Here I discuss Bank Deposits and their significance.

Bank Deposit:

Bank deposit, as the name suggests, its a sum of amount deposited in a bank by an individual, so that it can earn interest (mostly Compound interest).

Basically, Banks do business this way - have individuals deposit money and then lend it to business entities. Bank will collect higher interest from the borrowers and then, return it to depositors after their margins.

Interest Rates:

The interest rates are controlled by the central bank based on the country’s economy, inflation rates, government policies etc.

In developed countries, the interest rates are very low - <1% due to low inflation environment. However, in developing countries, the interest rates are quite high - up to 10% at best times.

Safety:

Bank Deposits are considered very safe since these deposits are guaranteed by the Central Bank and backed by the country’s Government.

Risk involved in such Bank deposits is much lower compared to stock markets. 

Significance:

For individuals, Bank Deposits should have a significant percentage in their asset allocation. It should be at least 10% according to me. 

This amount in Bank Deposits is safe and can be liquified when needed in a quick time.

Risk Contingency or Emergency Fund should be kept as Bank Deposits to serve its purpose.