Where Should You Keep Your Money ?

Last week we discussed how to make investment decisions, with special emphasis on the need to differentiate between 'asset' savings and 'liability' savings, with each factor determining the length and type of investment.

There are many different types of investment instruments available, and the choice of which one is suitable for you depends on the amount being invested, how soon the funds will be required, eventual use of funds, and expected rate of return.

Account Structures
Every individual or entity who handles money needs an account into which all their income will be received and all commitments or payables made from. This helps the accountholder track use of money, and ensures funds will be kept safely until they are required. The type of account normally used for this purpose is the 'current' account, which usually does not earn any interest. In addition, it is important to prepare for future planned expenditure, or for emergencies and other unplanned expenditures (saving for the rainy day). A separate and conscious allocation into an account set up specifically for this purpose needs to be made.

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