Alternative to deposit? So what to do with free money
Everyone who has any savings puts the simple question of what to do to multiply these funds. The most popular option is to place capital on a so-called deposit. Is this the only option? It turns out that the market offers several other solutions.
The most popular forms of investing money include:
- Polysolokaty – if you are wondering what instead of a deposit may multiply our money, then the answer may be polysolokaty. It is a kind of alternative to a bank deposit, which combines the deposit with life insurance. About whether it is actually beneficial, as it is presented in ads, we write later in the article!
- Bond Funds – these are investment funds that are a kind of collective form of investing capital, which include bonds, i.e. previously issued securities.
- Corporate bonds – that is, debt securities that are issued by enterprises to obtain the necessary funds for the development of the company. Investments in corporate bonds allow you to obtain the right to the interest rate specified in the terms of issue as well as the right to return the capital invested.
- Deposits – a deposit is the transfer of money or valuable items by one person or institution for safekeeping to another person or institution. In the investment form, it consists of transferring to the bank a certain amount of money, which the bank can rotate for a specified period of time. In return, the depositor receives from the bank interest that is earning for him. It is one of the safer forms of investing capital, but due to additional taxation it is no longer as profitable as it used to be.
A policy is a form of depositing money on an insurance policy. It is not very popular, mainly due to the fact that its interest rate is usually not high. Financial specialists note another disadvantage. If money is paid into an insurance policy, it is protected by the Insurance Guarantee Fund, which guarantees a refund of only 50% of the value. In the case of bank deposits, our funds are protected by the Bank Guarantee Fund, where we have a 100% return on the value of the deposit. So it seems that this option, as a replacement for the deposit, is not attractive to consumers.
And how to recover money from policies ? Until recently, this was practically impossible, because the withdrawal from the contract was subject to high fines. After numerous complaints, the Office of Competition and Consumer Protection (UOKiK) significantly reduced the amount of these penalties and facilitated the procedure of resigning from polysolokata, thanks to which dissatisfied clients no longer have to go to court regarding the recovery of their money.
What is the Bond Fund?
As for the Bond Funds, they can bring more benefits – but you have to remember that this is a risky investment. The bond fund may have different purposes. What distinguishes individual funds among themselves is also the time horizon. It should be remembered that the longer the bond maturity is, the greater the fluctuations in the bond prices – which can be both beneficial to the buyer and lose.
Or maybe corporate bonds?
Another proposal that can be an alternative to deposits – are corporate bonds. We refer to corporate bonds as securities or discounted securities. Who issues corporate bonds is mentioned above – they are enterprises and companies. There are two options for buying such bonds. The first is to buy them on the secondary market – we call it Catalyst. The second option is participation in bond issues. If we have low capital, we can usually only buy on the secondary market – such a purchase is less profitable, and what is important, you should check the company well. People with large funds should definitely consider participating in bond issues.
What are deposits?
Bank deposits are a convenient form of storage and at the same time invest your capital. These are usually interest-bearing term deposits. They are usually divided into bank deposits placed at a simple percentage, where there is no capitalization process and subject to capitalization, i.e. the best bank deposits at compound interest.
The examples show that there is an alternative to a bank deposit, but whether it is always beneficial depends on many individual factors. However, it should be remembered that no such investment is completely safe, the risk of losing some of the funds invested cannot be excluded. Before each investment, it is worth consulting a specialist in finance who will direct us in the right direction.