What Is Deposit Investment – What Are The Disadvantages Involved


A deposit investment is one of the most secure and authenticated modes of a safe investment. But why is it so? It is because it offers the customers with liquid, safe, assured interest income on investments. Therefore the majority of the population opts for this safe mode of investment to have a secure future.

But do you know, this safe mode of investment also involves several risk factors. And I am here to let you get acquainted with some of the variety of disadvantages involved with deposit investment. Therefore without any further ado, let us get going with the ideas one by one-

Let Us Begin With Liquidity Risk

We all know how a term deposit investment makes the availability of cash easy and sorted. But there might be some deposit investments that might not be easily liquified. Take for instance a tax saver deposit investment. The term generally is of 5 years. Hence there is no chance of liquifying the cash before the term ends. Additionally, if it is not maintained online, then to liquidity the process one must visit the nearest branch. The process may take around 3-5 days to complete.

What Is Deposit Investment - What Are The Disadvantages Involved
What Is Deposit Investment – What Are The Disadvantages Involved

Next, Let Us Move To Return Risk

This chapter comes with several issues. The first and foremost problem is the moderate rate of interest. You get around 6-8 percent of interest rate in the majority of the time. And this might not suffice your requirement altogether in the end. Additionally, when you compare the rate of interest with other small savings along with fund investments the rate is pretty low.

Next There Is Chances Of Getting Defaulter

Though the idea is quite rare, however, there is always a possibility. The procedure requires some measurement that the customer needs to follow. Hence while filling-up the form make sure to clear all the doubts beforehand. This reduces your chances of staying safe.

What Is Deposit Investment - What Are The Disadvantages Involved
What Is Deposit Investment – What Are The Disadvantages Involved

Tax Risk Is The Next

Some investment policies may come with tax risk. Conditions as such state that your income from the interest rate of the investment is totally taxable if you are under 60. However, there are some exemptions that you can clear by visiting the branches. Therefore it is once again advisable to learn the terms and conditions before applying for the deposits.  

Teach Children Saving From An Early Age

When we are talking about savings and investment, as an adult it is our duty to teach the concept of saving our next generation. And for starter why not try out this lovely piggy bank? Not only a noble gift but also an educational item side by side. One can also use this cute little product as home decor when not in use. And besides being a durable item it is also an eco-friendly product.

What Is Deposit Investment - What Are The Disadvantages Involved
What Is Deposit Investment – What Are The Disadvantages Involved

Conclusion

Normally people do not feel a risk can follow them with deposit investment. However, the reality is something different. Hence this article offers you a brief idea to stay cautious from the start. Also, it is better to learn that in life, everything comes with risk factors.

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