Today, Filipinos have a range of options to consider when it comes to growing their hard-earned money. Among the most common ways people choose to maximize their funds and boost their financial resources are through bank deposits and non-guaranteed investments.
A bank deposit provides a relatively secure and straightforward way to boost one’s finances by leveraging interest. When you deposit money into a savings account, it earns a specific percentage per annum. Maya Bank, the #1 digital bank in the Philippines, has a savings deposit account called Maya Savings that comes with a base interest rate of 3.5% p.a., which you can boost to up to 15% p.a. just by using Maya services for your daily transactions, like buying mobile load, paying bills, paying with QR Ph, using Maya Easy Credit, using your Maya Card, or paying online with Maya. This allows your savings account deposit to grow steadily over time. Meanwhile, non-guaranteed investments may offer potentially higher returns because they carry market risk. Examples of these market-based investments include stocks, bonds, mutual funds, UITFs, ETFs, and other non-guaranteed investment products.
Both strategies enable individuals to generate returns and build stability, but they differ in terms of risk, return potential, liquidity, and capital protection. Let’s take a closer look at how bank deposits compare to non-guaranteed investments and explore which option may be more suitable depending on your financial goals.
Understanding Bank Deposits
Bank deposits are financial products that allow people to store money in an account while earning interest over time. Examples of these include savings accounts and time deposit accounts, as well as goal-based accounts, which may be offered as an additional savings product, depending on your chosen bank.
With Maya Personal Goals, for example, you can set up individual savings goals without the need to open new savings deposit accounts. Each Maya Personal Goals account earns up to 8% p.a. on balances of up to PHP 100,000, with tiered interest rates that start at 4% p.a. for the first PHP 20,000 and gradually increase up to 8% p.a. for amounts above PHP 80,000. This tool lets you build savings for specific targets, whether that’s a vacation, a special occasion, a big-ticket purchase, or an emergency fund.
Additionally, with Maya, you can create multiple Maya Time Deposit Plus accounts. All Maya Time Deposit Plus accounts start with a guaranteed 3% p.a. interest rate that you can boost up to 6% p.a. when you reach your target amount and date. You gain predictable returns of 5% p.a., 6% p.a., or 5.5% p.a. for the 3-, 6-, or 12-month term, respectively.
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These savings products are often used by individuals who want flexibility and accessibility while still allowing their money to grow gradually. And since banks typically provide fixed or predictable interest rates, deposit accounts are considered among the most stable savings options available.
Another reason many people prefer bank deposits is capital protection. Deposit accounts in legitimate Bangko Sentral ng Pilipinas-supervised financial institutions (BSFIs) like Maya Bank are generally protected by the Philippine Deposit Insurance Corporation up to the maximum insured amount of PHP 1 million per depositor, as mandated by law. This provides an added layer of security for depositors, especially for those prioritizing financial stability over aggressive growth.
Understanding Non-Guaranteed Investments
Non-guaranteed investments are financial products that do not provide assured returns or capital protection. Their value and performance are influenced by factors such as market movements, economic conditions, interest rates, and the performance of underlying assets. Examples include stocks, bonds, mutual funds, UITFs, and ETFs.
Unlike bank deposits, these products do not offer fixed earnings. Instead, investors commit funds with the expectation of generating potentially higher returns over the long term. While market fluctuations can result in gains or losses, they also create opportunities for capital growth. As a result, non-guaranteed investments may be suitable for individuals with longer investment horizons and a greater capacity to tolerate investment risk.
Differences in Risk and Capital Protection
One main difference between bank deposits and non-guaranteed investments is the level of risk involved. Bank deposits are generally considered low-risk because the principal amount remains protected under normal banking conditions. While interest earnings may vary depending on the account, depositors are less exposed to sudden losses caused by market movements.
Non-guaranteed investments, meanwhile, are exposed to market volatility. Stock prices may fluctuate based on company performance, economic developments, and investor sentiment, while bond and fund values can be affected by factors such as interest rates, credit conditions, and broader market trends. This results in varying degrees of gains or losses over time. That said, understanding your risk tolerance is important before committing money to market-based products.
Differences in Return Potential
Bank deposits typically provide stable but lower returns because interest rates are often fixed or limited. Savings accounts and goal-based accounts may help preserve money while generating modest returns. Meanwhile, time deposit accounts may offer slightly higher interest rates in exchange for keeping funds locked in for a certain period. These products are often more suitable for individuals who value stability and predictable earnings.
Non-guaranteed investments may offer significantly higher return potential because they participate in market growth. Stocks, for example, may increase in value over time and may also provide dividend income. Likewise, UITFs, and ETFs can benefit from market appreciation depending on their investment strategy. However, returns are never guaranteed, and periods of strong growth may also be followed by market declines. As such, investors should maintain realistic expectations and focus on long-term financial goals.
Differences in Liquidity and Accessibility
Liquidity refers to how quickly money can be accessed when needed. Bank deposits are generally more liquid since funds in savings accounts and goal-based accounts can often be withdrawn readily. This makes deposit accounts practical for emergency funds and short-term financial needs.
Market-based investments may not always provide the same level of accessibility. Some investments require investors to sell assets before they can be converted into cash, and the value received may depend on current market prices. Time deposits also have liquidity limitations because withdrawing funds before maturity may result in penalties or reduced earnings. Understanding liquidity is important because financial emergencies may require immediate access to funds.
For many people, the best approach to growing their finances is not choosing one option exclusively but finding a balance between saving and investing. Bank deposits can provide stability, liquidity, and capital protection, while non-guaranteed investments may offer higher growth potential over time. When you leverage investment products thoughtfully and choose a reliable savings partner like Maya, you can create a financial strategy that aligns with your timeline and risk tolerance. This allows your money to grow steadily and to effectively support both urgent financial needs and long-term goals.