How To Earn 12-Month Fixed Deposit Rate Every Month?

You may have your idle fund and earns almost nothing in your savings account.  You also know that inflation will eat up your purchasing power if you continue to put your hard-earned money in savings account.  Furthermore, you know that fixed deposit is giving more attractive return than savings account but still unwilling to lock it with longer maturity period in order to meet any emergency requirement.  What could you do then?

In this post, I would like to share how I put my emergency buffer into fixed deposit and enjoy 12-month fixed deposit rate every month.  It is very simple.  Let us assume that you have an emergency buffer of $24,000.  Here are what you need to do:

1. Divide your emergency buffer by 12.  In this example, you divide $24,000 by 12 and you get $2,000;
2. Deposit $2,000 into 1-month, 2-month, 3-month and so on up to 12-month fixed deposit.  In this case, you will have a total 12 fixed deposit certificates with $2,000 in each certificate;
3. Whenever a fixed deposit reaches its maturity, convert it into 12-month fixed deposit.  Do the same for the subsequent 11 months;
4. From 12th month onwards, you will be able to enjoy 12-month fixed deposit rate every month.

By doing so, you will be able to effectively minimize the impact of inflation over your idle funds.  Even there is any withdrawal before maturity, you do not need to withdraw the whole fund with interest loss but to withdraw what you actually need.

Do enjoy your savings return :)