What is a deposit (practice from deposit to withdrawal)

    Hello everyone. This video discusses the very important topic of what deposits are. We explain how deposits work, the pros and cons of deposits, how interest is calculated, how to choose the best interest deposit, and show you how to deposit until interest reaches our account.

What is a deposit 

(practice from deposit to withdrawal)

    When we talk about investing, it is often an investment product against deposits. It's usually said, "Oh, that's a higher return than a deposit, and it's more profitable than a deposit."

    "Deposits were eroded by inflation etc." So what exactly are deposits? If we go to the bank, he usually has three ways: savings products, current account products and fixed deposit products. You can withdraw your savings and money transfer products at any time using ATMs and other facilities. In the meantime, our money will be kept in a deposit for a period of time chosen, for example a month or a year.

    In that case, the interest rate on savings will be much lower than on a deposit. For example, savings interest rates range from 0.7% to 1.0%, but current fixed deposit investments can yield interest rates of 5% or more. We are getting back to functioning as a bank. That means collecting money from the public and giving it back to the community in the form of loans. Savings are certainly difficult to transfer to others in the form of a loan, as they can be withdrawn at any time, but in the case of deposits the funds are held for a certain period of time.

    It is therefore much more likely to be redistributed into long-term loans, making it more profitable for banks as they can predict when the money should be returned to the public. For example, you have a bank where you can make deposits, customers deposit into the bank, earn 5% interest, and all the deposits collected from the bank can be used for loans. For example, a working capital loan is offered to an entrepreneur at, say, his 13% interest.

    The difference between 13% and 5% is the bank's profit. This is just a simple example. Of course the actual process is much more complicated than I am talking about. I may make another video about how banking works. Deposits are therefore banking products designed to hold public funds, which can be redistributed in the form of credit.

    Interest rates can be higher as compensation, as banks are diverting funds to loans with higher interest rates. For us as customers, deposits have several advantages. First, the return is clear. When you put money into a deposit, the interest is initially fixed. For example, if it is 6%, it will definitely be 6%. It can't be less. So you don't have to worry about your investment risk becoming negative. Second, our deposits are insured by the government through LPS or Deposit Insurance Corporation. This means that your deposits will remain safe even if the bank you deposit them with closes or goes bankrupt. Third, purchasing is very easy. Sure, we already have bank accounts and ATMs, right? That means you already have access to your deposit. Just go to a branch and open a deposit. Some banks even allow you to open a deposit directly from their mobile application. On the other hand, making a deposit has some drawbacks.

    The first disadvantage is that the return is small compared to other investment products because the risk is small and the return must be small. Deposits are therefore consistently cited as examples of low-yield investments. Second, it is often said that deposits are susceptible to inflation, but in Indonesia alone he said inflation was around 3% in 2019, so this may or may not be true. not. And in 2019, deposits could still earn a 4% to 6% return.In other words, deposit rates may still outpace inflation, but when you compare that to child education inflation, For example, 10% to 15% instead of 3% per year. So, if your investment objective is for education expenses, etc., deposits are actually inferior to increasing tuition fees and may not be suitable.

    Third, the existence of deadlines is also a weak point. This is because it means that it cannot be arbitrarily withdrawn and must wait for a deadline. Therefore, if you suddenly need money at any time, you cannot withdraw from the deposit. And fourth, taxes are high, his 20% of the interest. Not bad compared to stocks and mutual funds, where profits are not taxed.

    So, considering the pros and cons, it can be said that fixed deposits are more profitable and suitable for people who dislike risk. Therefore, it is not stressful to see your investment go negative like stocks and mutual funds. Calculating interest on deposits is actually quite simple, just like calculating interest on each product. It requires three numbers, the principal, or the amount to be deposited, both in percent interest, and his third period or period. For example, take capital of 100 million and interest rate of 6%. Remember that interest is always interest for a year, not monthly interest.

    Finally, here's an example of a period. B. 1 month. The nominal interest rate is calculated as 100 million times 6%, or 6/100 times the period of 1 month or 31 days divided by he year or 365 days. The result is IDR 509,589. But we're not done yet. Remember there is a 20% tax. So the tax is 20/100 multiplied by 509,589 = 101,918. 509 decreased from 101 to 407 thousand. So 407,671 is total wins.

    Next, I will explain how to choose a deposit. Interest rates are very transparent and published by each bank, so all you have to do is Google them. For example, enter interest only for BCA deposits. Later, you will see the deposit interest rate page. Here we take a look at the three largest banks. BCA, BRI, Mandiri. We can see that the interest rate ranges from 4.2% to 5% and lowers to about 4% within a month. After looking around, it turns out that Jenius is a major depositor interest. Here you can see that Jenius's interest rate of 5.75% is significantly higher than that of other banks.

    Here's how to make a direct deposit. We use Jenius because it has the highest interest rates and is the easiest way to make a deposit. Go to Genius, click Save It, go to Maxi Saver, then click Open a New Deposit. You try 100 million, so you receive 6% interest instead. I choose a period of 1 month. The above will appear soon. At the end of the period, you will earn interest of 509,000. If you click Next immediately, you can choose what to do next when the deadline arrives.

    Principal can be automatically rolled back to term deposits, but interest is paid to savings, principal and interest to savings, or principal and interest to savings. Put it back into your savings account to show interest and taxes. Click Next and then Confirm to complete the process. Then just wait a month. After a month you will find that the interest has already been accrued. This is exactly him 509,000 and the tax is exactly the same as we calculated in the first place, 101,000. Interest and capital will immediately return to your savings account. The conclusion is that, first, term deposits are banking products that receive higher interest rates than savings accounts.

    Secondly, the deposit can be reliably returned as promised, so it is suitable for risk-averse people, so there is no need to worry about any negatives. Third, yields are relatively low, but still slightly above Indonesia's inflation rate. Fourth, it is very easy to compare interest rates as all the information is available on his website for each bank. Choose a deposit with the highest interest.

    Fifth, you can use your deposit with Jenius, so you can do everything online, as explained in this video. To create a Jenius account, please refer to the link below. In addition to depositing money online, you can also create an ATM account online on your mobile. No more trips to the branch. Enter the referral code $kefinance when registering with Jenius and you will get 25,000 extra credit later as long as your initial balance is at least 500,000. After that I plan to do another video with a very basic subject like this. Suggest a topic you'd like to discuss first in the comments section. For example, how to save, how the bank works, how to choose a savings product, etc.

    Thank you for watching until the end. Please like and share this video if it helps. Now I also have Instagram. Link is below. You can follow information about investing for beginners. Don't forget to subscribe so you don't miss the next video.

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