of $23,054.

As the investment period extends, yields generally increase due to higher interest rates.

Crucial Considerations

It is crucial to remember that term deposits do not allow the anticipated withdrawal of capital. Investors must wait until the term expires to access their invested capital and accrued interest.