Deposit

A time deposit places a lump sum with a bank for a fixed period in exchange for interest. You put the money in once and leave it until maturity, which is what separates it from a regular savings plan paid in monthly.

Its main strength is that the principal is protected. Deposit insurance covers principal plus interest up to a set limit per institution, so even if the bank fails you are made whole within that cap.

The weakness is the low return, and more importantly its relationship with prices. If a deposit pays 3% while inflation runs at 4%, the balance grows but what it can buy shrinks. The principal survives; the value does not.

So deposits suit money you need to protect rather than grow. Keep emergency funds and cash you will spend within one to three years here, and let longer-horizon money sit in other assets. Match the tool to the job. Splitting maturities across one, two and three years means you never have to break the whole amount when cash is needed, and part of it rolls over whenever rates rise.