Mareeyah

That’s nothing at present, though doing something in the past would greatly help.

Let me tell you that I’m currently earning at least $86 per month doing nothing. Yes, nothing. Not even answering online surveys, or clicking ads, or reading sponsored emails, etc. I know $86/month may not be much, but if you get it by doing nothing, I believe that’s already good compared to doing nothing and earning nothing.

How am I earning that money?

It’s not really a big secret, but just for those who are not aware (if there ever is anyone), it’s just two words: Term Deposits.

I first heard of time deposit or term deposit when I was about 20. However, at that time, I only understood that it’s something good for my money. I did not even know how to apply for it, or what exactly happens in that process, or how much my money would earn. You see, at that time, (this may be embarrasing, but here it goes…) my mum invested my money for me.

I was probably 17 when I bravely went to a bank with a friend and opened my very own bank account, with a matching passbook and no ATM card, mind you. Crude and ancient like that. Before that, I only had a glass jar (which used to be a mayonnaise jar, most likely) where I put coins and bills I saved from my allowances. I can’t remember exactly when I started saving in a glass jar, but I do recall that as early as in 3rd grade (I would have been 8-9 years old), I was already doing that.

By 19, I was working as a government employee, and of course, I only got accepted because I knew somebody quite influential in the office. Not that I absolutely needed a job or big money. My biggest motivation for getting a job was probably the fact that my mum kept on rubbing the fact that she was already working and earning money at 14 (labor laws weren’t so strict yet in the olden days), while me, at 19, was still solely dependent on allowances from my parents. Well, how’s that? A mother’s nagging can also be quite helpful.

At my first workplace, I was quite famous for skipping an after-lunch nap on the day after payday, so I could go to the bank and deposit some savings. But my mum didn’t exactly have enough confidence on my saving strategy. She suspected that if she just let me be with my earnings, I’d most likely spend more in clothes and fashion accessories, than in savings. So, she convinced me to lend her my money every month, with the promise that she’ll pay me back later with interest (and she did, with a very generous interest rate actually). That’s how she was able to get hold of my money and invested it in a term deposit – the reason why I couldn’t get my money back just anytime I wanted (not needed) it.

It has been actually many many years since then. She had already given me back all my money, and since moving to Melbourne, I’m left to manage my savings all by myself. You know what they say… “With great power comes great responsibility”.. and of course, this means, I needed to be more responsible and wise in managing my finances.

It wasn’t long ago that I’ve read what some money expert wrote (I forgot which one, sorry!) about earning. He said that a wise person is one who earns more with less effort. Through the years, I’ve also heard my mum telling me to let my money work for me, and my sister telling me about investments which let you earn while you sleep. I know other people would instantly have investments such as stocks and real estate popping into their heads with that. But you’ll need bigger capital with that, more knowledge and understanding of how they work, and possibly, more courage to face bigger risks. I cannot afford all that yet.

And so, for now, I feel that one of the best things I can do is invest in term deposits. Boy, was I so excited when I first invested last year! But really, how do you go about it?

My first fear regarding investing in term deposits is not being able to get my money right away when I absolutely need it. I might get too excited in investing, invest more than I can afford to do so, then end up have not enough cash in my savings account for my needs in the next few months. Yes, I could withdraw the funds in my term deposit, if worse comes to worse, but I’d feel terribly bad about it because of course, I would no longer earn the interest I was expecting to earn.

So I came up with a few things to consider before investing in term deposits:

1. How much you can afford to put away without going broke.

As I mentioned above, I maintain a budget forecast and made one for the whole of this year. By doing that, I’ll have a good idea of how much money will actually come to my hands this year, how much I will need to spend, and, just as importantly, when these things will be happening during the year. For example, I can be confident that I can put away $8,000 and still be able to afford a $5,000 Philippine holiday in a few months, while earning just $2,000 a month. (Note: Not the actual amounts… just an example).

2. Compare rates before investing your money.

You must be aware that not all term deposit rates are actually better than your regular savings account interest rate. For example, if I have my money in a savings account that earns 4.00% p.a., I’d be better off leaving my money in that account, than investing in a term deposit that has a lower 3.90% p.a. rate. The longest terms or the biggest banks also do not always offer the best rates. Do your homework on rates first.

3. Oftentimes, short-term term deposits earn more.

Yes, I do regret one term deposit I made. It’s for 12 months. Many banks require a minimum amount of $5,000 for a TD, and if you can afford to save $1,000 a month, it means you’ll have to save for five months before you can have enough for another TD. If you come across a TD that has a competitive rate for a 90-day term, it can be more profitable because when it matures, you can reinvest it with the additional $3,000 that you have saved over the 3 month period.

4. Start early.

I have not encountered a finance expert who does not recommend this tip. You have often heard it – Time is gold – and this is why it says so. I do regret not starting earlier than I did. Had I started, say, 1 year earlier, I would have an additional $1,032, which, if I add to my TD, would earn me an extra $5 a month.

Yes, I know there are a lot of better ways to invest your money out there. But if you don’t have enough capital yet and if you are still too chicken to take big risks, putting your money in a term deposit may be the right investment option for you. Then, while you’re still in the process of saving and planning a much better business venture, you’re already earning something while doing nothing… much yet, that is.