Why are “random” deposits bad?
"Random deposits are a bit like playing the lotery - especially if one is frequently chasing ""hot tips"".  You might make it big, but the odds are vastly against you. ""Random"" deposits into various investments won't be optimal, because such ""random"" decisions will not be properly diversified and balanced.  Various investments have different rates of risk and return. ""Random"" deposits will not take this into account for an individual's personal situation. In addition to needing to research individual investments as they are made, investments also need to be considered as part of a whole financial picture.  A few considerations for example: Simply put, random isn't a financial strategy."
Here is an example for you. We have a fictional company. It's called MoneyCorp. Its job is to own money, and that's all. Right now it owns $10,000. It doesn't do anything special with that $10,000 - it stores it in a bank account, and whenever it earns interest gives it to the shareholders as a dividend. Also, it doesn't have any expenses at all, and doesn't pay taxes, and is otherwise magic so that it doesn't have to worry about distractions from its mathematical perfection. There are 10,000 shares of MoneyCorp, each worth exactly $1. However, they may trade for more or less than $1 on the stock market, because it's a free market and people trading stock on the stock market can trade at whatever price two people agree on. Scenario 1. MoneyCorp wants to expand. They sell 90,000 shares for $1 each. The money goes in the same bank account at the same interest rate. Do the original shareholders see a change? No. 100,000 shares, $100,000, still $1/share. No problem. This is the ideal situation. Scenario 2: MoneyCorp sells 90,000 shares for less than the current price, $0.50 each. Do the original shareholders lose out? YES. It now has something like $55,000 and 100,000 shares. Each share is now worth $0.55. The company has given away valuable equity to new shareholders. That's bad. Why didn't they get more money from those guys? Scenario 3: MoneyCorp sells 90,000 shares for more than the current price, $2 each, because there's a lot of hype about its business. MoneyCorp now owns $190,000 in 100,000 shares and each share is worth $1.90. Existing shareholders win big! This is why a company would like to make its share offering at the highest price possible (think, Facebook IPO). Of course, the new shareholders may be disappointed. MoneyCorp is actually a lot like a real business! Actually, if you want to get down to it, MoneyCorp works very much like a money-market fund. The main difference between MoneyCorp and a random company on the stock market is that we know exactly how much money MoneyCorp is worth. You don't know that with a real business: sales may grow, sales may drop, input prices may rise and fall, and there's room for disagreement - that's why stock markets are as unpredictable as they are, so there's room for doubt when a company sells their stock at a price existing shareholders think is too cheap (or buys it at a price that is too expensive). Most companies raising capital will end up doing something close to scenario 1, the fair-prices-for-everyone scenario. Legally, if you own part of a company and they do something a Scenario-2 on you... you may be out of luck. Consider also: the other owners are probably hurt as much as you are. Only the new shareholders win. And unless the management approving the deal is somehow giving themselves a sweetheart deal, it'll be hard to demonstrate any malfeasance. As an individual, you probably won't file a lawsuit either, unless you own a very large stake in the company. Lawsuits are expensive. A big institutional investor or activist investor of some sort may file a suit if millions of dollars are at stake, but it'll be ugly at best. If there's nothing evil going on with the management, this is just one way that a company loses money from bad management. It's probably not the most important one to worry about. Things are more complicated for non-spouse beneficiaries of a 401(k) account. If you have not deposited the money yet, you may wish to contact the plan administrator and have them do a trustee-to-trustee transfer. If you take possession of the money (by depositing that check) then it will be considered a distribution and won't be eligible for a roll-over deposit. Required minimum distributions will still apply, but those are based on when your mother would have reached the age 70.5, rather than 62. It's not clear to me why they chose that number unless it was something specific to the rules of her 401(k) plan. Any investor can make a bad bet, even Buffett. Even if you have done every bit of research on an investment possible you are exposed to random external events.. acts of god, and outright fraud. &gt; Why not just get rid of deposit insurance for commercial banks  Repeated cycles of boom-and-busts, bank runs, recessions and crashes (that make today's situation look like a walk in the park) showed that deposit insurance is the best policy. Case in point: no Great Depression since we instituted it, and individual account holders are protected even when banks fail (as they do now and then for natural reasons). "Since the last time savings account interest rates were meaningful banks have made relationships much ""stick-ier."" By that I mean that the online services and all the auto-pay systems in place put up a significant barrier for people to leave their bank. This results in people no longer shopping their banking business around to the bank with the best account interest rates. So no cartel or other devious behavior from banks, but rather just customer apathy (as you pointed out was an option)." I'm not a financial guy. That being said, I think you can make a couple of common sense points here: The reason this site exists is because in some of these countries there just isn't an established way to create credit history. Partly because the infrastructure is risky to build. It may also be due to the corruption within a country. The really cool part about Kiva and these other lending tools might be that they can be an end run around those governments and are a 21st century approach to building the infrastructure for credit worthiness.  That being said, you probably already realize, in this situation - you're the bank - and you really ought to be acting somewhat like a bank: I'm also curious whether or not the good loans and opportunities are snatched up so quickly that all you are left with is the really high risk stuff. Anyway that's my non-expert 0.02. "I think the risk involved with the ""fund gaining a larger rate of return"" is probably priced in. Why would the bank take the risk on you with a car loan when it could put it in the same fund you're talking about and make more money?" For small amounts I wouldn't be too concerned.   There are two factors I can think of: For relatively small amounts and when dealing with reputable banking institutions there should be little concern of banking with a single bank.  It's what most people do.