Advantages and Disadvantages of Deposits

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The future, will be determined by how we design finances. One of them depends on choosing the type of investment that we do. For example, deposits, which are one type of investment instrument that we are familiar with so far. Before investing, it helps us to know the advantages and disadvantages of deposits to minimize investment risk.

However, of course, you still need to pay attention to the specified time deposit period so you don’t feel a loss.

Deposits are savings in banks that have a certain period of time with the results of the rewards we receive in the form of interest. The bigger the nominal that we deposit, the greater the interest we receive.

Advantages of Deposits

The following advantages and disadvantages of deposits will make us more careful before investing. This is important to minimize the risks that may occur. Among the benefits that can be taken when investing through deposits include:

1. The system is very easy

Time deposit is a term savings product that has a very easy system that is liked by many people

2. The timeframe varies

The duration varies according to our wishes. Starting from 1 month, 2 months, 3 months, some are 6,9,12 up to 24 months

However, of course, you still need to pay attention to the specified time deposit period so you don’t feel a loss.

3. Security guaranteed

Time deposits are considered safe investments because they are guaranteed by the LPS on the condition that they follow all the stipulated conditions, namely the nominal value is not more than 2 billion in one account.

4. Free administration fee

This deposit is not like regular savings because it is free of monthly administration fees.

5. More profitable

Unlike ordinary savings, these deposits have a higher interest yield than ordinary savings.

6. Can be automatically extended

The term of this deposit is very flexible because it can be extended automatically. We just need to inform the bank.

However, of course, you still need to pay attention to the specified time deposit period so you don’t feel a loss.

Disadvantages from Deposits

Apart from the advantages mentioned above, time deposits also have several disadvantages, including:

1. Can only be taken at certain times

Unlike ordinary savings that we can take at any time when we need it. Because as the name implies, these deposits can only be disbursed according to a certain period that we have set.

2. Easily affected by inflation

As we know, the value of money will be more easily affected by inflation. Likewise with deposits, when there is inflation, the yield on deposits will be smaller.

3. Management is done by other people

Deposit management is carried out by other parties so that we cannot know what the real results are from the money we deposit.

4. Relatively low investment yield

Time deposit is one type of investment with relatively low yields offered when compared to other types of investments such as stocks, bonds or property.

5. Kind of boring investment

Deposits are a monotonous and boring type of investment option for some people who like challenges. Because in addition to low risk, deposit profits are also relatively stable according to the time period and nominal that we deposit.

6. Cannot be accessed every time

We cannot access our savings all the time like regular savings. Because our money is locked in the bank according to the time period we specify.
After knowing some of the advantages and disadvantages of deposits, it’s time for us to determine the steps to start investing. Adjust options with existing financial conditions, yes. Happy investing!

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