With the development of modern economy, bank deposits have become one of the important ways for people to manage their wealth. Interestingly, despite the relatively low interest on bank deposits, people prefer to keep their money in the bank rather than invest in other channels. Why is that?
Bank deposits are a relatively safe and trustworthy method. As a regulated financial institution, banks need to comply with a series of laws, regulations and supervision systems in the process of operation, so their operational risks are low. Compared with other investment channels, such as **, bonds, etc., bank deposits can bring people a greater sense of security. Even if the interest rate is lower, people are more concerned about the safety of their principal.
Bank deposits are relatively stable, and low interest means less income, but it also represents a relatively stable income. Although it is not as likely as possible to obtain high returns as other investment channels, the profitability of bank deposits is more reliable and stable. For those who are not willing to take on high risk, stability is one of the important reasons why they choose bank deposits.
Bank deposits have good liquidity, people can withdraw their deposits at any time when they need to use money, and most banks do not have a minimum deposit period and withdrawal time limit. This liquidity makes bank deposits ideal for emergency use and everyday payments. Other investment channels may have investment periods and withdrawal restrictions, making the funds less liquid and unable to meet the needs of people's daily lives.
In some countries, interest on deposits is tax-free, while income from other investment channels is often subject to a certain amount of tax. While the interest rate is lower, the actual yield may be higher when considering the tax benefits.
Bank deposits are also a worry-free way of investment, compared with other investment channels, bank deposits are simple to operate, low risk, and do not require too much economic knowledge and research. For those who don't know or are interested in investing, a bank deposit is a convenient and time-saving option.
To sum up, people prefer to keep their money in the bank despite the low interest rate on bank deposits. This is mainly because bank deposits have the advantages of fee security, stability, liquidity and tax incentives, which meet people's needs for security, stability and convenience.