Among many banking products, deposits are among the most popular. This is a very good way of investing for everyone who wants to multiply their funds without too much risk.
In the case of deposits, this risk is practically minimal. In addition, bank deposits, which include deposits, are secured by the Bank Guarantee Fund, so that even in the event of the bank’s insolvency, the funds will be returned to the holder.
To maximize your profits
However, you need to choose the right deposit at a good interest rate. First, however, you need to decide what amount you want to invest and for how long. Short-term deposits are very popular, for example monthly, bi-monthly or quarterly. With the adhesives on long-term deposits, the funds work longer, and the banks also offer higher interest rates for providing funds for a long time.
However, this does not have to be the rule, especially when you consider some promotional offers for short-term deposits, where the interest rate is quite high. When choosing a deposit in terms of its duration, you should not be guided only by the profit itself, but also by when we may need funds.
If we have some amount of funds
And want to save it for a more distant future, or we simply know that we will not urgently need it, we can put it on a long-term deposit. However, in the event that we expect funds to be needed soon, it is better to put them in a short-term deposit. The main reason here is the fact that in most cases, choosing funds from the deposit before the deadline causes the loss of a significant part of the generated interest, and thus saving makes no sense.
For short-term deposits, it is easier to estimate whether we will need the funds before the end of the deposit or not. As for the duration of the deposit, we can decide on a renewable deposit, i.e. one that is automatically launched again when it ends. However, you should be aware that it may be under new conditions that apply at the moment in the bank.
The interest rate directly determines it
Although its amount is not the only factor here. A lot depends on how often interest is capitalized. Capitalization is adding interest to capital. The more often it occurs, the better, because in each subsequent accounting period, interest will be charged on a larger capital. The type of interest may also affect the amount of profit, specifically whether it will be a fixed or variable interest rate.
The cost-effectiveness of one or the other solution will depend on the circumstances, and specifically on the interest rates set by the NBP. In the case of fixed interest rate, it remains unchanged throughout the term of the deposit, and hence we will not lose it if interest rates are reduced. Floating interest carries the risk of lower profits. This need not be the case, however, because if the interest rate increases, the interest rate on the deposit, and thus our profits will increase.
If the profit from the standard deposit of several percent is too small for us, and we are willing to slightly higher risk, we can decide on the so-called double, which some banks also offer. What is it about Namely, the funds paid for such a deposit are divided into two parts. On one of them, investments look generally standard, i.e. they are low-risk investments. On the other hand, investments are more risky, but the potential profits are much higher, even several percent.