What is considered the main risk of keeping money in a deposit?

The main risk of keeping money in a deposit is inflation risk. This risk arises because the interest earned on a bank deposit may not keep pace with the rate of inflation. When inflation occurs, the purchasing power of money decreases, meaning that even though money is safe and secure in a deposit, it may lose value over time if the return does not exceed inflation rates. For example, if a deposit earns 1% interest annually, but inflation is at 3%, the real value of the money effectively declines, as it buys less than it did at the start of the deposit.

In contrast, currency risk relates to the potential for loss in value due to changes in exchange rates and is more relevant for foreign currency deposits. Market risk involves the possibility of losses due to changes in market prices and is typically more associated with investments in stocks or bonds rather than guaranteed deposits. Liquidity risk, while important, refers to the possibility of not being able to access funds quickly without incurring a significant loss and is generally less of a concern with standard deposit accounts. Thus, inflation risk stands out as the primary risk affecting the real value of the funds held in deposits over time.