What is a deposit in a bank? How to open a profitable deposit in a bank

The most common type of investment in many countries of the world is a bank deposit, which is called a deposit in economic terminology. This choice is due to the rapid and rapid development of the economy and investment. What is a deposit in a bank and why is it so popular? Immediate accessibility and simplicity of this method of investing, saving and multiplying funds attract ordinary citizens. But few can really give an exhaustive answer to the question, what is a deposit in a bank. But this is the basis of economic literacy.

What can be called a bank deposit?

Deposit - is transferred to the bank at a certain percentage of the money for storage. After a certain period, these funds are refundable. What is a deposit in a bank? It's not just money. The owner can be securities, contributions, payments, precious metals and even real estate. Even without special knowledge in the economy and investment, it is easy to monitor the state of the market in order to be aware of various factors that affect the financial situation of the region. It would seem that everything is simple: you need to deposit the right amount into the selected bank and just wait for the deadline to collect the interest. Investors, in their majority, require certainty in the services they provide, which includes a constant interest rate. What does it mean? A person wants to have profitable deposits in banks, that is, at the right time to receive the entire amount taking into account the interest that characterizes the profit. The ordinary inhabitant is not interested in economic factors and trends. That is why deposits are so popular and honorable.

Influence of inflation

If a person plans to solve all his financial problems with the help of a deposit, then he will be disappointed. Basically, almost any bank provides an interest rate slightly less than or equal to the level of inflation. What does it mean? If you decide to open a deposit in a bank, be prepared that inflation will "eat up" almost all of the profits. Naturally, the bank deposit can significantly slow down this process, but in matters of increasing the capital deposit is irrelevant. But do not give up deposits and underestimate them. The overwhelming majority of successful and successful businessmen and investors somehow keep parts of their capital in the form of bank deposits. In this case, this choice dictates the investment strategy, which includes the accounting of the alleged risk and probable profit. As you know, a bank deposit is one of the safest ways of investing money.

In most developed countries, there are special organizations and funds that are guarantors of return of invested funds to customers in the event of a bankruptcy of the bank. This factor must be taken into account by novice investors. Before you carry your money somewhere, you need to understand well what banks, deposits, deposits, look at the ratings of interesting offices, get acquainted with the offered shares, interest rates and terms of deposits. Any additional information will be useful in the formation of your investment portfolio.

Demand deposit

There are two types of bank investments - urgent and on demand. The essence of the latter is that you can withdraw money from your account virtually at any time. However, there is a significant disadvantage of such a system - the interest rate is extremely low. That is why this kind of deposits is unpopular and unprofitable.

Term deposit

This type of investment is characterized by a higher interest rate. The profit in this case depends on the term of the deposit and on the amount. The larger the capital goes to the disposal of the bank, the higher will be the percentage of profit. What is a bank deposit under a fixed-term contract and what are its drawbacks? A significant drawback is that you can not withdraw money at any time. It is also impossible to replenish the amount invested. But the terms of placement are the widest - from several days to decades. To attract customers, banks are making compromises. The bottom line is that you are allowed to withdraw some deposit amount , but set a certain limit. The interest rate will differ from the term deposit, but there is the possibility of replenishing the account.

Currency for deposit placement

Today it is not difficult to invest in a variety of world currencies. However, in all countries deposits in national currency, euro and US dollars are the most popular. Foreign exchange deposits usually have lower interest rates and, accordingly, generate less revenue. To date, multi-currency deposits have become very popular. They are characterized by accounting for each currency separately. As a rule, such deposits are formed on the basis of a compromise deposit - taking into account the irreducible balance and the possibility of replenishing the account. A very convenient function is to transfer currency to another at the current exchange rate on the interbank market. Interest on deposits in banks with a similar function is usually selected individually for each client. This makes a multi-currency deposit popular with traders, brokers and dealers in foreign exchange markets.

Interest rate in bank deposit

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To form an investment portfolio, you need to understand the basic concepts. There are two types of interest rates - floating and fixed. The first can change under the influence of state financial institutions that regulate the market. This happens when different factors, both economic and political, are taken into account. The fixed rate is established directly at the time of signing the contract at the beginning of the term and will remain the same all the way until its end. In a floating bank, it is obliged to guarantee what is the minimum profit, but it is practically impossible to predict the level of income unequivocally.

It is also necessary to mention the term "capitalization". It means that the funds that are accrued will take into account the size of the deposit itself plus interest received for a certain part of the period. It is necessary to take into account the possibility of capitalization when planning your own investment portfolio and calculating the probable profit.