After having reached the maturity date, you finally have a chance to take all the saved funds and any possible interest earned throughout the term period. Now, you have enough money to invest in something else. It takes some planning to ensure the funds are used efficiently, helping you grow richer and closer to achieving your financial goals.
How to Properly Understand Maturity Dates
The maturity date is simply a deadline after which you get back your investment plus interest. Typically, maturity date applies to fixed-term deposit accounts and government bonds, such as ING’s online term deposit accounts. Once the specified deadline comes, the bank transfers the principal amount and interest earned into your account.
We strongly recommend starting thinking about future steps one month prior to reaching the maturity date. Otherwise, the bank would most likely roll-over your deposit terms for another few years with an interest rate that is very low compared to the one you would have received had you negotiated with someone.
Choosing the Best Strategy for Reinvestment
There are many ways in which you may reinvest your matured money. For example, you may find yourself in love with fixed-term investments, meaning you can negotiate the highest interest rate with your financial institution or switch to a competitor with more favourable conditions.
If you wish to take a risk, it is possible to invest in shares and other securities or exchange-traded funds. This type of investment gives you the possibility to achieve substantial capital growth plus franked dividends as a regular income source.
Alternatively, you can take advantage of your matured money to reduce the outstanding balance of your home mortgage. Moreover, you can also transfer the funds straight into your superannuation fund.
Key Factors to Take into Account Before Making the Right Decision
Your choice depends greatly on the state of your economy and individual financial condition. It is necessary to keep track of the official cash rate as issued by RBA as it changes quite frequently and affects the earnings of traditional investment types. Therefore, if the cash rate remains relatively high, it makes much sense to lock your investment into a fixed deposit.
Also, you should remember about the necessity of earning interest that would consistently outpace the country’s inflation rate. Furthermore, it is vital to think of how much liquid you need for your current expenses or purchases such as a home. You cannot afford to tie down the funds for several years, so we advise you against doing so.
See also: How Technology Drives Business Innovation
Conclusion and Useful Tips
Approaching your investment maturity date opens tremendous possibilities to analyse your current investment portfolio and improve it further. Do not miss such an important moment in your financial life; rather, make it work in your favour by negotiating with competitors. Do not forget about your risk tolerance and investment horizon. Also, it never hurts to turn for professional advice if you feel unsure about your financial future.
