For Chileans looking to enter the world of investing, term deposits present a simple and accessible option.these deposits allow individuals to place funds in a financial institution for a fixed period, earning interest in return.

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 makes them a reliable and easily understandable investment for beginners.

Term deposits are available through various banks, offering investments with low minimum amounts and terms starting from as little as 7 days. This versatility enables investors to start small and adjust their investments according to their financial needs.

These deposits can be made in Chilean pesos or Unidades de Fomento (UF), an inflation-indexed unit of account. The primary difference lies in profitability. Deposits in pesos offer a fixed return known from the outset. In UF deposits, the return adjusts based on the UF’s fluctuation, safeguarding purchasing power against inflation.

Potential Earnings on a $500,000 Investment

To illustrate potential earnings, consider a $500,000 peso investment in a term deposit.Profitability varies with the deposit term. Here’s a simulation of returns for different periods:

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 $502.015with one $ 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 one $ 3 gain.900.
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 $506.000with one $ 6 gain.000.
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 $507.727with one 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 one $ 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 $523.054with one gain of $ 23,054.

As the investment period increases, the returns generally grow, reflecting the higher interest rates typically offered for longer terms.

It is crucial to remember that term deposits usually do not allow early withdrawal of the invested capital. Investors need to be prepared to wait until the term expires to access their funds and the accrued interest.

“sums of money delivered to a financial institution, to generate interests in a certain period of time”