Deposits are a type of investment that is in great demand because they offer stable interest rates and low risk. However, there are still many people who do not fully understand what a deposit is and how to invest it.
Therefore, let’s do a detailed discussion about deposits and everything you need to know before investing in this one financial product, come on .
What is a Deposit?
Deposit is a financial product that offers a stable interest rate and low risk. In deposits, you need to deposit money at the bank for a certain period of time with a fixed interest rate.
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Your money will be held by the bank during this period, and you will receive interest on the deposit at the end of the deposit period. Deposits are one of the safest forms of investment, because they have low risks and stable interest rates.
Deposits usually have varying terms, ranging from 1 month to 5 years. The longer the term of the deposit, the higher the interest rate given by the bank.
The interest rate on deposits is usually higher than the interest rate on ordinary savings, so deposits can be the right choice for those of you who want to earn a stable passive income.
However, before investing in deposits, there are several things that must be considered. First, make sure that the bank you choose is registered and supervised by the Financial Services Authority (OJK). Second, also pay attention to the interest rates offered by banks, as well as the costs associated with the deposit products offered.
Types of Deposits
There are several types of deposits to choose from, including the following:
1. Time Deposits
Time deposits are the most common type of deposit. In a time deposit, you will deposit money at the bank for a certain period of time, usually between 1 month and 5 years. The longer the term of the deposit, the higher the interest rate given by the bank.
2. On Call Deposits
Deposit on call is a type of deposit that can be withdrawn at any time without being charged a penalty fee. Interest rates given on deposits on call are usually lower than time deposits.
3. Forex Deposits
Foreign currency deposits are types of deposits that use foreign currency as the basic unit. Forex deposits usually offer higher interest rates compared to rupiah deposits, but carry a higher exchange rate risk.
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How to Calculate Deposit Interest
Calculating deposit interest is an important thing to do so you can estimate the income you will get from investing in deposits. The formula for calculating deposit interest is actually quite simple. Here is an easy formula to try.
Deposit Interest = Deposit Amount x Interest Rate x Deposit Term / 12
Example of calculating deposit interest: You deposit IDR 10,000,000 at a bank with an interest rate of 5% per year for a period of 1 year. Then, the interest you will receive is as follows:
Deposit Interest = IDR 10,000,000 x 5% x 1 year / 12 = IDR 41,666
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Advantages of Investment in Deposits
Investment in deposits is a popular choice for many people because it offers quite attractive benefits. Stable interest rates on deposits and low risk make time deposits a safe choice for people who want to maintain their investment value over the long term.
However, there are still many people who do not understand in detail what are the benefits that can be obtained from investing in deposits. Here is a list of the advantages that you need to know.`
1. Low Level of Risk
Investing in deposits has a low risk, because banks usually guarantee a return of your money at the end of the deposit period.
2. Stable Profits
Interest rates on deposits tend to be more stable compared to other investment instruments. This makes deposits the right choice for those of you who want to maintain the value of your investment in the long term.
3. Protection Against Inflation
The interest rate on deposits is usually higher than the inflation rate, so you can maintain the value of your money from inflation.
Investment Risk in Deposits
Although deposits carry a low risk, there are several risks that must be watched out for, including the following.
1. Liquidity Risk
Deposits have a certain time period that must be adhered to, so if you need money within that time period, you may need to pay a penalty fee.
2. Interest Rate Risk
If interest rates decrease over the term of the deposit, you may not get a competitive interest rate.
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How to Choose the Right Deposit
Choosing the right deposit is very important to maximize the profit from your investment. However, choosing the right deposit is not easy, because there are various factors that must be considered.
To choose the right deposit, here are some things to note.
1. Choose the appropriate deposit period
You must choose a deposit period that suits your investment goals. If you need money in the short term, then deposits on call might be the right choice. However, if you want to maintain the value of your money over a longer period of time, then a time deposit can be the right choice.
2. Choose a Competitive Deposit Interest
You have to choose a bank that offers competitive interest rates and suits your investment goals. Also make sure that the costs outside of the interest on the deposit don’t make you suffer a loss.
3. Choose a Trusted Bank
You have to choose a bank that is trusted and has a good reputation in the financial industry. Make sure that the bank you choose is registered and supervised by the Financial Services Authority (OJK).
By understanding in detail about deposits, including the types of deposits, how to calculate interest on deposits, the benefits and risks of investing in deposits, and how to choose the right deposit, you can obtain the necessary information in choosing a financial product that suits your needs and investment goals. .
Thus the article regarding the definition, types, and how to calculate deposit interest.