In the modern world, in conditions of an absolute lack of time, people are trying to secure for themselves some additional, passive income. Almost everyone is now a customer of banks or other financial organizations. In this regard, many have quite logical questions. How to make money on bank deposits? Which investments are profitable and which are not? How risky is this event?
Deposit and deposit
In the broadest sense of the word, a deposit is money, valuables, or other assets placed with a financial institution. In English, the word “contribution” is completely absent, and the values introduced by the client are called the deposit. But in the Russian language there are both concepts and there are differences in the interpretation of their meanings. In the Russian-speaking space, a deposit is the amount of money placed by a client in a bank for a specific or indefinite period. A banking organization puts this money into circulation, and in exchange for this, the depositor receives his interest.
A deposit (in the Russian sense) can be expressed not only in money, but be any valuable means, and it can be placed not only in a bank. If, for example, a sum of money is transferred to a customs organization to secure any obligations, then this will also be called a deposit.
How do banks make money on deposits?
Banks issue loans to the population at interest. But first, in order to issue a loan, it is necessary to attract the funds of depositors (owners of funds that are temporarily held by any financial institution) at low interest rates. These funds are used to issue loans, but at a high percentage. The deposit in the bank is made out today at 6-8% per annum, while the interest on the loan ranges from 15 to 18% per annum. It is on this difference that banks form their profit.
There are also financial organizations that put funds raised from clients into various projects, which also allows them to make an income on this. These are mainly investment funds. Often, banks are also intermediaries in money transfer systems, such as Western Union. In this operation, the sender is charged a certain payment.
Other services, including currency conversion, various payments, interbank transfers, are also paid. Banks also make money by providing access to trading floors where they trade in stocks, bonds and other securities. All this is also provided free of charge. For such opportunities, as a rule, small but steady commission fees are provided.
Earnings on bank deposits
This is one of the simple methods of extra income. How to make money on deposits?
If the client has a certain free amount that can be deferred for a while, then it is quite reasonable to place it in a bank deposit and receive income from this, say, 1% per month, without making any other efforts.
But one unpleasant moment in the form of inflation must be taken into account. This process reduces the cost of the deposit by approximately 0.5% per month (not the amount, but its value). It turns out that the real profit is about half a percent per month of the invested amount. That is, if a client makes a contribution of one million rubles, then a month he will receive about 11-12 thousand.
But besides inflation, there is also purchasing power. And if the depositor did not withdraw and use his money during the year, then, receiving 120 thousand rubles per million (12% per annum) for a year, you can buy goods (already more expensive) worth about 100 thousand rubles (that is, out of 120 thousand rubles deducted 7% of inflation).
But we must also take into account that modern technology is getting cheaper quite quickly due to competition. For example, a TV set for a year will probably become cheaper by 20%, and the deposit amount, as it was 120 thousand rubles, remained. So, despite inflation, by purchasing this TV, the buyer saves 20% of the cost of the goods.
Conclusion: a deposit is the easiest and safest option for passive earnings.
Destination classification
Deposits are divided by their intended purpose. In order to correctly determine the investment, first of all, the client must understand what purpose he pursues, making it.
Depending on this, there are deposits: savings, savings or settlement. If the client chooses a savings, then he can not make deposits and withdraw funds from him. The maximum interest is accrued on such deposits, and these are, as a rule, the most profitable deposits. If the goal is just to save money, a fixed rate deposit is suitable. The conditions in this case sometimes allow additional contributions, the final amount from this will only increase.
Savings deposits are intended for customers who are going to replenish the deposit during the term of the contract. They are suitable for accumulation for a large amount.
The settlement deposit leaves the client with the opportunity to control their money, manage their savings, and conduct income or expense transactions.
Classification by time
It is important not only how much is invested, but also for how long - it depends on how much you can earn on deposits. There are two main types of deposits in banks:
- poste restante;
- term deposits.
The first is suitable primarily for those who want to protect themselves and their capital from the risk of inflation. Under the terms of such a deposit, funds can be withdrawn from the account at any convenient time.
Some banks may somewhat limit cash withdrawals by entering a minimum balance or commission. But making money on such a contribution is hardly possible, since the interest rate in this case is very small.
When making a term deposit (for a certain period), the client agrees not to withdraw money from the account for a certain period.
If the client decides to violate this clause of the contract, the bank deprives him of interest charges. But this inconvenience pays off with high percentages of such a contribution, covering the risk of inflation and allowing to obtain a small but guaranteed income.
The criterion for the duration of the investment must be carefully considered. If in the near future there are no large expenses, it is better to invest money for a year or 9 months, since the rates for these periods are maximum. But if cash expenditures are still planned, it is better to draw up an investment for 1, 3 or 6 months. Since in case of early withdrawal of money from the account, the interest rate will be calculated as the rate for the deposit on demand (0.01% per annum), and the interest paid will be deducted from the total amount upon termination of the contract. In this case, you won’t manage to earn money: as you know, the shorter the investment period, the lower the interest rate of income.
Therefore, it is very important to choose a bank that does not set a strict framework for early termination of a deposit. Due to the great competition among financial organizations, there are now enough banks that do not apply penalties for the termination of the contract.
Interest Calculation Method
In Russia, the percentage in banks on deposits in rubles is somewhere from 3.5 to 7.15% per annum. Before you start paperwork, you must carefully read the offers of various banks and pay special attention to the size of interest rates, as well as get acquainted with all the possible ways of calculating interest.
As a rule, banks offer a program according to which the determination of the amount of interest is calculated at the end of the investment period. But there is an alternative option - a contribution to the bank with a monthly interest payment. According to this scheme, accrual occurs monthly or quarterly and with monthly capitalization.
This means that at the end of the month the amount of interest that the client has not received is added to the total amount of the asset, and that for the next month the daily accrual is already made taking into account the interest added over the past month. According to this principle, the general rate becomes higher by another 0.8-1.2% and does not depend on the withdrawal period.
Banks in the insurance system
Modern banks almost all are included in the deposit insurance system, but there are also those that are not there. At the conclusion of the contract, insurance takes place automatically. If a critical situation (bankruptcy) has occurred with the bank, then the insurance fund will pay up to 700 thousand rubles to the client for the period of 12 days, plus the accumulated interest.
There is one subtlety: a contribution up to the specified amount should be in the singular and drawn up for one person. That is, if one client has 2 or more deposits of 500 thousand rubles, then only 500 thousand plus interest will be paid, if the deposit is 100 million rubles, the client still receives 700 thousand with interest from the insurance agency.
A simple conclusion follows from this: if there is more than 700 thousand rubles of money, then this amount should not be placed in your own name, but on your relatives or on people you can definitely trust.
It is important to provide one more detail - for each contribution it is necessary to have a cross power of attorney in order to always be able to make any manipulations with each of its assets. Power of attorney, as a rule, can be issued at the same bank for free. If there are no relatives to whom you can write your money, you need to put money in different banks in your name. In this case, the insurance system will operate in each bank according to the above scheme (700 thousand plus interest for 1 person).
One should also be careful if a bank deposit is offered at a high percentage, for example, above 10% per annum. Such a deal is very doubtful.
Perhaps this organization is involved in risky financial transactions.
In principle, if the client’s finances on all accounts of a given bank do not exceed 1 million 400 thousand rubles, then you can risk concluding an agreement, because this is the maximum investment amount at which 100% insurance payments are guaranteed in case of bank ruin.
Multicurrency Deposits
When the money market is stormy, many make profits on deposits in other currencies. In times of inflation, such deposits are the most profitable. Multicurrency deposits are decided by financially enlightened people to protect their savings from possible risks.
You can arrange funds on one deposit in different currencies, and if necessary transfer them from one currency to another. With this method, the client has the ability to quickly manipulate their savings, converting them among themselves without losing the existing interest. This usually occurs during moments of sharp fluctuations in the course.
But for the successful implementation of such a plan, it is necessary to know the situation on the currency market, to know how to make money on a multicurrency deposit. For example, when the dollar exchange rate rises, advanced market participants partially convert the currency into rubles and, on the contrary, acquire dollars after the stabilization of the ruble. Thus, in addition to interest income, the investor can make a profit on the difference in rates.
Almost all multicurrency deposits are designed for the classic triad: ruble, euro and dollar. In the range of services of some banks there is also the opportunity to invest in Swiss francs and pounds sterling.
A multicurrency asset also allows replenishment, extension and premature withdrawal of funds. Pay interest at the end of the term or every month.
The rates of multicurrency deposits are usually lower than ruble deposits by 1-2 percentage points in rubles and 0.3-1 in currency. This is due to the overall low number of such investments. Non-cash conversion costs may reduce the investor's profit. Banks convert currency at their own rate, and not at the rate of the Central Bank. Therefore, with minor fluctuations in the exchange rate, it does not make sense to convert funds.
Deposit replenishment, account for interest
One of the principal criteria is where the interest is transferred.
It would be nice for the client to go to a separate client account and be used at their own discretion. This is an important condition of the contract.
There is actually a deposit box for storing cash and valuables in any bank, but the conditions for its payment vary widely, this must be taken into account. And do not forget that the use of the cell is often attached with a deposit bonus with the conditions the milder the more the deposit amount.
Replenishment of the deposit is also a very important procedure, but many large banks are reluctant to do this, offer to make additional transactions, which is unprofitable for the client, but usually there are no problems with small and medium-sized banking organizations.
Pleasant trifles
There are other ways to make money on deposits. For example, you can get a nice gift during the opening of the deposit. Sometimes banks reward systems provide quite decent bonuses: it can be different discounts, "gold" credit cards, expensive coins, trips and much more, but it will depend on the amount invested. The client should not be embarrassed when choosing the appropriate conditions for themselves.
Everything must be carefully discussed with the maintenance staff, since their task is to keep the client.
Summing up the above, we can conclude that it is quite realistic to make money on deposits. Both banks and other financial organizations today provide a variety of conditions for processing deposits. Before concluding an agreement, the client needs to consider the goals and terms of his investment, carefully study the rules for calculating interest, make sure that the selected bank is reliable and participates in the mandatory deposit insurance system. In short, carefully study all the clauses and nuances of the contract so as not to miss anything.