Many of my friends work (or blog) strive hard to make more money but do not have a plan for their money. They leave all their money in the bank savings account. It is not a good way to keep your money. Your money is losing its value due to the inflation. Here I share with you the places I keep my money (no, not under pillow).
Bank / Saving Account — The first place where my online revenue goes into. Saving account has very low interest rate but high flexibility (withdraw anytime). I have accounts in 3 main local banks, all with e-banking access. Saving account served as a “temporary storage” for my money before they go to other places.
Fixed Deposit — Low risk and higher interest rate than saving account. My fixed deposit (FD) served as my emergency funds. I have a 3-month FD (auto renewal) that enough for my 6 months living. I do not put a higher interest rate 12-month fixed deposit, because 3-month is more balance on flexibility and returns.
Mutual Funds / Unit Trusts — Higher risk and (generally) higher returns than Fixed Deposit. It is managed by professional fund manager and invest in stocks, bonds, money market, and/or other securities. Save time and lower the risk of doing investments by yourselves. I bought my 1st unit trust funds at the end of 2006. Now I have several unit trust funds with monthly re-investments. Most of my money goes there.
Gold — the yellow precious metal. Gold price is increasing steady in the past years. It is a long term investment. Last week, I opened a gold saving account to turn my money into gold. I plan to to buy gold at a monthly basis.
EPF — I am self-employed, can I have EPF or Employees Provident Fund? Yes, you can. My accountant tips me that I can do an EPF voluntary contribution. Not only that I can earn interest returns (5+% per annual) but also save on income tax (claim up to 6K).
Beside the above 5 places to keep and grow my money, I plan to put my money into the following 2 places:
Stocks — The fastest place to make/lose money. I plan to put some of my money into some blue chip stocks as long term investment. It is exciting to study the market.
House — Everyone needs a “shell”. I plan to buy a house (preferably landed property) as my long term investment. But, it is not easy to get an ideal house.
In the end, I do not have much cash in my bank saving accounts. My money are in different baskets, each with different risks & returns.
While you are working hard to make more money, don’t forget to plan for your money. Do some researches, ask your friends, or read a book like Personal Finance For Dummies.
What are your tips of personal finance?