When free money appears, a logical question arises: how to not only save it, but also increase it? Two popular options that come to mind are bank deposits and investments in microfinance companies (IFC). At first glance, they look similar: you give your money away for a while and get interest for it.
However, this external similarity hides fundamental differences in the level of risk, profitability and legal protection. Understanding these differences is the key to making an informed financial decision. It's like comparing a relaxing walk in the park with an extreme hike in the mountains: both are movement, but the goals and risks are completely different.
Bank deposit: reliability above all
A bank deposit is the most conservative and reliable way to invest money. You sign a contract with the bank, and your money starts working, bringing in a fixed, pre-determined percentage.
The main features of the contribution:
- High reliability. Deposits in Russian banks in the amount of up to 1.4 million rubles are insured by the state through the Deposit Insurance Agency (DIA). This means that even if the bank goes bankrupt, you will get your money back.
- Low profitability. You have to pay for reliability. Interest rates on deposits are usually low and, at best, only slightly outstrip official inflation. You won't be able to earn much here.
- Simplicity and clarity. It is very easy to open a deposit, it does not require any special knowledge. All conditions are specified in the contract.
A bank deposit is an ideal tool for storing a financial safety cushion or for saving for a specific purpose in the foreseeable future. His task is not so much to increase as to protect money from inflation.
Investing in IFC: high risk, high return
Investing in IFC is a completely different story. Here you don't deposit money into an account, but in fact, you lend it to the company itself, which then issues microloans to the public at a very high interest rate. IFC shares part of this profit with you, the investor.
Key points:
- High profitability. The rates here can be 2-3 times higher than the rates on bank deposits. This is the main magnet for investors.
- High risk. This is the most important difference. Investments in IFC are not insured by the government. If the company goes bankrupt, you may lose all your investments. And the risk of bankruptcy in this sector is much higher than in banking.
- High entry threshold. By law, the minimum investment amount in the IFC for an unqualified investor is 1.5 million rubles. This is done specifically to cut off people who are not ready for such risks.
Investing in IFC is a tool for experienced investors who understand the risks well and are ready for a possible loss of capital for the sake of high potential profits.
What should I choose?
The choice between a deposit and an investment in IFC depends solely on your financial goals, risk tolerance, and capital size. These are not mutually exclusive, but rather complementary tools.
This is not to say that one is better than the other. They're just different weight classes. For most people, whose goal is to save and increase their savings a little, a bank deposit is the only right solution. Investing in IFC is already a high—risk game, and you can only join it if you have solid experience, a diversified portfolio, and "extra" money that you don't mind losing.
Financial literacy is your main asset
Before investing money anywhere, it is important to carefully study all the conditions and, most importantly, soberly assess the risks. Tempting promises of high returns often go hand in hand with a high probability of losing everything.
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