Fixed-Term deposit

In Switzerland, fixed-term deposits are considered a safe investment with a fixed term and fixed interest rate. A certain amount is deposited with a bank for an agreed period of time. The interest rate remains the same throughout the entire term. Investors benefit from a safe alternative to savings accounts, which is less flexible but offers a higher return.

The risks associated with fixed-term deposits include default risk (if the bank becomes insolvent) and currency risk if the fixed-term deposit is held in a foreign currency. Until repayment, there is also inflation risk, because the purchasing power of the invested amount may decline without compensation. Interest rates remain fixed for the entire term. Furthermore, a fixed-term deposit is an illiquid investment. The deposit remains tied up for the entire term.

While a fixed-term deposit is a tied-up deposit for a few years, similar medium-term notes are securities that can have terms of up to ten years.