Why long-time CD savers should consider investing
Taiwan's savings culture runs deep, but treating "time deposit = safe" as a rule during long inflation cycles can produce real losses.
The current picture (Taiwan, 2024–2025)
- 1-year time deposit rate: about 1.5%
- CPI year-over-year: 2.5–3%
- Real return: about −1% to −1.5%
In other words, money parked in time deposits is losing more than 1% of purchasing power per year. That's roughly 10% over 10 years and 20–30% over 20 years.
That isn't "preserving principal" — it's slow bleeding.
Three realistic scenarios
Scenario 1: Retiree with NT$10M entirely in time deposits
- Annual interest: NT$150K
- Annual spending: NT$800K
- Gap: NT$650K/year, drawn from principal
- After 10 years: roughly NT$3–4M of principal left, with purchasing power further eroded by inflation — a high retirement-risk situation
Scenario 2: Salaried worker saving NT$20K/month to time deposits
- 20-year total: 240K × 20 = NT$4.8M (with interest about NT$5.4M)
- Same capital into a 6% annualized ETF: NT$20K/month, about NT$9.2M over 20 years
- Gap: NT$3.8M ≈ 4–5 years of retirement spending
Scenario 3: Emergency fund parked in time deposits
This is actually correct. Emergency funds should be in highly liquid, stable places. Time deposits are fine for this purpose.
Common reasons for hesitating to invest
"The market will crash"
True, but over the long run markets go up. Global equities have returned roughly 7% annualized over 100 years (about 5% after inflation). Short-term swings don't change long-term results.
Solutions:
- Use the Monte Carlo simulator to see worst-case scenarios
- Only invest money you don't need in the long run (keep the emergency fund separate)
- Accept that 20–30% short-term drawdowns are normal
"I don't understand investing"
You actually don't need to know much to invest. Basic principles:
- Buy a global total-market ETF (VT, VWRA, etc.) — the whole world in one ticker
- Hold for the long term, don't time the market
- Dollar-cost-average to reduce timing risk
Do these three things and you'll beat 80% of active investors.
"I'll wait until the market is cheap"
That's "timing", and statistically it loses to dollar-cost averaging. Nobody consistently calls market tops and bottoms.
Alternative: start dollar-cost averaging NT$10K/month today — don't wait.
"I'm too old for this"
It depends on your horizon. Retiring at 60 still means a 20–25-year life expectancy. That horizon is long enough to absorb equity volatility.
The site's 4% Withdrawal Tool is built around the length of post-retirement life and shows that even after retirement, a large portion of assets typically stays in growth assets.
A phased transition
Going "all time deposits → all ETFs" in one step is not ideal. Phasing reduces psychological pressure:
Phase 1 (months 1–3)
- Keep 6 months of emergency fund in time deposits
- Move surplus into money-market funds (MMFs, about 2–3%)
- Get used to money not sitting in the bank
Phase 2 (months 4–12)
- Each month, move a portion of the MMF into a balanced stock/bond ETF (60/40 or 70/30)
- Use the allocation calculator to find a ratio suited to your age
- Aim to reach the target allocation within a year
Phase 3 (month 13 onward)
- Continue monthly auto-debits into the target allocation
- Review and rebalance every 6–12 months
- Ignore short-term noise
Avoiding traps when picking instruments
New investors leaving time deposits often get drawn toward high-fee, high-risk products. A quick list:
Relatively conservative (suitable for beginners)
- Taiwan ETFs: 0050, 006208 (Taiwan 50)
- US ETFs: VOO, VTI, VT (total-market)
- Total-market bond ETFs: BND, AGG
Relatively high risk (caution)
- High-dividend ETFs: 0056, 00878 (high yield but total return often lags total-market ETFs; see yield myth article)
- Leveraged ETFs: decay issues for long-term holders
- Single-sector ETFs: tech, semiconductors, clean energy, etc.
Avoid
- Investment-linked insurance (see pitfalls article)
- High-yield bond funds (the name misleads — these are high-risk bonds)
- Actively managed funds pushed by salespeople (high internal fees, performance rarely beats the index)
- "Guaranteed winner" tickers recommended by friends (usually they are not)
Do these first
- Build an emergency fund (see emergency fund calculator ), 3–6 months of expenses
- Baseline insurance coverage (see insurance calculator ): medical, accident, term life
- Open a brokerage account (online order entry, low fees)
- Decide the allocation (using the allocation calculator )
- Set up monthly auto-debit (don't overthink it, let discipline do the work)
Reasonable expectations
Even with everything done well, investing still needs time. Don't expect:
- 20% returns in a single year (long-run average is 6–8%)
- Gains every month (there will be sharply down months)
- No drawdowns (short-term 20–30% declines are routine)
What you can expect:
- Something close to the long-run average over a 10+ year horizon
- Purchasing power not eroded by inflation
- Substantially more retirement wealth than time deposits — often 2–3× as much