What Are Deposits, Investments and Loans?

Deposits:

When you put money into your account, you are depositing money. The money you keep in your bank account for safekeeping are Bank Deposits.

Two ways of depositing money:

Through cash deposits
By transferring money from one account to another

Eg. Rekha’s employer can transfer her salary from their account to Rekha’s account

Investments:

Investments are what you do with your money to make sure that it grows as time passes.

You invest, in order to get a good return on the investment. You can invest in a company, in stocks or in government bonds.

If the company, stock or bond – called assets – shows good growth, your returns will be good.

To know about Investments, check out our Investment Guides

Loans:

Money that you borrow is called a loan.
Loans should be paid back to the bank along with interest over a period of time. There can be many reasons to take a loan from the bank.

Depending on the purpose, banks offer these types of loans:

Personal loans
Home loans
Small business loans
Gold loans
Credit cards
Two-wheeler loans
Education loans

To know about Loan, check out our Loan Guides

Before you take a loan, consider there 3 important factors:

The loan amount or the principal amount
The time duration of the loan
The interest rate to be paid on the loan

Pro Tip

You can use a credit-linked insurance policy to help pay off your loan in some cases like unforeseen death, disability and unemployment.

Points to remember:

Here are some key takeaways from this section that you should remember.

When you put money into your account, you are depositing money.
Investments are what you do with your money to make sure that it grows as time passes.
Money that you borrow is called a loan.

To track your progress