DEFINITION of 'Pre-Encashable Deposit'

A deposit made in a term deposit or CD that allows the account holder to withdraw funds without penalty to the principal. A pre-encashable deposit is a popular investment vehicle for individuals looking for full flexibility while saving in a guaranteed account.

BREAKING DOWN 'Pre-Encashable Deposit'

Pre-encashables are available in a wide range of investment vehicles, including term deposits, GICs and CDs, all of which can be held in tax-deferred accounts. Although pre-encashables usually advertise withdrawals without penalty, most deposits require a certain minimum investment period before funds can be withdrawn without penalty to the principal.

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RELATED FAQS
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    CDs are FDIC insured, so they do not lose face value, though broker-issued CD accounts do carry risks. Read Answer >>
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