Why we choose loan deposits as a way to save money?
Anyone who has some savings, tries not to make them lie idle, but to bring some profit. Fortunately, today we have a lot of financial instruments that allow us to increase our financial resources. However, for many years, we have invested the most of our money in banks by establishing deposits.
What is a bank deposit?
The deposit is a contract between the bank and its client, under which he pays money to the bank for a specified period, and the bank in return for the opportunity to use the money pays him the salary, in this case interest. Usually, the amount of interest depends on the period for which we pay the money to the bank, as well as their quantity. Banks can propose fixed or variable interest rates to us, and we ourselves should decide which form is best for us.
Why do we very much choose a deposit as a way to multiply savings? It is not easy to answer this question. One could say that it is unprofitable to hold money on deposits today, because in most cases the interest rate on deposits is lower than inflation, so we theoretically lose on such an investment. Certainly one of the reasons for depositing money into banks is investment certainty. First of all, there is very little probability that the bank will fall. Secondly, even if such a situation arises, we will get a refund of the funds paid, because the money will be paid by the Bank Guarantee Fund. Just other banks will “shed” and pay the clients bankrupt money. So, assuming deposits, they are not afraid of losing money, even in spite of low profits.
Another reason that encourages people to set up bank deposits is the relatively low knowledge of Poles about finance. Not everyone knows how to multiply money in a more alternative way and that can bring more profits. Of course, such investing often involves risk, but with more knowledge, this risk can be minimized. People who do not fully know their finances choose a bank deposit because they simply know the product best. Besides, it is a product that does not require a lot of effort (just one deposit in a bank or one transfer via the Internet) and we can practically “forget” about our money.
Is deposits a good way to save? Finance specialists will definitely have a divergent opinion here. Some will say that it does not make sense, because their interest rate is very low, and others will find that every way to save money is good, so also a bank deposit. And certainly bank deposits will be the most popular product when it comes to saving by Poles for a long time.